Brief Report of Financial Statements for the Year Ended March 31, 2012 [JGAAP] (Consolidated Basis) Listed exchanges: Tokyo, Osaka Listed company name: Kobayashi Pharmaceutical Co. Ltd. Code: 4967 URL: Representative officer: Contact: http://www.kobayashi.co.jp/english/index.shtml Yutaka Kobayashi, President & COO Satoshi Yamane, Executive Director & Senior General Manager, Group Corporate Business Headquarters Tel: +81-6-6222-0142 Scheduled date of general meeting of shareholders: June 28, 2012 Scheduled date of dividend payment commencement: June 11, 2012 Schedule date of financial report filing with the Finance Ministry: June 28, 2012 Preparation of the attachment of Financial Statements: Yes Holding of the results presentation: Yes (For analysts and investors) (Any fraction less than 1 million yen is rounded down to the nearest million yen.) 1. Consolidated Operational Results for Year Ended March 31, 2012 (April 1, 2011 to March 31, 2012) (1) Consolidated Operating Results (% figures represent changes from previous period.) Year ended March 2012 Year ended March 2011 Net sales 131,166 millions 0.3 % 130,824 millions 1.3 % of yen of yen Operating income 19,298 3.6 18,620 9.3 Ordinary income 20,092 5.7 19,010 11.4 Net income 11,726 25.6 9,335 0.9 Earnings per share 286.36 yen 227.98 yen Diluted earnings per share ¾ ¾ Return on equity 12.2 10.6 Return on assets 14.2 14.3 Ratio of operating income to net sales 14.7 14.2 (Note) Comprehensive income Year ended March 2012: 13,335 million yen (41.2%) Year ended March 2011: 9,444 million (-10.8%) (Reference) Equity in earnings of affiliates Year ended March 2012: 408 million yen Year ended March 2011: 382 million yen
(2) Consolidated Financial Position As of March 31, 2012 As of March 31, 2011 Total assets 147,890 millions of yen 134,356 millions of yen Net assets 101,879 91,342 Shareholders equity ratio 68.8 % 67.9 % Net assets per share 2,484.08 yen 2,226.42 yen (Reference) Shareholders equity As of March 31, 2012: 101,719 million yen As of March 31, 2011: 91,169 million yen (3) Consolidated Cash Flow Year ended March 2012 Year ended March 2011 Net cash provided by (used in) operating activities Net cash provided by (used in) investing activities Net cash provided by (used in) financing activities Cash and cash equivalents at period-end 17,250 millions of yen 13,168 millions of yen (2,929) (8,378) (3,292) (5,154) 42,835 31,963 2. Dividends Year ended March 2012 Year ended March 2011 Year ending March 2013 (forecasts) Dividends per share Q1 end ¾ ¾ ¾ Q2 end 35.00 yen 33.00 yen 39.00 yen Q3 end ¾ ¾ ¾ Year-end 43.00 33.00 39.00 Total 78.00 66.00 78.00 Total dividends 3,194 millions of yen 2,702 millions of yen ¾ Payout ratio (consolidated) 27.2 % 28.9 % 25.6 % Ratio of dividends to net assets (consolidated) 3.3 3.1 ¾
3. Forecasts of Consolidated Operational Results for Year Ending March 31, 2013 (April 1, 2012 to March 31, 2013) (Percentages represent changes from previous year for full-year results, and changes from same period of previous year for quarterly results.) Interim (1st half) Full year Net sales 64,100 millions of yen 0.1 % 132,000 millions of yen 0.6 % Operating income 10,500 (2.0) 20,000 3.6 Ordinary income 11,000 0.4 20,900 4.0 Net income 6,900 12.2 12,500 6.6 Earnings per share 168.50 yen 305.26 yen * Notes (1) Significant changes in subsidiaries during the period (changes in specified subsidiaries resulting in a change in consolidation scope): Changed Newly included: - (Name) ; Excluded: 1 (Name) Kobayashi Medical America LLC (2) Change in accounting policies, change in accounting estimation, modification/restatement 1) Changes in accounting policies due to revisions of accounting standards: No change 2) Change in accounting policies for other reasons: No change 3) Change in estimations in accounting: No change 4) Modification/restatement: No change (3) Issued shares (common shares) 1) Number of shares issued at As of March period-end (including treasury stock): 31, 2012 2) Number of shares of As of March treasury stock at period-end: 31, 2012 3) Average number of shares outstanding As of March 31, 2012 42,525,000 shares 1,576,287 shares 40,948,901 shares As of March 31, 2011 As of March 31, 2011 As of March 31, 2011 42,525,000 shares 1,575,987 shares 40,949,074 shares * Presentation of situation of audit procedures Audit procedures under the Financial Instruments and Exchange Law of Japan have not been completed at the date of submission of this brief report of Financial Statements. * Notes on proper use of forecasts and other matters Forward-looking statements in this document are based on currently available information and assumptions considered reasonable by the Company. Actual results may differ significantly from these statements due to various factors. For forecast details, please refer to 1. Operational Results, (1) Analysis of Operational Results on pages 2 to 4 of the attachment.
