part 5: financial section - dentsu · part 5: financial section . 1. preparation method of the...

Part 5: Financial Section 1. Preparation method of the quarterly consolidated financial statements

Quarterly consolidated financial statements of DENTSU INC. (“Dentsu” or the “Company”) are prepared in accordance with the “Regulations for Terminology, Forms and Preparation Methods of Quarterly Consolidated Financial Statements” (Cabinet Office Ordinance No. 64 of 2007) (the “Regulations (for Quarterly Consolidated Financial Statements)”).

The quarterly consolidated financial statements for the third quarter, ended December 31, 2008 (from October 1, 2008, to December 31, 2008), and the consolidated financial statements for the nine months (from April 1, 2008, to December 31, 2008) of the year ending March 31, 2009, have been prepared in accordance with the “Regulations (for Quarterly Consolidated Financial Statements)” after amendment, pursuant to the Proviso of Article 7, Paragraph 1, Item 5, of the Supplementary Provision to the “Partial Amendment of Regulations for Terminology, Forms and Preparation Methods of Financial Statements” (Cabinet Office Ordinance No. 50, August 7, 2008).

2. Audit Certificate

The Company’s quarterly consolidated financial statements for the third quarter, ended December 31, 2008 (from October 1, 2008, to December 31, 2008), and the consolidated financial statements for the nine months (from April 1, 2008, to December 31, 2008) of the year ending March 31, 2009, were subject to the quarterly review of Deloitte Touche Tohmatsu pursuant to Article 193-2, Paragraph 1, of the Financial Instruments and Exchange Law.

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1. Consolidated Financial Statements (1) Consolidated Balance Sheets

(Millions of yen)

At end of the third quarter (As of December 31, 2008)

Summarized consolidated balance sheets in the previous consolidated

fiscal year (As of March 31, 2008)

Assets Current assets

Cash and deposits 60,502 *2 71,578 Notes and accounts receivable—trade *6 445,103 502,791 Short-term investment securities 1,126 321 Inventories *5 21,418 *5 22,768 Other 46,792 48,414 Allowance for doubtful accounts (4,373) (4,871)Total current assets 570,570 641,002

Noncurrent assets Property, plant and equipment

Land 160,424 158,868 Other, net *1 90,192 *1 *2 94,169 Total property, plant and equipment 250,617 253,038

Intangible assets Goodwill 13,643 17,477 Other 21,744 24,305 Total intangible assets 35,387 41,783

Investments and other assets Investment securities 219,802 *2 249,684 Other 72,107 *2 67,775 Allowance for doubtful accounts (1,115) (1,093)Allowance for investment loss (6) (278)Total investments and other assets 290,787 316,087

Total noncurrent assets 576,792 610,909 Total assets 1,147,362 1,251,912

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(Millions of yen)

At end of the third quarter (As of December 31, 2008)

Summarized consolidated balance sheets in the previous consolidated

fiscal year (As of March 31, 2008)

Liabilities Current liabilities

Notes and accounts payable—trade *6 366,265 *2 430,709 Short-term loans payable 7,183 10,289 Income taxes payable 1,700 13,271 Provision 733 2,428 Other 91,743 *2 70,805 Total current liabilities 467,626 527,504

Noncurrent liabilities Long-term loans payable 117,394 *2 81,324 Provision for retirement benefits 31,502 30,544 Other provision 1,249 1,386 Other 19,970 20,291 Total noncurrent liabilities 170,116 133,547

Total liabilities 637,742 661,051 Net assets

Shareholders’ equity Capital stock 58,967 58,967 Capital surplus 61,583 61,586 Retained earnings 454,081 460,444 Treasury stock (67,366) (6,754)Total shareholders’ equity 507,266 574,243

Valuation and translation adjustments Valuation difference on available-for-sale securities

201 4,339

Deferred losses on hedges (2,170) (559)Revaluation reserve for land (7,179) (7,179)Foreign currency translation adjustment (11,073) (3,550)Total valuation and translation adjustments (20,223) (6,950)

Subscription rights to shares 0 0 Minority interests 22,576 23,567 Total net assets 509,620 590,861

Total liabilities and net assets 1,147,362 1,251,912

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(2) Consolidated Statements of Income [For the nine months ended December 31, 2008]

