Brief Report of Financial Statements for the Year Ended March 31, 2011 [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, Director & Senior General Manager, Group Corporate Business Headquarters Tel: +81-6-6231-1144 Scheduled date of general meeting of shareholders: June 29, 2011 Scheduled date of dividend payment commencement: June 13, 2011 Schedule date of financial report filing with the Finance Ministry: June 29, 2011 Preparation of the attachment of Financial Statements: Yes Holding of the results presentation: Yes (for securities analysts and institutional 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, 2011 (April 1, 2010 to March 31, 2011) (1) Consolidated Operating Results (% figures represent changes from previous period.) Year ended March 2011 Year ended March 2010 Net sales 130,824 millions 1.3 % 129,184 millions 2.8 % of yen of yen Operating income 18,620 9.3 17,041 7.7 Ordinary income 19,010 11.4 17,071 11.3 Net income 9,335 0.9 9,249 4.5 Earnings per share 227.98 yen 225.88 yen Diluted earnings per share ¾ ¾ Return on equity 10.6 11.5 Return on assets 14.3 13.3 Ratio of operating income to net sales 14.2 13.2 (Note) Comprehensive income Year ended March 2011: 9,444 million yen (-10.8%) (Reference) Equity in earnings of affiliates Year ended March 2011: 382 million yen Year ended March 2010: 10,588 million (¾) Year ended March 2010: 78 million yen
(2) Consolidated Financial Position 31, 2011 31, 2010 Total assets 134,356 millions of yen 131,972 millions of yen Net assets 91,342 84,603 Shareholders equity ratio 67.9 % 64.0 % Net assets per share 2,226.42 yen 2,061.79 yen (Reference) Shareholders equity 31, 2011: 91,169million yen 31, 2010: 84,428 million yen (3) Consolidated Cash Flow Year ended March 2011 Year ended March 2010 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 13,168 millions of yen 15,319 millions of yen (8,378) (4,701) (5,154) (1,815) 31,963 32,623 2. Dividends Year ended March 2011 Year ended March 2010 Year ending March 2012 (forecasts) Dividends per share Q1 end ¾ ¾ ¾ Q2 end 33.00 yen 29.00 yen 35.00 yen Q3 end ¾ ¾ ¾ Year-end 33.00 33.00 35.00 Total 66.00 62.00 70.00 Total dividends 2,702 millions of yen 2,538 millions of yen ¾ Payout ratio (consolidated) 28.9 % 27.4 % 28.7 % Ratio of dividends to net assets (consolidated) 3.1 3.2 ¾
3. Forecasts of Consolidated Operational Results for Year Ending March 31, 2012 (April 1, 2011 to March 31, 2012) (Percentages represent forecast changes from the previous year for the full year results, and forecast changes from the same period in the previous year for the interim [1st half] results.) Interim (1st half) Full year Net sales 63,000 millions of yen (1.9) % 131,000 millions of yen 0.1 % Operating income 9,500 (10.1) 18,700 0.4 Ordinary income 9,600 (8.6) 19,100 0.5 Net income 5,000 (20.3) 10,000 7.1 Earnings per share 122.10 yen 244.21 yen 4. Other (1) Significant changes in subsidiaries during the period (changes in specified subsidiaries resulting in a change in consolidation scope): No change (2) s in accounting principles, procedures, and financial statement presentation 1) s due to revisions of accounting standards, etc.: Adopted 2) s other than those defined in 1) above: Not adopted (3) Issued shares (common shares) 1) Number of shares issued at period-end (including treasury stock): 31, 2011 2) Number of shares of treasury stock at period-end: 31, 2011 3) Average number of shares outstanding 31, 2011 42,525,000 shares 1,575,987 shares 40,949,074 shares 31, 2010 31, 2010 31, 2010 42,525,000 shares 1,575,862 shares 40,949,183 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. (Method to obtain the attachment of Financial Statements) The Company plans to post the attachment of Financial Statements on its website immediately after the results presentation scheduled for Tuesday, May 10, 2011.