Table of contents for the attachment 1. Operational Results... 2 (1) Analysis of Operational Results... 2 (2) Analysis of Financial Position... 5 (3) Basic Policy for Profit Distribution and Dividend Payments for Fiscal 2011 and Fiscal 2012... 6 2. Consolidated Financial Statements...7 (1) Consolidated Balance Sheet...7 (2) Consolidated Income Statement and Consolidated Comprehensive Income Statement...9 (3) Consolidated Statement of Shareholders Equity...12 (4) Consolidated Statement of Cash Flows...14 3. Information on the amount of net sales, income or loss, assets and other items by reportable segments...16 Important subsequent events...17-1 -
1. Operational Results (1) Analysis of Operational Results Overview of Consolidated Results Previous Year (Year ended March 31, 2011) Ratio Current Year (Year ended March 31, 2012) Ratio Change Change Net sales 130,824 100.0 131,166 100.0 342 0.3 Operating income 18,620 14.2 19,298 14.7 677 3.6 Ordinary income 19,010 14.5 20,092 15.3 1,082 5.7 Net income 9,335 7.1 11,726 8.9 2,390 25.6 Earnings per share (yen) 227.98 286.36 58.38 25.6 The business environment in Japan continued under significantly uncertain conditions during the year ended March 31, 2012. Business activities and consumer buying behavior were slowed down by the tremendous damages resulting from the Great East Japan Earthquake in March 2011. The accidents at Fukushima No. 1 Nuclear Power Plant and the electric supply shortage associated with those accidents also affected economic activities. Under those circumstances, the Kobayashi Pharmaceutical Group unified its efforts toward the recovery of Sendai Kobayashi Pharmaceutical Co., Ltd., a production subsidiary stricken by the earthquake, demonstrating its management philosophy to provide good comfort to people and society. To maintain a stable product supply to the extent practicable, other production sites within the Group took over the production of the quake-stricken subsidiary until it could be restored. As a result of our unified efforts, the subsidiary resumed full production operations in June. We also continued to introduce products and services that will create new markets, serve newly discovered needs of customers and vitalize the market. As a result of these efforts, the Company achieved consolidated net sales of 131,166 million yen, an increase of 342 million yen (0.3%) from the previous year. Operating income increased by 677 million yen (3.6%) to 19,298 million yen, and ordinary income increased by 1,082 million yen (5.7%) to 20,092 million yen. Consolidated net income for the year ended March 31, 2011 totaled 11,726 million yen, an increase of 2,390 million yen (25.6%) from the previous year. The following is an overview of segment performance. Consumer Products Business 17 new items were introduced during the year, with the aim of creating new markets and expanding existing markets. Sales of Atto-Non, an ointment to minimize wound scarring, and Tomarina, a medicated toothpaste to prevent gum recession, among other new products, were very strong and contributed to the business growth of the Company. Among existing products, sales of Eye-Bon (medicated eyewash) Inochi-No-Haha (health medication for women) and Shoyo (medicated toothpaste to prevent alveolar pyorrhea) were strong, contributing to overall sales growth. Since consumer consciousness regarding electricity saving has become strong, sales of Netsusama Sheet (forehead-cooling pads), Netsusama Hinyari Gel Mat (cooling gel mats), Shirt Cool (lasting spray to coat clothing with cooling agent) and other coolness products were strong in summer and sales of body warmers were strong in winter, contributing to overall sales growth. Sales of air fresheners and deodorizers declined, however, mainly because Sendai Kobayashi Pharmaceutical Co., Ltd. introduced a distribution quota system (under which it allocated daily shipments by customer) until its quake-stricken production line recovered from the damage. The Consumer Products Business also actively implemented sales promotion, advertisement and other marketing activities. Consequently, net sales by the Consumer Products Business segment for the current year increased by 1,631 million yen (1.5 %) from the previous year to 112,423 million yen. Segment profit (ordinary income) decreased by 398 million yen (-2.2%) to 17,546 million yen. Operating income decreased by 649 million yen (-3.4%) to 18,317 million yen. - 2 -
