cos-medi station

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2006 Head Office 9-1, Shinmatsudo-Higashi, Matsudo-shi, Chiba Phone: +81-47-344-5111 URL http://www.matsukiyo.co.jp/

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Page 1: COS-MEDI Station

2006

Head Office 9-1, Shinmatsudo-Higashi, Matsudo-shi, Chiba Phone: +81-47-344-5111

URL http://www.matsukiyo.co.jp/

Page 2: COS-MEDI Station

Store of the home center operator Kohnan Shoji Co., Ltd. onNovember 23, 2005.

On December 1, 2005, 20 stores of Koyo Yakuhin Co., Ltd., oneof the Company’s business partnerships since October 2002,became our franchised stores, bringing the total number offranchise stores to 26.

In January 2006, the Company concluded an exclusive contractwith San-A Co., Ltd., an Okinawa Prefecture-based generalmerchandise store operator running 75 outlets, to operatefranchise stores in the prefecture. Under this contract, we willestablish new franchise stores in Okinawa, beginning with the oneinside a San-A shopping center, which is slated to open inOctober 2006.

As for affiliated companies, Tobu Drug Co., Ltd. opened fourstores in the year under review and shut one down, and nowoperates 28 outlets. Kenkou Kazoku Drug Corporation establishedtwo new stores and closed one down, and as a result it currentlyruns 30 outlets.

* On March 27, 2006, the Company opened “COS-MEDI Station,”a directly managed drugstore that is based on a new businessmodel (departing from Matsumotokiyoshi’s conventional storeimage that features a sign in blue, yellow and red), in theprecincts of Nishi Shinjuku Station on the Tokyo MetroMarunouchi Line. The features of this new type of drugstore,targeting women, students and businesspeople in their 20s and30s, include “a relatively small space with great appeal in afavorable location,” with the new concept—“an attractive storewhich proposes a slightly cooler lifestyle where customers canlead a healthy and enjoyable life.” We will increase the numberof such new stores in the future.

Business and capital partnerships

In September 2005, the Company formed business partnershipswith Okuwa Co., Ltd., a Wakayama Prefecture-based generalmerchandise store operator running 127 outlets, and Okuwa’saffiliate O-Joyful Co., Ltd., an Osaka Prefecture-based homecenter operator with 27 outlets. In November 2005, weestablished a business partnership with Nakajima FamilyPharmacy, a Nagano Prefecture-based drugstore operator with 21outlets. (The Company now has business partnerships with 14companies.)

We established business and capital partnerships withLovedrugs Co., Ltd., an Okayama Prefecture-based drugstorechain operator with 38 stores, in October 2005 and Papasu Co.,Ltd., a Tokyo-based operator of drugstores, which runs 106outlets, and Midori Yakuhin Co., Ltd., a Kagoshima Prefecturedrugstore operator which lists shares on the JASDAQ market andhas 130 outlets, in November 2005. (At present, the Company hasbusiness and capital partnerships with seven companies.)

New store plan for this fiscal year 2006

In August 2005, the Company set up a Kansai Sales Office andassigned four staff of store development group there, whilestationing four such staff in the Fukuoka Office. For this year, weplan to establish 80-90 directly managed stores (Kanto region: 50-60; Kansai and Kyushu regions: 30-40), with urban type stores

226,724

272,527

10,905

24,311

245,657

9,69917,170

291,174258,694

8,64912,776

11,053

300,252266,099

7,81310,839

15,499

252,666209,263

261,940

12,350

31,053

Sales by division (Unit: millions of yen)

14,96315,504 15,586

12,4237,229

8,702

6,763

Home centers WholesaleSupermarketsDrugstores

2002 2003 2004 2005 2002 2003 2004

5,215

2005

14,376

2006

2,056

2006

Ordinary income (Unit: millions of yen) Net income (Unit: millions of yen)

2005 20062002 2003 2004

648632588

551567

524

2002 2003 2004

694680

2005

762749

2006

Part-timers (per 8-hours’ working time)Full-time workers OthersDrugstores

6,2125,741

2,830

3,266

2,911

2,946

6,120

3,045

3,07574,554

82,502

96,834

68,173

2002 2003 2004 2005 2002 2003 2004

6,463

3,316

3,147

2005

97,345

2006

6,976

3,773

3,203

2006

1,000 storesTarget:

2008

Number of stores (Unit: number of stores)Number of employees (Unit: persons)Shareholders’ equity (Unit: millions of yen)

2127 16 14 1321

accounting for 60% and suburban type stores representing 40%.We will also set up 200 franchised stores nationwide.

Among our affiliated companies, Tobu Drug and Kenkou KazokuDrug plan to open three stores each, while Papasu plans to open20.