(Millions of yen)

Nine months ended December 31, 2008

(From April 1, 2008 to December 31, 2008)

Net sales 1,430,226 Cost of sales 1,196,716 Gross profit 233,510 Selling, general and administrative expenses

Salaries and allowances 102,052 Provision for directors’ bonuses 302 Provision for retirement benefits 7,114 Provision for directors’ retirement benefits 192 Welfare expenses 12,987 Depreciation 10,350 Amortization of goodwill 1,504 Other 70,139 Total selling, general and administrative expenses 204,643

Operating income 28,866 Non-operating income Interest income 1,023 Dividends income 1,641 Foreign exchange gains 279 Equity in earnings of affiliates 2,393 Other 1,579 Total non-operating income 6,917

Non-operating expenses Interest expenses 1,774 Other 981 Total non-operating expenses 2,755

Ordinary income 33,028 Extraordinary income

Gain on sales of noncurrent assets 27 Gain on sales of investment securities 805 Other 589 Total extraordinary income 1,422

Extraordinary loss Loss on sales of noncurrent assets 11 Loss on retirement of noncurrent assets 188 Impairment loss 1,205 Loss on valuation of investment securities 10,117 Restructuring loss *1 4,484 Other *2 2,440 Total extraordinary losses 18,448

Income before income taxes and minority interests 16,002 Income taxes—current 7,718 Income taxes—deferred 4,022 Total income taxes 11,741 Minority interests in income 118 Net income 4,142

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Consolidated Statements of Income [For the three months ended December 31, 2008]

(Millions of yen)

Third quarter, ended December 31, 2008

(From October 1, 2008 to December 31, 2008)

Net sales 481,604 Cost of sales 404,558 Gross profit 77,045 Selling, general and administrative expenses

Salaries and allowances 33,718 Provision for directors’ bonuses 65 Provision for retirement benefits 2,315 Provision for directors’ retirement benefits 57 Welfare expenses 4,467 Depreciation 3,444 Amortization of goodwill 493 Other 21,412 Total selling, general and administrative expenses 65,975

Operating income 11,070 Non-operating income Interest income 294 Dividends income 162 Dividends income of insurance 284 Other 359 Total non-operating income 1,100

Non-operating expenses Interest expenses 635 Equity in losses of affiliates 277 Foreign exchange losses 93 Other 253 Total non-operating expenses 1,260

Ordinary income 10,910 Extraordinary income Gain on sales of noncurrent assets 4 Reversal of allowance for doubtful accounts 79 Gain on liquidation of subsidiaries and affiliates 51 Other 17 Total extraordinary income 152

Extraordinary loss Loss on sales of noncurrent assets 3 Loss on retirement of noncurrent assets 78 Impairment loss 163 Loss on valuation of investment securities 9,304 Other *1 1,213 Total extraordinary losses 10,764

Income before income taxes and minority interests 299 Income taxes—current (966) Income taxes—deferred 5,076 Total income taxes 4,110 Minority interests in income 158 Net loss (3,969)

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(3) Consolidated Statements of Cash Flows

(Millions of yen)



Operating Activities Income before income taxes and minority interests 16,002 Depreciation and amortization 11,807 Impairment loss 1,205 Amortization of goodwill 3,073 Decrease in allowance for doubtful accounts (115) Increase in provision for retirement benefits 884 Interest and dividends income (2,665) Interest expenses 1,774 Foreign exchange gains (21) Equity in earnings of affiliated companies (2,393) Loss on valuation of investment securities 10,117 Decrease in notes and accounts receivable—trade 49,988 Decrease in inventories 252 Increase in other current assets (1,665) Decrease in notes and accounts payable—trade (56,797) Decrease in other current liabilities (9,134) Other, net (1,886) Subtotal 20,424 Interest and dividends income received 6,478 Interest expenses paid (1,782) Income taxes paid (21,589) Net cash provided by operating activities 3,531