(Sales Breakdown) Previous Year (Year ended March 31, 2011) Ratio Current Year (Year ended March 31, 2012) Ratio Change Change Pharmaceutical products 21,941 19.8 22,929 20.4 987 4.5 Oral hygiene products 15,510 14.0 16,234 14.5 723 4.7 Sanitary products 14,042 12.7 14,309 12.7 267 1.9 Deodorizing air fresheners 30,733 27.8 29,720 26.4 (1,012) (3.3) Household sundries 4,791 4.3 4,585 4.1 (206) (4.3) Food products 8,881 8.0 9,101 8.1 219 2.5 Body warmers 14,890 13.4 15,543 13.8 653 4.4 Total 110,792 100.0 112,423 100.0 1,631 1.5 (Note) Net sales include intersegment sales or transfers (3,136 million yen in fiscal 2010 and 3,220 million yen in fiscal 2011). Mail-Order Business The Mail Order Business markets dietary supplement products, skin care products and the like. The segment actively placed advertisements and implemented sales promotion activities, mainly via direct mail, seeking new customers and repeated purchases by existing customers. Consequently, the Mail Order Business segment recorded net sales of 10,380 million yen, an increase of 508 million yen (5.1%) from the previous year, and segment profit (ordinary income) of 137 million yen, a decrease of 180 million yen (-56.7%). Operating income decreased by 179 million yen (-57.4%) to 132 million yen. Net sales do not include inter-segment sales or transfers. Medical Devices Business The Medical Devices Business segment focused on the selected areas of orthopedics and operating room devices, both of which markets are expected to grow in Japan. On July 31, 2011, the Company assigned all shares of event Medical Incorporated by the MBO method. Consequently, the Medical Devices Business segment recorded net sales of 10,476 million yen, a decrease of 1,707 million yen (-14.0%) from the previous year, and segment profit (ordinary income) of 1,334 million yen, an increase of 145 million yen (12.3%). Operating income increased by 40 million yen (16.0%) to 292 million yen. (Sales Breakdown) Previous Year (Year ended March 31, 2011) Ratio Current Year (Year ended March 31, 2012) Ratio Change Kobayashi Medical 10,213 83.8 8,965 85.6 (1,247) (12.2) event 915 7.5 427 4.1 (487) (53.3) Other 1,055 8.7 1,083 10.3 27 2.6 Total 12,183 100.0 10,476 100.0 (1,707) (14.0) (Note) Net sales do not include inter-segment sales or transfers. Change Other Businesses Businesses in this segment (transportation business, plastic container manufacture and sale, insurance agency, real estate management, advertisement planning and creation, etc.) support the above-mentioned three core businesses. Although companies in this business segment operate individually on a financially independent basis, their business purposes also include contributing to the profits of the three core businesses of the Group. Accordingly, their delivery prices of materials and services to the three core businesses were reviewed and revised as necessary. Consequently, this segment recorded sales of 6,254 million yen, a decrease of 6 million yen (-0.1%) from the previous year, and segment profit (ordinary income) of 1,233 million yen, an increase of 569 million yen (85.8%). Operating income increased by 383 million yen (223.9%) to 554 million yen. Net sales include intersegment sales or transfers, totaling 5,149 million yen in fiscal 2010 and 5,147 million yen in fiscal 2011. - 3 -
Forecast for Year Ending March 31, 2013 Current Year (Year ended March 31, 2012) Ratio Next Year (Year ending March 2013) Ratio Change Net sales 131,166 100.0 132,000 100.0 833 0.6 Operating income 19,298 14.7 20,000 15.2 701 3.6 Change Ordinary income 20,092 15.3 20,900 15.8 807 4.0 Net income 11,726 8.9 12,500 9.5 773 6.6 Earnings per share (yen) 286.36 305.26 18.90 6.6 With the outlook for the Japanese economy remaining extremely uncertain and it being unlikely that the consumer buying appetite will recover soon, the business environment is expected to remain severe during the year ending March 31, 2013. Under these circumstances, the Kobayashi Pharmaceutical Group will pursue development and sales expansion of new products with unprecedented added value, as well as the strengthening of existing brands as the foundation of our business, with the brand slogan You make a wish and we make it happen. The Company will actively invest in overseas businesses and the mail order business, both of which are expected to grow significantly, for further sales expansion. Forecasts for the year ending March 31, 2013 are as follows: Consolidated net sales are expected to total 132,000 million yen, an increase of 833 million yen (0.6%) from the year ended March 31, 2011. It is expected that operating income will increase by 701 million yen (3.6%) to 20,000 million yen and ordinary income will increase by 807 million yen (4.0%) to 20,900 million yen. Consolidated net income is expected to total 12,500 million yen, an increase of 773 million yen (6.6%). Forecasts by segment are as follows: In the Consumer Products Business segment, consumer buying appetite has declined, consumers preferring low-priced items. To satisfy these latent needs and create new demand, we introduced 15 new value-added items this spring, including Cleansil (innovative enteral environment-improving drug with medicated charcoal), Shoshugen Aroma Pot (deodorizer with real aromatic fragrance) and Head Cool (head cooling spray, useful for instant head cooling in hot summer). We will also engage in active sales activities for existing brands, based on our marketing plan for each brand. In overseas business, we will implement a sales strategy for expanding