Production distribution

In November 1995, the Company began outsourcing its logisticsoperations to Maruwa Logistics Co., Ltd. while launching a JointDistribution Center in Yoshikawa, Saitama Prefecture. Thedrugstores in 29 prefectures supply their merchandise throughJoint Distribution Centers (in Yoshikawa, Saitama Prefecture,Yokohama, Kanagawa Prefecture, Omihachiman, ShigaPrefecture, Ishikari, Hokkaido Prefecture and Fukuoka, FukuokaPrefecture) as well as by sharing the logistics centers of MediceoPaltac Holdings Co., Ltd. and Nippon Access, Inc.

Private brand

Matsumotokiyoshi develops a total of 1,250 private brandproducts in fields such as MKM (Medical), MKF (Foods), MKB(Beauty-care), MKL (Lifestyle), MKP (Pet-related), and MKG(Grocery). MKB (Beauty-care) product brands include PaKiRa,NYPM and le un, brands of MKL (Lifestyle) goods include justeye, Quick Nurse and Sea and brands of MKP (Pet-related)products include Smile Mate. By providing such abundantproduct lineups, we can differentiate ourselves from rivals.

The Company will strive to achieve the targets of operating 1,000drugstores and having net sales of ¥500 billion by the year endingMarch 31, 2008. We will also form capital partnerships withpharmaceutical manufacturers to enhance the lineup of privatebrand products. Through these efforts, we will establish a stableearnings structure and expand our corporate scale, while realizinga vertical integration of “production,” “distribution,” and “sales”activities.

Namio MatsumotoPresident

Matsumotokiyoshi Co., Ltd. (“the Company”) originates from theprivately-run Matsumoto Drugstore founded by KiyoshiMatsumoto in Kogane, Matsudo city, Chiba Prefecture in 1932.The present Matsumotokiyoshi drugstores firmly maintain thefounder’s spirit of good service to constantly seek customersatisfaction with its motto of “providing quality products at lowprices,” without being shackled by stereotypical mind-set. Thisspirit combines the volume purchase system with the chain storetheory earned by the founder in the United States.

In August 1990, the Company listed on the over-the-countermarket.

In August 1999, the Company listed on the First Section ofTokyo Stock Exchange, and subsequently consolidated its statusas Japan’s largest drugstore in terms of sales.

In 1981, the number of the Company’s stores totaled 100.In July 1987, the Company opened its 250th store in Ueno Ame-

yoko, Tokyo, incorporating a totally new concept of urbandrugstore. The success of this store, boosted in part by themorning shampoo boom in Japan, established a basis for furthergrowth of the urban drugstore chain, accelerating the founding ofa series of Matsumotokiyoshi drugstores in the Tokyometropolitan area.

In August 1995, the Company established its 378th outlet ofShibuya Part 1 Store in central Tokyo. At that time, the new storeoften appeared on TV and magazines as the Shibuya district wasbecoming a source of mass-media information. An article inwomen’s weekly magazine introduced the drugstore, referring tothe phrase Matsukiyo suru (go shopping at Matsumotokiyoshi).Since abbreviations were considered trendy at that time,Matsumotokiyoshi became known throughout Japan by word ofmouth and mass media by the pet name of Matsukiyo.

In April 1996, the Company began TV commercials so thatpeople throughout the nation would become familiar with thedrugstore business and at the same time improve the brand imageof “Matsumotokiyoshi.”

In March 2001, the number of the Company’s chain stores

reached 500.In February 2001, organizational reform was implemented to

integrate the marketing and operational functions of the DrugstoreDivision and the Supermarket Division. Under this new structure,the Company launched a medium-term management plan toincrease the number of stores to 1,000 nationwide by March2008: the number of stores throughout the Kanto region to 900and other regions throughout Japan to 100, mainly in cities withpopulations of at least 200,000, centering on shopping districtsand railway stations with shopping complex.

The Company will strive to become Japan’s No.1 drugstore inthe industry by establishing stores and running operations withthe purpose of satisfying customers, upholding the motto of“friendly stores” and the founder’s spirit of “sincerity” withaffectionate services as its basic principle. Store opening, store closing and franchising in FY2005

During the year ended March 31, 2006, the Company opened atotal of 78 drugstores (38 suburban type of stores and 40 urbantype of stores), including 23 (11 suburban type of stores and 12urban type of stores) in the first half of the year and 55 (27suburban type of stores and 28 urban type of stores) in thesecond half.

Of these stores, the Company opened 5 in the Tohoku region,59 in Kanto, one each in Koshinetsu and Hokuriku, 3 in Tokai, 7 inKinki, and one each in Chugoku and Kyushu. Among those in newareas, there was one in Fukui, Fukui Prefecture (Prism FukuiStore) and another in Tottori, Tottori Prefecture (Trinity MallStore). Meanwhile, we closed down 32 stores (including 1supermarket). As a result, we operate a total of 762 outlets in 29prefectures as of the end of March 2006.

In the year under review, the Company created a businessformat and a system of package model to establish a multi-storenetwork of franchised stores. Through these measures, weestablished the first franchised store, Keikyu Hautu Store, onAugust 24, 2005 and the second one within the Ichikawa Baraki

T O P M E S S A G ET O P M E S S A G E

Page 3: COS-MEDI Station

The Company always makes every effort to establish stores that satisfy customers, under the motto, “better products at cheaper prices” and“customer-friendly outlets.”