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 2010 and Fiscal 2011... 6 2. Consolidated Financial Statements... 7 (1) Consolidated Balance Sheet... 7 (2) Consolidated Income Statement and Consolidated Comprehensive Income Statement... 9 Consolidated Income Statement... 9 Consolidated Comprehensive Income Statement... 11 (3) Consolidated Statement of Shareholders Equity... 12 (4) Consolidated Statement of Cash Flows... 14 3. Segment Information... 16-1 -
1. Operational Results (1) Analysis of Operational Results Overview of Consolidated Results Previous Year (Year ended March 31, 2010) Ratio Current Year (Year ended March 31, 2011) Ratio Net sales 129,184 100.0 130,824 100.0 1,639 1.3 Operating income 17,041 13.2 18,620 14.2 1,579 9.3 Ordinary income 17,071 13.2 19,010 14.5 1,938 11.4 Net income 9,249 7.2 9,335 7.1 86 0.9 Earnings per share (yen) 225.88 227.98 2.10 0.9 During the year ended March 31, 2011, the business environment for the Company remained tough because uncertainties remained over prospects of the employment environment and labor income, although some signs of recovery in consumer spending were seen in Japan. Under such an environment, the Great East Japan Earthquake that struck in March 2011 wreaked enormous damage on primarily the Tohoku region, adversely affecting the entire Japanese economy. Under such circumstances, the Kobayashi Pharmaceutical Group put into practice its management mission of Creativity and Innovation, delivered new-market-creating products and goods to stimulate potential customer needs, and also delivered to existing markets new value-added products and services to vitalize those existing markets. After the earthquake, the Group pulled all its efforts toward restoring disaster-affected Sendai Kobayashi Pharmaceutical Co., Ltd., one of its production bases, and maximized its efforts to secure a stable supply of products as a manufacturer and marketer of OTC drug products and daily necessities. As a result of these efforts, the Company achieved consolidated net sales of 130,824 million yen, an increase of 1,639 million yen (1.3%) from the previous year. Operating income increased by 1,579 million yen (9.3%) to 18,620 million yen, and ordinary income increased by 1,938 million yen (11.4%) to 19,010 million yen. Consolidated net income for the year ended March 31, 2011 totaled 9,335 million yen, an increase of 86 million yen (0.9%) from the previous year. Overview of Business Results by Segment for Fiscal 2010 Consumer Products Business During the year ended March 31, 2011, the Consumer Products Business introduced 21 new products, which consist of items that are expected to create new markets and ones with unique features and new values. In particular, sales of Tenshino Shoshugen (a fragrant room deodorizer with compact size and affordable price), Shoshugen Aroma (a fragrant room deodorizer that delivers elegant aroma), and Ofurode Hot Charge (a beauty lotion-soaked mask placed on the face after warming up in the bathtub) all contributed to the growth of the Company s business performance. As for existing products, the Company s major products such as Bluelet (toilet tank cleaner), Breath Care (breath freshener) recorded solid sales. In addition, Eyebon (eye wash solution), Inochi No Haha (women s health medication), and Shouyou (medical toothpaste for preventing alveolar pyorrhea) contributed to sales for the year. In the meantime, sales of sanitary products decreased, due to a backlash from steady sales of Nodo Nu-ru Nuremasuku and Netsusama Sheet in the previous year triggered by fears over a new type of influenza pandemic. Furthermore, marketing activities, in which the Company strived to efficiently use advertisements and sales promotion expenses, contributed to profits. Consequently, net sales of the Consumer Products Business for the current year decreased by 4,722 million yen ( 4.1%) from the previous year to 110,792 million yen. Segment profit (ordinary income) increased by 2,422 million yen (15.6%) to 17,944 million yen. Operating income increased by 2,459 million yen (14.9%) to 18,966 million yen. From this fiscal year, the Company disclosed its Mail-Order Business, which had been included in Food in the Consumer Products Business until the previous fiscal year, as an independent segment. Consequently, sales of foods decreased. - 2 -