sales of body warmers, Netsusama Sheet (forehead cooling pads) and other products. By implementing these efforts, we expect that net sales by the Consumer Products Business segment in fiscal 2012 will increase by 6,676 million yen (5.9%) to 119,100 million yen, and that segment profit (ordinary income) will increase by 1,053 million yen (6.0%) to 18,600 million yen. Operating income is expected to total 19,300 million yen, an increase of 982 million yen (5.4%). In the Mail Order Business segment we will develop new products, mainly in the nutritional supplement and skin care product areas. We will also strive to realize business expansion by making active investments. By implementing these efforts, we expect that net sales by the Mail Order Business segment in fiscal 2012 will increase by 2,619 million yen (25.2%) to 13,000 million yen, and that segment profit (ordinary income) will increase by 262 million yen (191.4%) to 400 million yen. Operating income is expected to total 400 million yen, an increase of 267 million yen (201.4%). In the Medical Devices Business segment, 80% of shares of Kobayashi Medical Co., Ltd. are scheduled to be assigned to Mitsubishi Corporation on May 31, 2012. Upon completion of this transaction, the status of Kobayashi Medical will change from a consolidated subsidiary to an affiliate reported by the equity method. We expect that as a result of this status change, net sales by the Medical Devices Business segment in fiscal 2012 will decrease by 8,176 million yen (-78.0%) to 2,300 million yen, and that segment profit (ordinary income) will decrease by 534 million yen (-40.0%) to 800 million yen. Operating loss will be 200 million yen (compared with operating income of 292 million yen in the current year). - 4 -
(2) Analysis of Financial Position Overview of Consolidated Results (Consolidated Financial Position) Previous Year (Year ended March 31, 2011) Current Year (Year ended March 31, 2012) Change Total assets 134,356 147,890 13,534 Net assets 91,342 101,879 10,536 Shareholders equity ratio 67.9% 68.8% 0.9% Net assets per share 2,226.42 yen 2,484.08 yen 257.66 yen (Consolidated Cash Flow) Net cash provided by (used in) operating activities Net cash provided by (used in) investing activities Previous Year (Year ended March 31, 2011) Current Year (Year ended March 31, 2012) Change 13,168 17,250 4,082 (8,378) (2,929) 5,449 Free cash flow 4,789 14,320 9,531 Net cash provided by (used in) financing activities Cash and cash equivalents at period-end (5,154) (3,292) 1,862 31,963 42,835 10,872 The Company s financial position on a consolidated basis is as follows: Total assets on a consolidated basis increased by 13,534 million yen, compared with the balance as of the end of the previous fiscal year. In the current assets category, cash and deposits increased by 10,872 million, notes receivable and trade accounts receivable increased by 2,234 million. Merchandise and products increased by 1,103 million and deferred tax assets decreased by 882 million yen. In the non-current assets category, goodwill decreased by 429 million yen, investment securities increased by 1,879 million yen and deferred tax assets decreased by 1,032 million yen. In the current liabilities category, accounts payable-others increased by 1,810 million yen, income tax payable increased by 2,320 million yen and provision for sales returns decreased by 622 million yen. In the net assets category, retained earnings increased by 8,941 million yen and valuation difference on available-for-sale securities increased by 1,508 million yen. Cash flow from operating activities Net cash provided by operating activities totaled 17,250 million yen. Major factors affecting this cash flow were: net income before taxes (19,822 million yen), depreciation expenses (2,727 million yen), increase in notes and accounts receivable (2,060 million yen), increase in inventories (1,018 million yen), receipt of interest and dividends (1,036 million yen) and income tax paid (4,761 million yen). Cash flow from investing activities Net cash used in investing activities totaled 2,929 million yen. Major factors affecting this cash flow were: purchase of investment securities (39,989 million yen), proceeds from sales and redemption of securities (41,000 million yen), purchase of property, plant and equipment (1,747 million yen), purchase of investment securities (1,248 million yen) and acquisition of stocks of subsidiaries (979 million yen). Cash flow from financing activities Net cash used in financing activities totaled 3,292 million yen. Major factors affecting this cash flow were: dividend payment (2,785 million yen) and repayment of lease obligations (462 million yen). Consequently, cash and cash equivalents as of March 31, 2012 totaled 42,835 million yen, an increase of 10,872 million yen from the end of the previous fiscal year. - 5 -