The drugstore “Matsumotokiyoshi” operates many outlets in prime locations in the Tokyo Metropolitan area and provides an abundant lineupof first-rate products that meet the customer needs. When selling merchandise, its staff with expertise in goods provide a consulting service forcustomers. In this way, we are building a strong trust-based relationship with our customers.

Through “COS-MEDI Station” which differs from conventional stores in that it features high sensitiveness and favorable location, we willpropose a fashionable and healthy lifestyle to our targeted customers.

Establishment of a drugstore chain with the highest sales in Japan

43

Drugstore Urban type

NEW

Shibuya Part 2 Store Shibuya Part 1 Store

Shinjuku 3-chome Store Roppongi Store Ikebukuro Part 2 Store Tenjin Chikagai Store Asunal Kanayama Store

LaLaport Koshien Store

Universal CityWalkOsaka Store

Sendai Station Store

Sapporo Tanuki Koji Store

Shinsaibashi Store

Sannomiya San Plaza Store

Kobe Motomachi Store

Viale Yokohama StoreGinza 5th Store

NEW

NEW

NEW

Page 4: COS-MEDI Station

Tanashi Station Store (Seibu ShinjukuLine)

COS-MEDI Station

65

Drugstore in railway station shopping complex

NEW

New-type store

COS-MEDI Station Opened!

Morioka Station Building Fezan Store (JR East)

Crost Osaka Station Store (JR West)

Fukuyama Station Store (JR West)

Hiroshima Station Building Asse Store (JR West)

Kintetsu Nara Station Store (Kintetsu Railway)

Okayama Station B-1 Store (JR West)

Sendai Station East Exit Store (JR East)

Prism Fukui Store (JR West)

Kokubunji Station Bldg. L Store (JR East)Ebista Nishinomiya Store (Hanshin Nishinomiya Station of Hanshin Electric Railway)

Nishi Shinjuku Metropia Store (Tokyo Metro)

Asty Gifu Station Store (JR Tokai)

NEW

NEW

NEW

Page 5: COS-MEDI Station

We plan and implement an education/training curriculum based onthe philosophy of “developing human resources who is able tocontribute to the society the basic business concepts ofMatsumotokiyoshi,” which is something we think the employees ofMatsumotokiyoshi should do.

From now on, with the aim of furthering employees’ expertise(about dispensing and counseling), which is needed for drugstorestaff, we will extensively upgrade our education/training programs,including training to improve employees’ skills and education toinstruct managers in the management of stores.

Education for each rank (store managers, candidates for storemanager, staff in charge of various activities and new employees)

Functional training (supervisors, buyers, and staff in charge of OTCactivities, prescription drugs and cosmetics)

Education by purpose (customer service, leadership and riskmanagement)

e-learning (NID-NET and Matsukiyo prep schools)

Education by VTR (Basic knowledge about Matsumotokiyoshi:Customer service and Operations)

87

Suburban type drugstore/Prescription pharmacy

Human Resource Development

NEW NEW

NEW NEW

Drugstore Hitachi Ayukawa

Drugstore Makinohara MORE

Drugstore Yumoto Minami

Drugstore Takanezawa

Pharmacy Ashikaga Honjo Pharmacy Soka

Supermarket Yakuendai Futatsugi Home Center Store

Prescription counter

Matsumotokiyoshi’s self medication support

SelfMedication

Support

Sales of health food

Sales of OTC drugs

(generic drugs)

SelfMedication

Support

Nursing caresupport

Dispensingservice

Sales ofcosmetics

Sales of dailynecessities

The Company markets extensive lineup ofcosmetics and beauty-care related productsso as to meet the needs of femalecustomers.

Matsumotokiyoshi offers a broad range of health food productssuch as supplement and health-promoting food to meetconsumers’ needs toward health conscious. Consulting service isadequately provided for such purposes to advice that a consumershould avoid taking a health food with a certain drug.

At Matsumotokiyoshi stores,pharmacists dispense medicationsaccurately and quickly instructeddoctors’ prescription. In addition, wehave been strengthening andexpanding dispensing service byproviding the service by all newlyopened stores.

Through tender service to customers, we offerappropriate advice and care, as well as selectthe most suitable drugs among a wide range ofOTC drugs for each customer.

In-depth marketing has enabled the Company to offer various highquality and new products that are suitable for the location and customerof each Matsumotokiyoshi store. We also deal with individualcustomers meticulously.

Matsumotokiyoshi has beencarefully preparing andpromoting to create asystem to offer full-scalenursing care support service.

Page 6: COS-MEDI Station

Platform: ...................................Transponder: .............................Designated broadcast company: Data broadcaster: ......................Data transmission: ....................Channel No.: ..............................