(Sales Breakdown) Previous Year (Year ended March 31, 2010) Ratio Current Year (Year ended March 31, 2011) Ratio Pharmaceutical products 21,567 18.7 21,941 19.8 374 1.7 Oral hygiene products 14,687 12.7 15,510 14.0 823 5.6 Sanitary products 15,852 13.7 14,042 12.7 (1,810) (11.4) Deodorizing air fresheners 30,604 26.5 30,733 27.8 129 0.4 Household sundries 4,812 4.2 4,791 4.3 (20) (0.4) Food products 14,453 12.5 8,881 8.0 (5,572) (38.6) Body warmers 13,536 11.7 14,890 13.4 1,353 10.0 Total 115,514 100.0 110,792 100.0 (4,722) (4.1) (Note) Net sales include inter-segment sales and transfers, totaling 37 million yen in fiscal 2009 and 3,136 million yen in fiscal 2010. Mail-Order Business The Mail-Order Business markets dietary supplement products and skin care products and the like. The Business launched new products, cultivated new customers, and encouraged existing customers to purchase continuously. Consequently, the Mail-Order Sales Business for the current year posted segment profit (ordinary income) of 317 million yen on net sales of 9,872 million yen. Operating income was 311 million yen. Net sales do not include inter-segment sales or transfers. Medical Devices Business The Medical Devices Business focused on the areas of orthopedics and operating room devices, both markets expected to grow in Japan, and continued activities to expand its market share. Consequently, net sales of the Medical Devices Business for the current year increased by 72 million yen (0.6%) from the previous year to 12,183 million yen. Segment profit (ordinary income) increased by 328 million yen (38.2%) to 1,188 million yen, supported by cost reduction efforts. Operating income increased by 108 million yen (75.2%) to 251 million yen. (Sales Breakdown) Previous Year (Year ended March 31, 2010) Ratio Current Year (Year ended March 31, 2011) Ratio Kobayashi Medical 10,160 83.9 10,213 83.8 52 0.5 event 956 7.9 915 7.5 (41) (4.3) Other 993 8.2 1,055 8.7 61 6.2 Total 12,111 100.0 12,183 100.0 72 0.6 (Note) Net sales do not include inter-segment sales or transfers. 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. As a result, net sales decreased by 819 million yen ( 11.6%) from the previous year to 6,260 million yen. Segment income (ordinary income) fell by 48 million yen ( 6.8%) to 663 million yen. Operating income declined by 229 million yen ( 57.2%) to 171 million yen. Net sales, which include inter-segment sales and transfers, totaled 5,484 million yen in fiscal 2009 and 5,149 million yen in fiscal 2010. - 3 -
Forecast for Year Ending March 31, 2012 Current Year (Year ended March 31, 2011) Ratio Next Year (Year ending March 2012) Ratio Net sales 130,824 100.0 131,000 100.0 175 0.1 Operating income 18,620 14.2 18,700 14.3 79 0.4 Ordinary income 19,010 14.5 19,100 14.6 89 0.5 Net income 9,335 7.1 10,000 7.6 664 7.1 Earnings per share (yen) 227.98 244.21 16.22 7.1 With the outlook for the Japanese economy remaining extremely uncertain due to the effects of the Great East Japan Earthquake, it is quite difficult to predict the business future. In particular, the consequences of Fukushima No. 1 Nuclear Power Plant and a possible curb on power consumption during this summer are expected to significantly influence the domestic economy, swaying consumer sentiment. Accordingly, the Company expects that the business environment will remain severe during the year ending March 31, 2012. Among the Kobayashi Pharmaceutical Group, Sendai Kobayashi Pharmaceutical Co., Ltd., one of its production bases for the Consumer Products Business, was affected by the Great East Japan Earthquake. The earthquake damaged some of their production lines and impeded their procurement of raw materials. Concerning the shipment of products affected by the damage, Sendai Kobayashi introduced a distribution quota system (under which it allocates daily