Forecast for Year Ending March 31, 2013 Although the business environment will remain severe, we will make further efforts to improve the operating cash flow, including inventory reduction, in accordance with the policy to improve the efficiency of investment capital. As for facility investments constantly needed for product development, we plan to make the same level of investment as in fiscal 2011. As for other investment than facility investments, we plan to make the same level of investment as in fiscal 2010 since we currently do not have major investment plans. Trend of Cash Flow Indicators As of March 31, 2008 As of March 31, 2009 As of March 31, 2010 As of March 31, 2011 As of March 31, 2012 Shareholders equity ratio 63.0 60.9 64.0 67.9 68.8 Shareholders equity ratio on a market price basis Ratio of net cash to interest-bearing liabilities (year) 129.8 106.3 119.5 117.5 114.6 0.1 0.1 0.1 0.2 0.0 Interest coverage ratio (times) 193.6 75.9 184.0 277.7 613.7 Shareholders equity ratio: Shareholders equity/total assets Shareholders equity ratio on a market price basis: Total market value of shares/total assets Ratio of net cash to interest-bearing liabilities: Interest-bearing liabilities/operating cash flow Interest coverage ratio: Operating cash flow/interest payments * These indicators are calculated based on consolidated financial results. * Total market value of stock is calculated by the following formula: closing price at period-end x outstanding shares at period-end (excluding treasury shares). * Operating cash flow is based on net cash provided by operating activities reported on the consolidated statement of cash flow. Interest-bearing liabilities include all liabilities reported on the consolidated balance sheet for which interest is paid. The amount of interest payments is the amount of interest expenses paid reported on the consolidated statement of cash flow. (3) Basic Policy for Profit Distribution and Dividend Payments for Fiscal 2011 and 2012 The Company regards returns to shareholders as one of its most important management programs. The Company will set aside a certain level of retained earnings within the Company to maintain sources necessary for expanding rapidly growing businesses and maintaining a healthy management structure, and further strengthen our policy to enhance our returns to shareholders. While the Company has set a basic policy to continue stable payment of dividends, reasonable dividends will be paid to shareholders based on the consolidated operational results of the company. Retained earnings held within the Company will be used as financial sources for M&As and active investments for international business expansion aimed at expanding the operations of the Consumer Product Business. It is also our policy to make profit distribution twice a year as interim dividends and year-end dividends, in principle. In accordance with the above-mentioned policies, we will propose at the general meeting of shareholders for the year ended March 31, 2012 to pay a regular dividend to shareholders of 78 yen (including interim dividend of 35 yen per share already paid and year-end dividend of 43 yen per share). For the year ending March 31, 2013, we plan to pay a regular dividend of 78 yen per share (including interim dividend of 39 yen per share and year-end dividend of 39 yen per share). - 6 -
2. Consolidated Financial Statements (1) Consolidated Balance Sheet Previous year-end (March 31, 2011) Current year-end (March 31, 2012) ASSETS Current assets Cash and cash equivalents 31,963 42,835 Notes and accounts receivable-trade 29,879 32,113 Short-term investment securities 11,005 11,004 Merchandise and finished goods 8,402 9,505 Work in process 477 457 Raw materials and supplies 2,015 2,049 Deferred tax assets 4,170 3,287 Other 1,284 1,353 Allowance for doubtful accounts (361) (69) Total current assets 88,837 102,538 Non-current assets Property, plant and equipment Buildings and structures, net 6,042 6,064 Machinery, equipment and vehicles, net 2,306 2,159 Tools, furniture and fixtures, net 1,016 1,049 Land 3,471 3,468 Lease assets, net 1,213 788 Construction in progress 107 98 Total property, plant and equipment 14,156 13,628 Intangible assets Goodwill 4,021 3,592 Right of trademark 677 513 Software 897 884 Lease assets 74 46 Other 250 249 Total intangible assets 5,922 5,287 Investments and other assets Investment securities 17,251 19,131 Long-term loans receivable 500 600 Deferred tax assets 2,334 1,302 Real estate for investment, net 3,113 3,103 Other 2,431 2,455 Allowance for doubtful accounts (191) (154) Total investments and other assets 25,440 26,437 Total non-current assets 45,518 45,352 Total assets 134,356 147,890-7 -