JSAT CorporationCS One Ten, Ltd.TOKYO BROADCASTING SYSTEM, INCORPORATEDTomo-Digi Corporation361ch

by SKY Perfect Communications Inc.

(As of the end of April 2006)

Tokyo BroadcastingSystem (TBS)

Fuji Television Network(CX)

Nep Vegas (nationwide broadcast)AichiteruGoro’s BarR-30Waratte Iitomo! ZokangoChimpan News ChannelSanma No Manma

23: 55 – 24: 25 (Tuesday)23: 55 – 24: 25 (Wednesday)23: 55 – 24: 25 (Thursday)24: 40 – 25: 25 (Friday)10: 00 – 11: 45 (Sunday)24: 35 – 24: 45 (Monday through Thursday)25: 50 – 26: 20 (Friday)

TV station Program name Time slot (day of the week)

Nippon Television(NTV)

Tokyo BroadcastingSystem (TBS)

Gogo Wa ... Omoikkiri TVNNN DocumentDRAMA COMPLEX (nationwide broadcast)Tensai! Shimura Dobutsu-en (nationwide broadcast)If I, Ota Hikaru, Become Prime Minister... Tanaka as Secretary (nationwide broadcast)Friday Special! (nationwide broadcast)Gekko Ongakudan

12: 00 – 13: 55 (Monday through Friday)24: 25 – 24: 55 (Sunday)21: 00 – 22: 54 (Tuesday)19: 00 – 19: 58 (Thursday)

20: 00 – 20: 54 (Friday)18: 55 – 20: 54 (Friday)24: 30 – 24: 55 (Monday)

TV station Program name Time slot (day of the week)

109

Matsumotokiyoshi-sponsored TV programsCS broadcasting “JUST eye information”

Main targetsand purposes

Transmission ofinformation on self-medication by twoCompany’s media

Lineups of privatebrand products onthe rise

TOPICS

The Company opened an Internet shopping site “e! Matsumotokiyoshi,” which it operates on its own,since April 1, 2006, using the e-commerce site system “Commerce Line/Shop Package” provided byDai Nippon Printing Co., Ltd. This shop deals with 1,000 items, centering on health foods, cosmeticsand daily necessities, as well as 2,000 newly developed mail-order goods.

Given the progress of deregulations, we expect the classification of medicines to be reviewed, and ifit is, we will change the list of medicines handled via mail order. Hence, in selling pharmaceuticals,we will focus close attention on such trends.

We will continue to provide customers with enhanced information, through the new shopping site,in addition to our four existing websites, Point.com, care.com, fun.com and the Matsumotokiyoshihomepage.

The Company has established a unique transmission of information system making the best use of theproperties of broadcasting and printed media: “JUST eye information,” a TV program (via 110 CS digitalbroadcasting), and “digimaga,” a free magazine. Using these two media, the Company provides a widerange of information on its products as well as a variety of topics about beauty and health for eachseason. By providing such useful information via these two media, we are striving to make the publicthroughout the country see Matsumotokiyoshi as a corporation which helps people “look after theirbodies—self-medication.”

Name of shop: e! Matsumotokiyoshi

URL: http://www.e-matsukiyo.com

General household

Image

JSAT satelliteScreen image

store

Weather forecastSeasonal weather forecastDistribution of data broadcasting such as TBS news

Purchase of products

Main targets

JUST eye information (TV)

digimaga(free magazine)

Female office workers and married women in their 20s and 30s

Transmission of information as mass merchandisers that focus on offering not only

low price products but also professional advice

Self-medicationIncrease in recognition and satisfaction among

customers

Publication date:Format: Circulation: Distributed to:

Composition of pages:

Issued/supervised by:

1st of each monthA5-size, in color with 64 pages380,000 copiesAbout 800 stores including allMatsumotokiyoshi, Tobu Drug and FamilyDrug stores; Free distributionDescription of information on “Health,”“Beauty” and “Life” that are linked with self-medicationMatsumotokiyoshi Co., Ltd.

Free magazine “digimaga”

Internet shoppingsite (operated by theCompany) launched

Matsumotokiyoshi Membership Card

Matsumotokiyoshi Point Card

Members of popular Matsumotokiyoshi Membership Card on the rise

One point is added for every shopping worth ¥100 (excluding the consumption tax). When cardholders have collected 300 points they can obtain a ¥300 discount from their total purchase(after outputting the discount list at the terminal).For each 500 points, cardholders can earn 100 ANA Mileage Club miles.For each 1,000 points, cardholders can get an Edy Gift worth ¥700.Cardholders can get goods from the catalog up to the value of the accumulated points.If a card is not used for one year, the holder will lose membership status and the accumulated (cash) pointswill become invalid.