shipments by customer) after the earthquake. The Group immediately worked toward restoring production at Sendai Kobayashi Pharmaceutical Co., Ltd., while arranging alternate production at the group s other production bases, including Toyama Kobayashi Pharmaceutical Co., Ltd. and Ehime Kobayashi Pharmaceutical Co., Ltd., checking the actual state of the raw material procurement for each product, and trying to solve problems. As a result, in early April 2011, Sendai Kobayashi Pharmaceutical Co., Ltd. successively resumed production, while Toyama Kobayashi Pharmaceutical Co., Ltd. and Ehime Kobayashi Pharmaceutical Co., Ltd. started alternate production of deodorizing air fresheners and the like. In addition, the Group s efforts to solve problems in procurement of raw materials by putting information together helped Sendai Kobayashi Pharmaceutical to gradually reduce the number of products shipped under the quota system and move forward to restore a stable supply of products. The Kobayashi Pharmaceutical Group will continue to focus on fully restoring functions at Sendai Kobayashi Pharmaceutical Co., Ltd. to recover their product supply system. The Group s business operations have been returning to normal except for some areas in eastern Japan. The Group will activate its business operations in step with stabilization of its production supply system. Concerning a possible curb on power consumption this summer, the Group is studying adjustment of the production schedule. In the Medical Devices Business, the restraining of operative treatments by medical institutions during the summer would affect the business. Under such circumstances, the Group is determined to establish a stable product supply system as a manufacturer and marketer of OTC drug products and daily necessities The Consumer Products Business will concentrate mainly on developing new products. In addition, the Business will position the Overseas Business and the Mail-Order Business as a strategic business in the future and increase investment to expand these businesses. The Medical Devices Business will continue to focus on the areas of orthopedics and operating room devices and try to expand its market share. Forecast for the year ending March 31, 2012 is as follows: Net sales are expected to increase by 175 million yen (0.1%) from the previous year to 131,000 million yen. It is expected that operating income will increase by 79 million yen (0.4%) to 18,700 million yen and ordinary income will increase by 89 million yen (0.5%) to 19,100 million yen. Consolidated net income is expected to total 10,000 million yen, an increase of 664 million yen (7.1%). The Company prepared the forecast for the year ending March 31, 2012 announced today by taking into account factors that can be predicted at this time. However, with the effects of the Great East Japan Earthquake still remaining, the environment surrounding the Kobayashi Pharmaceutical Group may drastically change in the future. In case this situation continues, the Company will work out and disclose the forecast after carefully reviewing effects. - 4 -
(2) Analysis of Financial Position Overview of Consolidated Results (Consolidated Financial Position) Previous Year (Year ended March 31, 2010) Current Year (Year ended March 31, 2011) Total assets 131,972 134,356 2,383 Net assets 84,603 91,342 6,739 Shareholders equity ratio 64.0% 67.9% 3.9% Net assets per share 2,061.79 yen 2,226.42 yen 164.63 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, 2010) Current Year (Year ended March 31, 2011) 15,319 13,168 (2,151) (4,701) (8,378) (3,677) Free cash flow 10,618 4,789 (5,829) Net cash provided by (used in) financing activities Cash and cash equivalents at period-end (1,815) (5,154) (3,339) 32,623 31,963 (660) The Company s financial position on a consolidated basis is as follows: Total assets on a consolidated basis increased by 2,383 million yen, compared with the balance as of the end of the previous fiscal year. In the current assets category, notes and accounts receivable-trade increased by 3,482 million yen. In the non-current