Previous year-end (March 31, 2011) Current year-end (March 31, 2012) LIABILITIES Current liabilities Notes and accounts payable-trade 12,880 12,823 Short-term loans payable 25 5 Accounts payable-other 12,859 14,669 Lease obligations 462 391 Income taxes payable 2,177 4,497 Accrued consumption taxes 567 382 Provision for sales returns 1,661 1,038 Provision for bonuses 2,086 2,095 Asset retirement obligations 13 13 Other 1,790 1,873 Total current liabilities 34,525 37,791 Non-current liabilities Lease obligations 874 483 Provision for retirement benefits 5,159 5,312 Provision for directors retirement benefits 14 17 Asset retirement obligations 73 87 Other 2,366 2,318 Total non-current liabilities 8,488 8,220 Total liabilities 43,013 46,011 NET ASSETS Shareholders equity Capital stock 3,450 3,450 Capital surplus 4,219 4,219 Retained earnings 92,185 101,127 Treasury stock (4,701) (4,702) Total shareholders equity 95,154 104,094 Accumulated other comprehensive income Valuation difference on available-for-sale securities 489 1,998 Deferred gains or losses on hedges (599) (323) Foreign currency translation adjustment (3,874) (4,050) Accumulated other comprehensive income total (3,984) (2,374) Subscription rights to shares 160 159 Minority interests 12 Total net assets 91,342 101,879 Total liabilities and net assets 134,356 147,890-8 -
(2) Consolidated Income Statement and Consolidated Comprehensive Income Statement (Consolidated Income Statement) Previous year (April 1, 2010 to March 31, 2011) Current year (April 1, 2011 to March 31, 2012) Net sales 130,824 131,166 Cost of sales 56,184 54,635 Gross profit 74,640 76,531 Selling, general and administrative expenses Promotion expenses 6,991 7,201 Freight and warehousing expenses 5,134 5,086 Advertising expenses 13,489 14,999 Provision of allowance for doubtful accounts 341 Salaries, allowances and bonuses 9,950 9,890 Retirement benefit expenses 837 804 Provision for directors retirement benefits 3 4 Taxes and dues 230 261 Depreciation 822 740 Amortization of goodwill 1,223 504 Rent 1,633 1,738 Commission fees 4,776 4,727 Research and development expenses 4,069 4,385 Other 6,516 6,888 Total selling, general and administrative expenses 56,019 57,233 Operating income 18,620 19,298 Non-operating income Interest income 81 127 Dividends income 254 254 Royalty income 659 662 Real estate rent 274 275 Equity in earnings of affiliates 382 408 Foreign exchange gains 51 Other 338 368 Total non-operating income 1,991 2,147 Non-operating expenses Interest expenses 60 43 Sales discounts 1,157 1,149 Rent cost of real estate 79 77 Foreign exchange losses 173 Other 131 83 Total non-operating expenses 1,602 1,352 Ordinary income 19,010 20,092-9 -
Previous year (April 1, 2010 to March 31, 2011) Current year (April 1, 2011 to March 31, 2012) Extraordinary income Gain on sales of non-current assets 0 0 Gain on sales of investment securities 53 222 Compensation income 333 176 Other 44 152 Total extraordinary income 430 552 Extraordinary loss Loss on disposal of non-current assets 75 86 Loss on valuation of investment securities 5,142 Loss on valuation of stocks of subsidiaries and 36 2 affiliates Loss on sales of stocks of subsidiaries and affiliates ¾ 640 Impairment loss 636 31 Loss on adjustment for changes of accounting 25 standard for asset retirement obligations Loss on disaster 259 38 Other 86 23 Total extraordinary loss 6,263 823 Income before income taxes 13,178 19,822 Income taxes - current 4,916 6,936 Income taxes - deferred (1,074) 1,160 Total income taxes 3,842 8,096 Income before minority interests 9,335 11,725 Minority interest in income (or loss) 0 0 Net income 9,335 11,726-10 -
(Consolidated Comprehensive Income Statement) Previous year (April 1, 2010 to March 31, 2011) Current year (April 1, 2011 to March 31, 2012) Income before minority interests 9,335 11,725 Other comprehensive income Other valuation difference on available-for-sale 1,451 1,508 securities Deferred gains or losses on hedges (114) 127 Foreign currency translation adjustment (1,066) (175) Share of other comprehensive income of associates (162) 149 accounted for using equity method Other comprehensive income total 108 1,609 Comprehensive income 9,444 13,335 (Comprehensive income attributable to) Comprehensive income attributable to owners of the 9,444 13,335 parent Comprehensive income attributable to minority interests 0 0-11 -
(3) Consolidated Statement of Shareholders Equity Previous year (April 1, 2010 to March 31, 2011) Current year (April 1, 2011 to March 31, 2012) Shareholders equity Capital stock Balance at period start 3,450 3,450 Total change during current period Balance at current period-end 3,450 3,450 Capital surplus Balance at period start 4,219 4,219 Change during period Disposal of treasury stock 0 Total change during current period 0 Balance at current period-end 4,219 4,219 Retained earnings Balance at period start 85,552 92,185 Dividends from surplus (2,702) (2,784) Net income 9,335 11,726 Total change during current period 6,633 8,941 Balance at current period-end 92,185 101,127 Treasury stock Balance at period start (4,700) (4,701) Purchase of treasury stock (0) (1) Disposal of treasury stock 0 Total change during current period (0) (1) Balance at current period-end (4,701) (4,702) Total shareholders equity Balance at period start 88,521 95,154 Dividends from surplus (2,702) (2,784) Net income 9,335 11,726 Purchase of treasury stock (0) (1) Disposal of treasury stock 0 Total change during current period 6,632 8,940 Balance at current period-end 95,154 104,094-12 -