No registration fee, no annual membership fee for ever.New members receive a Matsumotokiyoshi Voucher worth ¥1,000.When paying by Matsumotokiyoshi Membership Card, the member gets a 10% discount from list prices for Shiseido, Kanebo, Kose, Kao Sofina andMax Factor products (excluding exceptional periods).When paying by Matsumotokiyoshi Membership Card in Japan or abroad, the member gets 1 point for every ¥100 purchase, and can exchange aMatsumotokiyoshi Voucher when the points exceed 500 (application procedures required). The members can use telephone counseling services regarding health, medical treatment and nursing care round-the-clock all year round. When settled with a credit card at Matsumotokiyoshi stores, members can obtain one point per ¥100Matsumotokiyoshi cash point, in addition to credit points.The members can easily shop and cash.The members will be informed of various events and present campaigns.The members are covered by overseas travel accident insurance up to ¥20million.The members are covered by domestic travel accident insurance up to ¥10million.The members are covered by buckled-up car accident insurance up to ¥2 million.The members are ensured against loss or theft of the card.

Page 7: COS-MEDI Station

Keikyu Hautu StoreHeadquarters: Yokohama, Kanagawa Prefecture

Itayamamedico Co., Ltd. Headquarters: Kofu, Yamanashi Prefecture

SAPPORO DRUG STORE Co., Ltd.Headquarters: Sapporo, Hokkaido Prefecture

The drugstore industry now faces heightened competition in opening newstores, entry of firms from different industries, and declined profitability due toprice-cutting competition. Against this backdrop, the Company formedbusiness partnerships with other companies to exchange information, supplyeach other’s products and cooperate in private brand products andplanning/development of such products. Through such alliances, we aim todevelop our business and improve operational efficiency.

Drug Fujii Co., Ltd. Headquarters: Takaoka, Toyama Prefecture

Takada Pharmaceutical Co., Ltd. Headquarters: Shizuoka, Shizuoka Prefecture

Yokohama Pharmacy Co., Ltd. (Super Drug Asahi)

Headquarters: Itayanagi-machi, Aomori Prefecture

Shimizu Drug Co., Ltd. Headquarters: Kyoto, Kyoto Prefecture

Komeya Drugstore Co., Ltd.Headquarters: Tsurugi-machi, Ishikawa Prefecture

Izumi Co., Ltd. Headquarters: Hiroshima, Hiroshima Prefecture

Fujikoshi Co., Ltd. Headquarters: Iwaki, Fukushima Prefecture

CHUBU YAKUHIN Co., Ltd.Headquarters: Tajimi, Gifu Prefecture

OKUWA Co., Ltd.Headquarters: Wakayama, Wakayama Prefecture

O-JOYFUL Co., Ltd.Headquarters: Toyonaka, Osaka Prefecture

Nakajima Family Pharmacy Co., Ltd.Headquarters: Suzaka, Nagano Prefecture

Drug Eleven Co., Ltd.Headquarters: Onojo, Fukuoka Prefecture

Koyo Yakuhin Co., Ltd.Headquarters: Osaka, Osaka Prefecture

Kohnan Shoji Co., Ltd.Headquarters: Sakai, Osaka Prefecture

SAN-A Co., Ltd.Headquarters: Ginowan, Okinawa

Tobu Drug Co., Ltd. Headquarters: Matsudo, Chiba Prefecture

(28 stores)

Kenkou Kazoku Drug Corporation (Family Drugstore)Headquarters: Okaya, Nagano Prefecture

(30 stores)

Sugiura Yakuhin Co., Ltd.Headquarters: Konan, Aichi Prefecture

(42 stores)

LOVEDRUGS Co., Ltd.Headquarters: Okayama, Okayama Prefecture

(38 stores)

PAPASU Co., Ltd.Headquarters: Sumida-ku, Tokyo

(106 stores)

MIDORIYAKUHIN Co., Ltd.Headquarters: Kagoshima, Kagoshima Prefecture

(129 stores)

Itohide Shoji Co., Ltd.Headquarters: Matsudo, Chiba Prefecture

Total number of stores: 762

Drugstores: 749Supermarkets: 8Home Centers: 5Capital Partnership: 206Kenkou Kazoku: 30Tobu Drug: 28PAPASU Co., Ltd.: 106Sugiura Yakuhin Co., Ltd.: 42

Ishikari Distribution Center

Yoshikawa Distribution Center

Yokohama Distribution Center

Omihachiman Distribution Center

(as of March 31, 2006)

Fukuoka Distribution Center

Stores Location

1211

Capital Partnership

Franchise alliance

(as of March 31, 2006)

(as of March 31, 2006)

(as of March 31, 2006)

(as of March 31, 2006)