assets category, lease assets in tangible assets decreased by 388 million yen; goodwill decreased by 2,294 million yen; investment securities increased by 2,291 million yen. In the current liabilities category, notes and accounts payable-trade decreased by 1,689 million yen; short-term loans payable decreased by 1,683 million yen; and income taxes payable decreased by 1,274 million yen. In the net assets category, retained earnings increased by 6,633 million yen; valuation difference on available-for-sale securities increased by 1,451 million yen; and foreign currency translation adjustments decreased by 1,066 million yen. Cash flow from operating activities Net cash from operating activities totaled 13,168 million yen. Major factors affecting this cash flow were: net income before taxes (13,178 million yen), depreciation expenses (2,932 million yen), depreciation of goodwill (1,223 million yen), loss on valuation of investment securities (5,142 million yen), increased notes and accounts receivable-trade (3,715 million yen), decreased notes and accounts payable-trade (1,598 million yen), and income tax paid (6,142 million yen). Cash flow from investing activities Net cash used in investing activities totaled 8,378 million yen. Major factors affecting this cash flow were: purchase of short-term investment securities (36,989 million yen), proceeds from sales and redemption of short-term investment securities (37,000 million yen), purchase of property, plant and equipment (1,867 million yen), and purchase of investment securities (6,083 million yen). Cash flow from financing activities Net cash used in financing activities totaled 5,154 million yen. Major factors affecting this cash flow were: net decrease in short-term loans payable (1,673 million yen), cash dividends paid (2,703 million yen), and repayments of lease obligations (601 million yen). Consequently, cash and cash equivalents as of March 31, 2011 totaled 31,963 million yen, a decrease of 660 million yen from the end of the previous fiscal year. - 5 -
Forecast for Year Ending March 31, 2012 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 2010. As for other investment than facility investments, we plan to make the same level of investment as in fiscal 2009 since we currently do not have major investment plans. Trend of Cash Flow Indicators 31, 2007 31, 2008 31, 2009 31, 2010 31, 2011 Shareholders equity ratio 45.2 63.0 60.9 64.0 67.9 Shareholders equity ratio on a market price basis Ratio of net cash to interest-bearing liabilities (year) 112.3 129.8 106.3 119.5 117.5 0.4 0.1 0.1 0.1 0.2 Interest coverage ratio (times) 125.1 193.6 75.9 184.0 277.7 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 2010 and 2011 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, 2011 to pay regular dividends to shareholders of 66 yen (including interim dividends of 33 yen per share already paid and year-end dividends of 33 yen per share). For the year ending March 31, 2012, we plan to pay regular dividends of 70 yen per share (including interim dividends of 35 yen per share and year-end dividends of 35 yen per share). - 6 -
2. Consolidated Financial Statements (1) Consolidated Balance Sheet Previous year-end (March 31, 2010) Current year-end (March 31, 2011) ASSETS Current assets Cash and cash equivalents 32,670 31,963 Notes and accounts receivable-trade 26,397 29,879 Short-term investment securities 10,006 11,005 Merchandise and finished goods 8,965 8,402 Work in process 548 477 Raw materials and supplies 1,933 2,015 Deferred tax assets 3,639 4,170 Other 1,130 1,284 Allowance for doubtful accounts (83) (361) Total current assets 85,208 88,837 Non-current assets Property, plant and equipment Buildings and structures, net 6,281 6,042 Machinery, equipment and vehicles, net 2,225 2,306 Land 3,471 3,471 Lease assets, net 1,601 1,213 Construction in progress 69 107 Other, net 1,129 1,016 Total property, plant and equipment 14,779 14,156 Intangible assets Goodwill 6,316 4,021 Right of trademark 846 677 Software 937 897 Lease assets 95 74 Other 251 250 Total intangible assets 8,447 5,922 Investments and other assets Investment securities 14,959 17,251 Long-term loans receivable 410 500 Deferred tax assets 2,725 2,334 Real estate for investment, net 3,149 3,113 Other 2,424 2,431 Allowance for doubtful accounts (131) (191) Total investments and other assets 23,536 25,440 Total non-current assets 46,763 45,518 Total assets 131,972 134,356-7 -