Previous year (April 1, 2010 to March 31, 2011) Current year (April 1, 2011 to March 31, 2012) Accumulated other comprehensive income Valuation difference on available-for-sale securities Balance at period start (961) 489 Net changes of items other than shareholders equity 1,451 1,508 Total change during current period 1,451 1,508 Balance at current period-end 489 1,998 Deferred gains or losses on hedges Balance at period start (322) (599) Net changes of items other than shareholders equity (276) 276 Total change during current period (276) 276 Balance at current period-end (599) (323) Foreign currency translation adjustment Balance at period start (2,808) (3,874) Net changes of items other than shareholders equity (1,066) (175) Total change during current period (1,066) (175) Balance at current period-end (3,874) (4,050) Accumulated other comprehensive income total Balance at period start (4,093) (3,984) Net changes of items other than shareholders equity 108 1,609 Total change during current period 108 1,609 Balance at current period-end (3,984) (2,374) Subscription rights to shares Balance at period start 162 160 Net changes of items other than shareholders equity (2) (1) Total change during current period (2) (1) Balance at current period-end 160 159 Minority interests Balance at period start 12 12 Net changes of items other than shareholders equity 0 (12) Total change during current period 0 (12) Balance at current period-end 12 Total net assets Balance at period start 84,603 91,342 Dividends from surplus (2,702) (2,784) Net income 9,335 11,726 Purchase of treasury stock (0) (1) Disposal of treasury stock ¾ 0 Net changes of items other than shareholders equity 106 1,595 Total change during current period 6,739 10,536 Balance at current period-end 91,342 101,879-13 -
(4) Consolidated Statement of Cash Flows Previous year (April 1, 2010 to March 31, 2011) Current year (April 1, 2011 to March 31, 2012) Cash flow from operating activities Income before income taxes 13,178 19,822 Depreciation 2,932 2,727 Loss on valuation of stocks of subsidiaries and affiliates 36 2 Impairment loss 636 31 Amortization of goodwill 1,223 504 Increase (decrease) in allowance for doubtful accounts 345 (326) Increase (decrease) in provision for retirement benefits 342 150 Interest and dividends income (336) (381) Interest expenses 60 43 Equity in (earnings) losses of affiliates (382) (408) Loss (gain) on sales of stocks of subsidiaries and affiliates 640 Loss (gain) on sales of investment securities (53) (222) Loss (gain) on valuation of investment securities 5,142 Loss (gain) on sales and retirement of non-current assets 75 85 Decrease (increase) in notes and accounts receivable-trade (3,715) (2,060) Decrease (increase) in inventories 430 (1,018) Increase (decrease) in notes and accounts payable-trade (1,598) (6) Increase (decrease) in accounts payable-other 251 1,932 Increase (decrease) in accrued consumption taxes 17 (164) Other 327 (348) Total 18,879 21,003 Interest and dividend income received 479 1,036 Interest expenses paid (47) (28) Income taxes paid (6,142) (4,761) Net cash provided by (used in) operating activities 13,168 17,250 Cash flow from investing activities Proceeds from withdrawal of time deposits 44 Purchase of short-term investment securities (36,989) (39,989) Proceeds from sales and redemption of securities 37,000 41,000 Purchase of property, plant and equipment (1,867) (1,747) Proceeds from sales of property, plant and equipment 2 15 Purchase of intangible assets (298) (345) Purchase of investment securities (6,083) (1,248) Proceeds from sales of investment securities 52 711 Purchase of investment assets and other assets (225) (219) Proceeds from sales of investment assets and other assets 102 45 Payments of long-term loans receivable (134) (176) Collection of long-term loans receivable 18 80 Purchase of investments in subsidiaries resulting in change (979) in scope of consolidation Other (1) (74) Net cash provided by (used in) investing activities (8,378) (2,929) - 14 -
Previous year (April 1, 2010 to March 31, 2011) Current year (April 1, 2011 to March 31, 2012) Cash flow from financing activities Net increase (decrease) in short-term loans payable (1,673) (30) Repayment of long-term loans payable (175) Purchase of treasury stock (0) (1) Cash dividends paid (2,703) (2,785) Repayments of lease obligations (601) (462) Dividends paid to minority shareholders upon (12) liquidation Net cash provided by (used in) financing activities (5,154) (3,292) Effect of exchange rate change on cash and cash (295) (154) equivalents Net increase (decrease) in cash and cash equivalents (660) 10,874 Cash and cash equivalents at beginning of period 32,623 31,963 Decrease in cash and cash equivalents resulting from (1) exclusion of subsidiaries from consolidation Cash and cash equivalents at end of period 31,963 42,835-15 -