Investment Activities Purchase of short-term investment securities (997) Proceeds from sales of short-term investment securities 200 Purchases of property, plant and equipment (3,700) Proceeds from sales of property, plant and equipment 67 Purchase of software (5,332) Purchase of investment securities (2,441) Proceeds from sales of investment securities 9,533 Proceeds from sales of investments in subsidiaries resulting

in change in scope of consolidation 914

Payments for sales of investments in subsidiaries resulting in change in scope of consolidation

(103)

Payments of loans receivable (3,363) Collection of loans receivable 2,728 Other, net (1,731) Net cash used in investment activities (4,226)

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(Millions of yen)



Financing Activities Decrease in short-term loans payable (2,222) Increase in commercial papers 29,000 Proceeds from long-term loans payable 40,000 Repayment of long-term loans payable (3,938) Purchase of treasury stock (60,648) Cash dividends paid (9,769) Cash dividends paid to minority shareholders (523) Other, net 337 Net cash used in financing activities (7,766)

Effect of exchange rate change on cash and cash equivalents (2,494) Net decrease in cash and cash equivalents (10,955) Cash and cash equivalents at beginning of period 70,252 Cash and cash equivalents at end of period *1 59,296

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Events or Circumstances that may Raise Significant Doubts on the Premises of a Going Concern Third quarter, ended December 31, 2008 (From October 1, 2008, to December 31, 2008)

None applicable

Changes in the Basis of Presenting Quarterly Consolidated Financial Statements

Nine months ended December 31, 2008 (From April 1, 2008, to December 31, 2008)

1. Changes in scope of consolidation Dentsu has 127 consolidated subsidiaries including Dentsu East Japan Inc. Nakahata, Inc., and two other companies, three in total, have been included into consolidation due to

incorporation during the nine months ended December 31, 2008: Nakahata effective from the second quarter and OOH Media Solution, Inc., and another one, two in total, effective from the third quarter.

Geneon Entertainment Inc. and another one, two in total, were excluded from consolidation due to sales of all or a part of the shares held by the Company and Dentsu Business Development Europe S.A. due to the completed liquidation effective from the third quarter. The financial results before the completion of the sales or the liquidation of these companies are included in the consolidated statements of income and the statements of cash flows.

In addition, Handshake Technologies, Inc., in the first quarter and Dentsu Communication Institute Inc. in the second quarter were removed from consolidation due to a merger within the scope of consolidation.

2. Changes in scope of application of the equity method

Thirty-one affiliated companies, including Video Research Ltd., an affiliate, are accounted for by the equity method.

JP MEDIA DIRECT Co., Ltd., has become an affiliated company effective from the second quarter due to an increase in importance. Geneon Entertainment Inc. has become an affiliated company from a subsidiary effective from the third quarter through the partial sales of shares held by the Company. Ubiquitous Core Inc. and another one, two in total, were excluded from the affiliated companies due to their completed liquidation effective from the third quarter.

3. Changes in accounting policies and procedures (1) Changes in revaluation standards and revaluation methods for significant assets

Inventories Commencing with the consolidated financial results for the first quarter, ended June 30, 2008, the “Accounting Standard for Measurement of Inventories” (ASBJ Statement No. 9, July 5, 2006) is applied. The impact on profit and loss as well as segment information for the nine months ended December 31, 2008, was immaterial.

(2) Application of the “Practical Solution on Unification of Accounting Policies Applied to Foreign Subsidiaries for Consolidated Financial Statements”

Commencing with the consolidated financial results for the first quarter, ended June 30, 2008, the “Practical Solution on Unification of Accounting Policies Applied to Foreign Subsidiaries for Consolidated Financial Statements” (ASBJ PITF No. 18, May 17, 2006) is applied, and amendments necessary for consolidated accounting are made. The impact on profit and loss as well as segment information for the nine months ended December 31, 2008, was immaterial.

Simplified Accounting Method


1. Calculation method of depreciation expense for fixed assets Depreciation expense for property, plant and equipment that are depreciated using the declining-balance

method is calculated by dividing on a pro-rata basis the annual depreciation expense.

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Special Accounting Treatment Specific to Quarterly Consolidated Financial Statements


None applicable Additional Information


1. As Publicis Groupe S.A., an affiliated company accounted for by the equity method, does not disclose its accounts on a quarterly basis, the financial results for the third quarter do not take into account the equity held by Dentsu in the net income of Publicis Groupe S.A. and the amortization of goodwill based on the third-quarter financial results of Publicis Groupe S.A. Meanwhile, the equity held by Dentsu in the net income of Publicis Groupe S.A. and the amortization of goodwill for the six months are includedin the financial results for the nine months.