Previous year-end (March 31, 2010) Current year-end (March 31, 2011) LIABILITIES Current liabilities Notes and accounts payable-trade 14,570 12,880 Short-term loans payable 1,708 25 Current portion of long-term loans payable 184 ¾ Accounts payable-other 12,747 12,859 Lease obligations 580 462 Income taxes payable 3,451 2,177 Accrued consumption taxes 602 567 Provision for sales returns 1,365 1,661 Provision for bonuses 2,024 2,086 Asset retirement obligations ¾ 13 Other 1,788 1,790 Total current liabilities 39,024 34,525 Non-current liabilities Lease obligations 1,149 874 Provision for retirement benefits 4,814 5,159 Provision for directors retirement benefits 36 14 Asset retirement obligations ¾ 73 Other 2,344 2,366 Total non-current liabilities 8,344 8,488 Total liabilities 47,368 43,013 NET ASSETS Shareholders equity Capital stock 3,450 3,450 Capital surplus 4,219 4,219 Retained earnings 85,552 92,185 Treasury stock (4,700) (4,701) Total shareholders equity 88,521 98,154 Accumulated other comprehensive income Valuation difference on available-for-sale securities (961) 489 Deferred gains or losses on hedges (322) (599) Foreign currency translation adjustment (2,808) (3,874) Accumulated other comprehensive income total (4,093) (3,984) Subscription rights to shares 162 160 Minority interests 12 12 Total net assets 84,603 91,342 Total liabilities and net assets 131,972 134,356-8 -
(2) Consolidated Income Statement and Consolidated Comprehensive Income Statement (Consolidated Income Statement) Previous year (April 1, 2009 to March 31, 2010) Current year (April 1, 2010 to March 31, 2011) Net sales 129,184 130,824 Cost of sales 57,295 56,184 Gross profit 71,888 74,640 Selling, general and administrative expenses Promotion expenses 6,366 6,991 Freight and warehousing expenses 4,740 5,134 Advertising expenses 13,949 13,489 Provision of allowance for doubtful accounts ¾ 341 Salaries, allowances and bonuses 9,161 9,950 Retirement benefit expenses 850 837 Provision for directors retirement benefits 4 3 Taxes and dues 258 230 Depreciation 835 822 Amortization of goodwill 1,260 1,223 Rent 1,560 1,633 Commission fees 5,216 4,776 Research and development expenses 3,962 4,069 Other 6,679 6,516 Total selling, general and administrative expenses 54,847 56,019 Operating income 17,041 18,620 Non-operating income Interest income ¾ 81 Dividends income ¾ 254 Interest and dividends income 329 ¾ Royalty income 627 659 Real estate rent 257 274 Equity in earnings of affiliates 78 382 Other 268 338 Total non-operating income 1,562 1,991 Non-operating expenses Interest expenses 88 60 Sales discounts 1,203 1,157 Rent cost of real estate 76 79 Foreign exchange losses 72 173 Other 90 131 Total non-operating expenses 1,531 1,602 Ordinary income 17,071 19,010-9 -
Previous year (April 1, 2009 to March 31, 2010) Current year (April 1, 2010 to March 31, 2011) Extraordinary income Gain on sales of non-current assets 46 0 Reversal of allowance for doubtful accounts 3 ¾ Gain on sales of investment securities 0 53 Compensation income 125 333 Other 9 44 Total extraordinary income 185 430 Extraordinary loss Loss on disposal of non-current assets 252 75 Loss on valuation of investment securities 15 5,142 Loss on sales of investment securities 0 ¾ Loss on valuation of stocks of subsidiaries and 93 36 affiliates Loss on sales of stocks of subsidiaries and affiliates 1,456 ¾ Impairment loss 322 636 Loss on adjustment for changes of accounting ¾ 25 standard for asset retirement obligations Loss on disaster ¾ 259 Other 563 86 Total extraordinary loss 2,703 6,263 Income before income taxes 14,553 13,178 Income taxes - current 5,718 4,916 Income taxes - deferred (415) (1,074) Total income taxes 5,303 3,842 Income before minority interests ¾ 9,335 Minority interest in income 0 0 Net income 9,249 9,335-10 -