3. Information on the amount of net sales, income or loss, assets and other items by reportable segments Current year (April 1, 2011 to March 31, 2012) Net sales Consumer products Reportable segments Mail-order Medical devices Total Other businesses (Note 1) Total Adjustment (Note 2) Consolidated (Note 3) Sales to outside customers 109,203 10,380 10,476 130,060 1,106 131,166 ¾ 131,166 Inter-segment sales and transfers 3,220 ¾ ¾ 3,220 5,147 8,368 (8,368) Total 112,423 10,380 10,476 133,281 6,254 139,535 (8,368) 131,166 Segment income 17,546 137 1,334 19,017 1,233 20,251 (158) 20,092 Segment assets 64,334 1,500 8,182 74,017 4,551 78,568 69,322 147,890 Other items Depreciation 2,277 33 143 2,454 123 2,578 148 2,727 Goodwill depreciation 496 ¾ 7 504 ¾ 504 ¾ 504 Interest income 40 3 7 50 95 145 (18) 127 Interest expenses ¾ ¾ 19 19 42 62 (18) 43 Equity in earnings of affiliates Investment in equity method affiliate ¾ ¾ 407 407 ¾ 407 1 408 ¾ ¾ 1,683 1,683 ¾ 1,683 ¾ 1,683 Increase in property, plant, and equipment and intangible assets (Notes) 1,675 56 109 1,841 171 2,013 198 2,212 1. Other businesses consist of business segments that are not included in reportable segments, such as transportation business, plastic container manufacture and sale, insurance agency, real estate management, and advertisement planning and creation. 2. Adjustment details are as follows: (1) Segment income of 158 million yen, Interest income of 18 million yen, and Interest expenses of 18 million yen posted in Adjustment reflect the elimination of transactions between segments. (2) Assets of group companies included in Adjustment totaled 73,253 million yen, mainly consisting of extra funds for investment by the parent company (cash and securities), funds for long-term investment (investment securities), and assets related to administrative departments. (3) Equity in earnings of affiliates of 1 million yen posted in Adjustment is the adjustment of inventory. 3. Segment income is adjusted with ordinary income presented in Consolidated Financial Statements. 4. Increase in depreciation, property, plant, and equipment and intangible assets includes an increase in long-term prepaid expenses and amortization of long-term prepaid expenses. - 16 -
(Important subsequent events) Previous Year (April 1, 2010 to March 31, 2011) None Current Year (April 1, 2011 to March 31, 2012) (Sales of subsidiary shares) On April 24, 2012, the board of directors of the Company adopted a resolution at its meeting to assign 80% of shares of a subsidiary, Kobayashi Medical Co., Ltd., to Mitsubishi Corporation. In 1992, the Company established the Kobayashi Medical Import Sales Division as a division engaged in the medical device business (renamed Kobayashi Medical Company in 2000). The division has expanded its business with the vision of providing safety and security on the medical front. Subsequently, on April 1, 2010, to flexibly respond to changes in the business environment and pursue advanced specialties of the business and more productivity improvement, while enhancing its competitiveness, Kobayashi Medical Company was separated into an independent subsidiary, Kobayashi Medical Co., Ltd. Currently, Kobayashi Medical Co., Ltd. deals in business relating to medical devices used in the fields of surgical, respiratory, anesthesiology, orthopedics and other specialty fields, taking advantage of its advanced expertise in specific medical fields. The Mitsubishi Corporation Group began to pursue the medical business seriously in 1970s. As the aging of society has been progressing, there is growing need to reform the healthcare and elderly care systems. Putting the focus on healthcare-related businesses under these circumstances, the Group collaborates with business partners (in which they invest) in selling or assisting procurement of medical devices and materials, renting nursing care equipment and providing other products and services extensively to medical institutions and care providers in and outside Japan. With the assignment of Kobayashi Medical Co., Ltd. shares to Mitsubishi Corporation, Mitsubishi s ability to provide total solutions in the medical device area can be integrated with Kobayashi Medical s advanced expertise in certain medical fields, which will greatly contribute to further growth of Kobayashi Medical in the medical device market. 1. Outline of Assignment (1) Names and Businesses of Subsidiary and Assignee Subsidy Kobayashi Medical Co., Ltd. (Business: Import, manufacture and sale of medical devices) Assignee Mitsubishi Corporation (Business: General trading company) (2) Main reason for assignment See explanation above. (3) Scheduled share assignment date May 31, 2012 (4) Legal form of assignment and other outlines Legal form Share assignment Number of shares to be assigned 80,000 shares Shareholding ratio after assignment 20.0% 2. Title of category in segment information disclosure containing information relating to subsidiary Medical Devices Business - 17 -