2. Among the Company’s holdings of investment securities, with respect to the ORA of Publicis Groupe S.A. (securities redeemable solely for shares of Publicis Groupe S.A.), because there were few actual stock exchange trades of such securities, the impairment loss is determined on the basis of a price calculated by using the market price of the common stock of Publicis Groupe S.A. and applying thereto a reasonable liquidity risk adjustment. The price of such securities on the consolidated balance sheets is ¥17,757 million.

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Notes to the Quarterly Consolidated Financial Statements Quarterly consolidated balance sheets

(Millions of yen)

As of December 31, 2008 As of March 31, 2008

*1. Accumulated depreciation of property, plant and equipment ¥84,165 *1. Accumulated depreciation of

property, plant and equipment ¥80,751

2. Assets pledged as collateral There were no assets pledged as collateral that

are important in the business operations and of which amounts have considerably changed compared with those at the end of the previous fiscal year.

*2. Assets pledged as collateral Cash and deposits ¥177 Property, plant and equipment and other, net (vehicles) ¥34

Investment securities ¥1 Total ¥213 Liabilities related to the pledged assets:

Trade payables ¥1,183 Other current liabilities (Current portion of long-term loans payable)

¥10

Long-term loans payable ¥19 Total ¥1,213

In addition to the above, ¥10 million within cash and deposits is pledged as security for transactions related to official gazettes (“Kanpo”) and ¥0 million of investments and other assets is pledged as security for opening a checking account

3. Contingent liabilities (1) Liability on guarantee resulting from a loan

scheme for housing funds for employees was ¥2,805 million.

3. Contingent liabilities (1) Liability on guarantee resulting from a loan

scheme for housing funds for employees was ¥3,161 million.

(2) As of December 31, 2008, the Company and consolidated subsidiaries were contingently liable for guarantees of loans of the following companies.

(2) As of March 31, 2008, the Company and consolidated subsidiaries were contingently liable for guarantees of loans of the following companies.

Electronic Library Inc. ¥264Phoenix Communications Inc. (South Korea) (KRW 35,000,000 thousand) ¥2,544PDS Media, Inc. (South Korea) (KRW 9,000,000 thousand) ¥654Football Media Services Pte. Ltd. (Singapore)(USD 357 thousand) ¥32Match Hospitality AG (Switzerland) (USD 30,125 thousand) ¥2,742PT. Dentsu Indonesia (IDR 55,000,000 thousand) ¥456Dentsu Marcom Middle East FZ LLC (UAE) (AED 800 thousand) ¥19Dentsu Utama Sdn. Bhd. (Malaysia) (MYR 1,000 thousand) ¥26Dentsu Creative Impact Pvt. Ltd. (India) (INR 29,396 thousand) ¥56Frontage Inc. ¥167Digital Egg Inc. ¥465

Electronic Library Inc. ¥264Phoenix Communications Inc. (South Korea) (KRW 40,000,000 thousand) ¥4,044PDS Media, Inc. (South Korea) (KRW 9,000,000 thousand) ¥909Football Media Services Pte. Ltd. (Singapore)(USD 357 thousand) ¥35Match Hospitality AG (Switzerland) (USD 30,125 thousand) ¥3,018PT. Dentsu Indonesia (IDR 30,000,000 thousand) ¥327Dentsu Marcom Middle East FZ LLC (UAE) (AED 800 thousand) ¥21Dentsu Utama Sdn. Bhd. (Malaysia) (MYR 1,000 thousand) ¥31Dentsu Creative Impact Pvt. Ltd. (India) (INR 679 thousand) ¥1Frontage Inc. ¥167Digital Egg Inc. ¥519

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Zhongying Dentsu Tec Advertising Co., Ltd.