(Consolidated Comprehensive Income Statement) Previous year (April 1, 2009 to March 31, 2010) Current year (April 1, 2010 to March 31, 2011) Income before minority interests ¾ 9,335 Other comprehensive income Other valuation difference on available-for-sale ¾ 1,451 securities Deferred gains or losses on hedges ¾ (114) Foreign currency translation adjustment ¾ (1,066) Share of other comprehensive income of associates ¾ (162) accounted for using equity method Other comprehensive income total ¾ 108 Comprehensive income ¾ 9,444 (Comprehensive income attributable to) Comprehensive income attributable to owners of the ¾ 9,444 parent Comprehensive income attributable to minority interests ¾ 0-11 -
(3) Consolidated Statement of Shareholders Equity Previous year (April 1, 2009 to March 31, 2010) Current year (April 1, 2010 to March 31, 2011) Shareholders equity Capital stock Balance at previous period-end 3,450 3,450 during current period Total change during current period ¾ ¾ Balance at current period-end 3,450 3,450 Capital surplus Balance at previous period-end 4,219 4,219 during period Total change during current period ¾ ¾ Balance at current period-end 4,219 4,219 Retained earnings Balance at previous period-end 78,678 85,552 during current period Dividends from surplus (2,375) (2,702) Net income 9,249 9,335 Total change during current period 6,874 6,633 Balance at current period-end 85,552 92,185 Treasury stock Balance at previous period-end (4,706) (4,700) during current period Purchase of treasury stock (1) (0) Disposal of treasury stock 7 ¾ Total change during current period 5 (0) Balance at current period-end (4,700) (4,701) Total shareholders equity Balance at previous period-end 81,641 88,521 during current period Dividends from surplus (2,375) (2,702) Net income 9,249 9,335 Purchase of treasury stock (1) (0) Disposal of treasury stock 7 ¾ Total change during current period 6,880 6,632 Balance at current period-end 88,521 95,154-12 -
Previous year (April 1, 2009 to March 31, 2010) Current year (April 1, 2010 to March 31, 2011) Accumulated other comprehensive income Valuation difference on available-for-sale securities Balance at previous period-end (1,725) (961) during current period Net changes of items other than shareholders equity 764 1,451 Total change during current period 764 1,451 Balance at current period-end (961) 489 Deferred gains or losses on hedges Balance at previous period-end (728) (322) during current period Net changes of items other than shareholders equity 405 (276) Total change during current period 405 (276) Balance at current period-end (322) (599) Foreign currency translation adjustment Balance at previous period-end (2,978) (2,808) during current period Net changes of items other than shareholders equity 169 (1,066) Total change during current period 169 (1,066) Balance at current period-end (2,808) (3,874) Accumulated other comprehensive income total Balance at previous period-end (5,432) (4,093) during current period Net changes of items other than shareholders equity 1,339 108 Total change during current period 1,339 108 Balance at current period-end (4,093) (3,984) Subscription rights to shares Balance at previous period-end 142 162 during current period Net changes of items other than shareholders equity 19 (2) Total change during current period 19 (2) Balance at current period-end 162 160 Minority interests Balance at previous period-end 12 12 during current period Net changes of items other than shareholders equity 0 0 Total change during current period 0 0 Balance at current period-end 12 12 Total net assets Balance at previous period-end 76,364 84,603 during current period Dividends from surplus (2,375) (2,702) Net income 9,249 9,335 Purchase of treasury stock (1) (0) Disposal of treasury stock 7 ¾ Net changes of items other than shareholders equity 1,358 106 Total change during current period 8,239 6,739 Balance at current period-end 84,603 91,342-13 -