Number of Stores

Business Partnership

HokkaidoPrefecture 2 drugstores

AkitaPrefecture 1 drugstore

AomoriPrefecture 2 drugstores

IwatePrefecture 1 drugstore

MiyagiPrefecture 3 drugstores

FukushimaPrefecture 13 drugstores

TochigiPrefecture 34 drugstores

IbarakiPrefecture 58 drugstores

ChibaPrefecture

199 drugstores8 supermarkets3 home centers2 Tobu Drug1 PAPASU

TokyoMetropolis

157 drugstores1 home center7 Tobu Drug105 PAPASU

117 drugstores1 home center19 Tobu Drug

SaitamaPrefecture

KanagawaPrefecture 65 drugstores

MiePrefecture 3 drugstores

AichiPrefecture 6 drugstores

28 SugiuraYakuhin's stores

ShizuokaPrefecture

2 drugstores

NaraPrefecture 8 drugstores

OsakaPrefecture 18 drugstores

OitaPrefecture 1 drugstore

OkinawaPrefecture

OkayamaPrefecture 1 drugstore

HiroshimaPrefecture 4 drugstores

FukuokaPrefecture 7 drugstores

HyogoPrefecture

5 drugstores

KyotoPrefecture 4 drugstores

NaganoPrefecture

2 drugstores30 Kenkou Kazoku

GunmaPrefecture 30 drugstores

NiigataPrefecture

2 drugstores

GifuPrefecture

2 drugstores14 SugiuraYakuhin's stores

FukuiPrefecture

TottoriPrefecture 1 drugstore 1 drugstore

Division Number of stores Number of stores by prefecture

Drugstore

SupermarketHome Center

Total

749 (26)

Number of stores by region

8 (-)5 (-)

762 (26)

Note: The figures in parentheses are the number of franchises.

Hokkaido: Aomori: Yamagata: Tokyo: Ibaraki: Yamanashi: Toyama: Aichi: Osaka: Nara: Tottori: Yamaguchi: Tokushima: Fukuoka: Oita: Okinawa:

2 (-)2 (-)- (-)

157 (2)58 (-)

- (-)- (-)6 (-)

18 (10)8 (5)1 (-)- (-)- (-)7 (-)1 (-)- (-)

Iwate: Fukushima: Kanagawa: Tochigi: Nagano: Ishikawa: Gifu: Hyogo: Wakayama: Shimane:

Kagawa: Saga: Miyazaki:

1 (-)13 (-)65 (1)34 (-)

2 (-)- (-)2 (-)5 (-)- (-)- (-)

- (-)- (-)- (-)

Miyagi:

Saitama: Gunma: Niigata: Fukui: Shizuoka: Kyoto:

Okayama:

Ehime: Nagasaki: Kagoshima:

3 (-)

117 (-)30 (-)

2 (-)1 (-)2 (-)4 (1)

1 (-)

- (-)- (-)- (-)

Akita:

Chiba:

Mie: Shiga:

Hiroshima:

Kochi: Kumamoto:

1 (-)

199 (6)

3 (1)- (-)

4 (-)

- (-)- (-)

2 (-)20 (-)

660 (9)

4 (-)1 (-)

13 (1)35 (16)

6 (-)

- (-)8 (-)

- (-)

Hokkaido:Tohoku:

Kanto:

Koshinetsu:Hokuriku:Tokai:Kinki:

Chugoku:

Shikoku:Kyushu:

Okinawa:

Hokkaido: Aomori: Yamagata: Tokyo: Ibaraki: Yamanashi: Toyama: Aichi: Osaka: Nara: Tottori: Yamaguchi: Tokushima: Fukuoka: Oita: Okinawa:

2 (-)2 (-)- (-)

158 (2)58 (-)

- (-)- (-)6 (-)

18 (10)8 (5)1 (-)- (-)- (-)7 (-)1 (-)- (-)

Iwate: Fukushima: Kanagawa: Tochigi: Nagano: Ishikawa: Gifu: Hyogo: Wakayama: Shimane:

Kagawa: Saga: Miyazaki:

1 (-)13 (-)65 (1)34 (-)

2 (-)- (-)2 (-)5 (-)- (-)- (-)

- (-)- (-)- (-)

Miyagi:

Saitama: Gunma: Niigata: Fukui: Shizuoka: Kyoto:

Okayama:

Ehime: Nagasaki: Kagoshima:

3 (-)

118 (-)30 (-)

2 (-)1 (-)2 (-)4 (1)

1 (-)

- (-)- (-)- (-)

Akita:

Chiba:

Mie: Shiga:

Hiroshima:

Kochi: Kumamoto:

1 (-)

210 (6)

3 (1)- (-)

4 (-)

- (-)- (-)

2 (-)20 (-)

673 (9)

4 (-)1 (-)

13 (1)35 (16)

6 (-)

- (-)8 (-)

- (-)

Hokkaido: Tohoku:

Kanto:

Koshinetsu: Hokuriku: Tokai: Kinki:

Chugoku:

Shikoku: Kyushu:

Okinawa:

Chiba: 8 (-)

Tokyo: 1 (-) Saitama: 1 (-) Chiba: 3 (-)

8 (-)

5 (-)

Kanto:

Kanto:

Page 8: COS-MEDI Station

Corporate Data Corporate History

Organization Chart

Founder Kiyoshi Matsumoto Matsumoto Drugstore at time of foundation.

1413

Outline of the Company (as of March 31, 2006)

UenoKita-Senju Matsudo

Shin-Matsudo

Transfer to a local train

JR Joban Line

To Minami-Urawa

To Nishi-Funabashi

To Ueno To Kashiwa

Chiyoda Line Hibiya Line

Tobu-Isesaki Line

The Park

Kashiwa

Shin-Matsudo

The Chiba Bank, Ltd.

Head office

Store outside of Shin-Matsudo Station

Head office

Corporate name:

Address:

Phone:

Established:

Incorporate:

Common stock:

Book closing date:

Business line:

Net sales:

Number of employees:

Matsumotokiyoshi Co., Ltd.

9-1 Shinmatsudo-Higashi, Matsudo-shi, Chiba 270-8501

+81-47-344-5111 (switchboard)

December 26, 1932

January 8, 1954

¥21.086 billion

March 31

Medicines, cosmetics, perishable foods, sundries, DIY

articles, etc.

¥300.2 billion (Year ended March 2006)

Full-time employees: 3,203

Part-timers: 3,773 (in terms of 8-hours’ working time)

Total: 6,976

Board of Directors: President: Namio Matsumoto

Senior Managing Director: Masashi Yoshida

Managing Director: Katsuhiko Terada

Director: Tetsuo Matsumoto

Director: Toshio Hayata

Director: Takao Watanabe

Director: Yukihiko Okubo

Director: Kazuaki Karahi

Director: Kiyoo Matsumoto

Standing Corporate Auditor: Jun Saga

Corporate Auditor: Masato Taimura

Corporate Auditor: Tetsuo Oiwa

Corporate Auditor: Susumu Torigoe

Prescription Drug Promotion Dept.

Store Development Dept.

Store Planning Dept.Store Development Div.

Prescription Drug & Pharmaceutical Div.

Store Operation Section

Mail Order Section

Business Planning Section

Merchandise Section

New Store Promotion Div.

Mail Order Div

Business Planning Div.

Finance & Accounting Div.

General Affairs Div.

Pharmaceutical Affairs Dept.

Alliance Administration Dept.

Alliance Operation Div. Subsidiaries Administration Dept.

FC Planning & Operation Div. FC Administration Dept.

Pharmacy Div.Pharmacy Dept. I

Pharmacy Dept. II

Information Technology Div.Information Technology Dept.

Product Data Management System Dept.

Drugstore Div.

Drugstore Dept. I

Drugstore Dept. II

Drugstore Dept. III

New Store Promotion Dept.

Store Promotion Div. Store Promotion Dept.

Mail Order Dept.

Advertising Dept.

Operation & Planning Dept.

Sales Promotion Dept.

Merchandise Div. II

Perishables Team

DIY Team

Food Products Team

Merchandise Development Div. Merchandise Development Dept.

Merchandise Div. I

Household & Miscellaneous Goods Team

Beauty Products Team

Pharmaceutical Products Team

Financial Planning Dept.

Accounting Dept.

Budget Dept.

Finance Dept.

Personnel Div.

Education and Training Dept.

Personnel Management Dept.

Personnel Dept. I

Personnel Dept. II

General Affairs Dept.

Store Development Group

Store Operation Group

Finance & Accounting Group

Business Alliance Administration Group

Auditing Department I

Auditing Department II

Legal Department

Claims Call Center

Board of Auditors

Senior Management Director

Corporate Communications Div.

Corporate Planning Div.

Office of President

Internal Auditing Div.

President

General Shareholders’ Meeting

Board of DirectorsStores

(from April 1, 2006)