(4) Consolidated Statement of Cash Flows Previous year (April 1, 2009 to March 31, 2010) Current year (April 1, 2010 to March 31, 2011) Cash flow from operating activities Income before income taxes 14,553 13,178 Depreciation 2,996 2,932 Loss on valuation of stocks of subsidiaries and affiliates 93 36 Impairment loss 322 636 Amortization of goodwill 1,260 1,223 Increase (decrease) in allowance for doubtful accounts 57 345 Increase (decrease) in provision for retirement benefits 137 342 Interest and dividends income (329) (336) Interest expenses 88 60 Equity in (earnings) losses of affiliates 78 (382) Loss (gain) on sales of stocks of subsidiaries and affiliates 1,456 ¾ Loss (gain) on valuation of investment securities ¾ 5,142 Loss (gain) on sales and retirement of non-current assets 206 75 Decrease (increase) in notes and accounts receivable-trade 1,070 (3,715) Decrease (increase) in inventories 1,389 430 Increase (decrease) in notes and accounts payable-trade (922) (1,598) Increase (decrease) in accounts payable-other (875) 251 Increase (decrease) in accrued consumption taxes 101 17 Other 142 274 Total 21,671 18,879 Interest and dividend income received 470 479 Interest expenses paid (83) (47) Income taxes paid (6,738) (6,142) Net cash provided by (used in) operating activities 15,319 13,168 Cash flow from investing activities Payments into time deposits (46) ¾ Proceeds from withdrawal of time deposits ¾ 44 Purchase of short-term investment securities (26,989) (36,989) Proceeds from sales and redemption of securities 23,000 37,000 Purchase of property, plant and equipment (2,624) (1,867) Proceeds from sales of property, plant and equipment 144 2 Purchase of intangible assets (361) (298) Purchase of investment securities (1,084) (6,083) Proceeds from sales of investment securities 1 52 Purchase of investment assets and other assets (288) (225) Proceeds from sales of investment assets and other assets 165 102 Proceeds from sales of stocks of subsidiaries and affiliates 3,500 ¾ Payments of long-term loans receivable (129) (134) Collection of long-term loans receivable 22 18 Other (10) (1) Net cash provided by (used in) investing activities (4,701) (8,378) - 14 -
Previous year (April 1, 2009 to March 31, 2010) Current year (April 1, 2010 to March 31, 2011) Cash flow from financing activities Net increase (decrease) in short-term loans payable 1,236 (1,673) Repayment of long-term loans payable ¾ (175) Purchase of treasury stock (1) (0) Cash dividends paid (2,374) (2,703) Repayments of lease obligations (675) (601) Net cash provided by (used in) financing activities (1,815) (5,154) Effect of exchange rate change on cash and cash 6 (295) equivalents Net increase (decrease) in cash and cash equivalents 8,810 (660) Cash and cash equivalents at beginning of period 23,813 32,623 Cash and cash equivalents at end of period 32,623 31,963-15 -
3. Information on the amount of net sales, income or loss, assets and other items by reportable segments Current year (April 1, 2010 to March 31, 2011) 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 107,656 9,872 12,183 129,713 1,111 130,824 ¾ 130,824 Inter-segment sales and transfers 3,136 ¾ ¾ 3,136 5,149 8,285 (8,285) Total 110,792 9,872 12,183 132,849 6,260 139,110 (8,285) 130,824 Segment income 17,944 317 1,188 19,450 663 20,114 (1,103) 19,010 Segment assets 61,969 1,237 10,415 73,622 4,486 78,108 56,247 134,356 Other items Depreciation 2,388 28 212 2,629 139 2,769 163 2,932 Goodwill depreciation 1,043 ¾ 179 1,223 ¾ 1,223 ¾ 1,223 Interest income 10 2 11 24 70 94 (13) 81 Interest expenses 24 ¾ 30 55 18 73 (13) 60 Equity in earnings of affiliates Investment in equity method affiliate ¾ ¾ 384 384 ¾ 384 (1) 382 ¾ ¾ 1,776 1,776 ¾ 1,776 ¾ 1,776 Increase in property, plant, and equipment and intangible assets (Notes) 1,796 19 288 2,104 158 2,263 83 2,346 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 1,103 million yen, Interest income of 13 million yen, and Interest expenses of 13 million yen posted in Adjustment reflect the elimination of transactions between segments. (2) Assets of group companies included in Adjustment totaled 59,501 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 -