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Founded on Dec. 26 as an independent businessoperator Matsumoto Drugstore at 44 Kogane, Matsudocity, Chiba Prefecture.Became incorporated. Trade name was renamed toMatsumotokiyoshi Drugstore.Founder Kiyoshi Matsumoto died at 64.Matsumotokiyoshi Drugstore was reorganized into joint-stock company Matsumotokiyoshi Co., Ltd.Kazuna Matsumoto took office as president.Opened supermarket Hikarigaoka Store.Established three business divisions: Drugstore,Supermarket and Convenience Store.Launched Benri Shinmatsudo Store (convenience store).Opened Ueno Ame-yoko Store.Opened Minami-Masuo Home Center Store.Became listed on the over-the-counter market. (TheCompany received approval from the Japan SecuritiesDealers Association to register its shares on the over-the-counter market.)Opened Ikebukuro Higashiguchi Store.Relocated the head office to 9-1, Shinmatsudo-Higashi,Matsudo city, Chiba Prefecture.Opened drugstore Kashiwa Kaga Store (1st roadsidestore).Opened prescription pharmacy Kita-Matsudo Store.Opened Shibuya Part 1 Store.Launched TV commercials. Number of stores totaled232.Integrated Convenience Store Division into DrugstoreDivision.Opened drugstore Ota Takara-chou Store (1st store inGunma Prefecture).Opened drugstore Ashikaga Asakura Store (1st store inTochigi Prefecture).Opened Roppongi Store.Opened Sendai Jujiya Store (1st store in MiyagiPrefecture).Opened Harajuku Takeshita-dori Store.Opened Ginza 5th Store.Opened Shinjuku 3-chome Store.Opened Sendai Chuo-dori Store.Opened drugstore Niigata Station Patio East Store (1ststore in Niigata Prefecture). Listed on the First Section of the Tokyo Stock Exchange.Opened Shibuya Part 2 Store.Opened Crost Osaka Station Store (1st store in OsakaPrefecture).Opened Tokorozawa Part 2 Store.Namio Matsumoto took office as president.Opened Ikebukuro Part 2 Store.Formed business partnership with TakadaPharmaceutical Co., Ltd. in Shizuoka Prefecture.Formed business partnership with Yokohama PharmacyCo., Ltd. in Aomori Prefecture.Formed business partnership with Drug Fujii Co., Ltd. inToyama Prefecture.Opened Abenobashi Station East Exit Store (2nd store inOsaka Prefecture).Opened Tenjin Matsuya-Ladies Store (1st store in Fukuoka Prefecture and Kyushu as well).Formed business partnership with SAPPORO DRUGSTORE Co., Ltd. in Hokkaido Prefecture.Formed business partnership with Natural Co., Ltd. inFukuoka Prefecture.Formed business partnership with Shimizu Drug Co.,Ltd. in Kyoto Prefecture.Launched a point card service.Opened Canal City Hakata Store (2nd store in FukuokaPrefecture).

Opened Okayama Station B-1 Store (1st store inOkayama Prefecture).Formed business partnership with Koyo Yakuhin Co.,Ltd. in Osaka Prefecture.Opened Hamamatsu Part 1 Store (1st store in ShizuokaPrefecture).Opened Shinsaibashi Store (3rd store in OsakaPrefecture).Established Pharmacists Education Center andCosmetics Education Center.Formed business partnership with Itayamamedico Co.,Ltd. in Yamanashi Prefecture.Opened Ebista Nishinomiya Store (1st store in HyogoPrefecture).Opened Fukuyama LOTZ Store (1st store in HiroshimaPrefecture).Opened Kintetsu Nara Station Store (1st store in NaraPrefecture).Adviser Toshiko Matsumoto (wife of the late KiyoshiMatsumoto) died.Opened Akita Station ALS Store (1st store in AkitaPrefecture).Formed business partnership with Komeya DrugstoreCo., Ltd. in Ishikawa Prefecture.Opened Aomori Station Building Lovina Store (1st storein Aomori Prefecture).Opened Sapporo Minami Ichijo Store (1st store inHokkaido Prefecture).Opened Park Place Oita Store (1st store in OitaPrefecture).Opened Asty Gifu Station Store (1st store in GifuPrefecture).Opened Tsu Station Cham Store (1st store in MiePrefecture).Opened Kyoto Shijo-dori Store (1st store in KyotoPrefecture).Formed business partnership with Tobu Drug Co., Ltd.in Saitama Prefecture.Executed a 2-for-1 stock split for shareholders listed onshareholders register as of Dec. 31.Formed business partnership with Kenkou Kazoku DrugCorporation in Nagano Prefecture.Formed business partnership with Izumi Co., Ltd. inHiroshima Prefecture.Formed business partnership with Drug Eleven Co., Ltd.in Fukuoka Prefecture.Formed business partnership with Itohide Shoji Co., Ltd.in Chiba Prefecture. Opened Nagano Station Store (the first store in NaganoPrefecture).Formed business partnership with Fujikoshi Co., Ltd. inFukushima Prefecture.Formed business and capital partnership with SugiuraYakuhin Co., Ltd. in Aichi Prefecture.Formed business partnership with CHUBU YAKUHINCo., Ltd. in Gifu Prefecture.Opened Prism Fukui Store (1st store in FukuiPrefecture).Announced the cancellation of business partnership withNatural Co., Ltd.Established Kansai Sales Office.Introduced electronic money Edy to all stores.Opened Keikyu Hautu Store (1st outside franchisedstore).Announced the establishment of business partnershipwith OKUWA Co., Ltd. (Wakayama Prefecture).Announced the establishment of business partnershipwith O-JOYFUL Co., Ltd. (Osaka Prefecture).Announced the establishment of business and capitalpartnership with LOVEDRUGS Co., Ltd. (OkayamaPrefecture).Started 110 CS broadcasting “JUST eye information”(Channel No. 361).Announced the establishment of business partnershipwith Nakajima Family Pharmacy.Formed business and capital partnership with PAPASUCo., Ltd. (Tokyo).Opened Trinity Mall Store (1st store in TottoriPrefecture).Announced the exclusive franchised store contract withSAN-A Co., Ltd. (Okinawa Prefecture).Formed business and capital partnership withMIDORIYAKUHIN Co., Ltd. (Miyazaki Prefecture).