¥100

Total ¥7,529

Total ¥9,341

4. The note is omitted for notes receivable discounted as the amount is insignificant.

4. Notes receivable discounted ¥37

*5. Breakdown of inventories: Merchandise and finished products

¥165

Production ¥1,141Work-in-process ¥19,850Raw materials and supplies

¥261

Total ¥21,418

*5. Breakdown of inventories: Merchandise and finished products

¥706

Production ¥1,055Work-in-process ¥20,785Raw materials and supplies

¥221

Total ¥22,768*6. Notes and bills matured at the period-end

Notes and bills matured at the period-end are treated as if redeemed on the expiration date. The following amounts are included in the balances at the end of the nine months (December 31, 2008), because it fell on a holiday for financial institutions.

Notes receivable ¥1,463Notes payable ¥1,294

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Quarterly consolidated statements of income

(Millions of yen)


*1. The loss attributable to a decision on restructuring several businesses and the resulting financial consequence is as follows:

Loss on valuation of inventories ¥3,807 Other ¥677 Total ¥4,484

Loss on valuation of inventories was recorded based on a devaluation deemed necessary by taking into consideration future prospects of the business being subject to the decision on restructuring regardless of the net selling price of the inventories.

*2. This refers to the amortization of goodwill of ¥1,568 million, in accordance with Paragraph 32 of the Practical Guidelines on Procedures for Consolidating Equity in the Consolidated Financial Statements (Japanese Institute of Certified Public Accountants (JICPA) Accounting Committee Report No. 7 issued on March 29, 2007), and other extraordinary losses.

Third quarter, ended December 31, 2008 (From October 1, 2008, to December 31, 2008)

*1. This refers to the amortization of goodwill of ¥748 million, in accordance with Paragraph 32 of the Practical Guidelines on Procedures for Consolidating Equity in the Consolidated Financial Statements (Japanese Institute of Certified Public Accountants (JICPA) Accounting Committee Report No. 7 issued on March 29, 2007), and other extraordinary losses.

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Quarterly consolidated statements of cash flows (Millions of yen)


*1. Relationship between the account items presented in the quarterly consolidated statements of cash flows and the balance of cash and cash equivalents

Cash and deposits ¥60,502 Time deposits with a maturity period of more than 3 months (¥1,205)

Cash and cash equivalents ¥59,296

Shareholders’ equity At the end of the third quarter (As of December 31, 2008) and for the nine months ended December 31, 2008 (From April 1, 2008, to December 31, 2008)

1. Class and total number of shares issued

Common stock 2,781,840 shares 2. Class and total number of shares of treasury stock

Common stock 299,598.14 shares

3. Balance of subscription rights to shares at the end of the third quarter, ended December 31, 2008

Company name Class of shares subject to the subscription rights to shares

Balance of subscription rights to shares at December 31, 2008

(Millions of yen) (Consolidated subsidiary) Criteria Communications Inc. Common stock 0

Total 0

Note: The first day of the period during which subscription rights to shares can be exercised has not yet come.

4. Dividends (1) Dividends paid

Resolution Class of stock

Source of dividends

Total amount of dividends(Millions of

yen)

Dividend per share (Yen) Record date Effective date

Ordinary general meeting of shareholders held on June 27, 2008

Common stock

Retained earnings 4,805 1,750 March 31, 2008 June 30, 2008

Board of Directors meeting held on November 12, 2008

Common stock

Retained earnings 4,964 2,000 September 30,

2008 December 8,

2008

(2) Dividends of which the “Record Date” is within the nine months, ended December 31, 2008, and the

effective date is after the end of the third quarter

None applicable

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5. Significant changes in shareholders’ equity

Capital stock

Capital surplus

Retained earnings

Treasury stock

Total shareholders’

equity Balance at March 31, 2008 (Millions of yen) 58,967 61,586 460,444 (6,754) 574,243

Changes during the nine months ended December 31, 2008

Dividends from surplus ─ ─ (9,769) ─ (9,769)

Net income ─ ─ 4,142 ─ 4,142

Repurchase of treasury stock*1 ─ ─ ─ (60,648) (60,648)

Disposal of treasury stock ─ (2) ─ 37 34Decrease due to increase in affiliated companies accounted for by the equity method

─ ─ (9) ─ (9)

Increase due to exclusion of affiliated companies accounted for by the equity method

─ ─ 2 ─ 2

Decrease in surplus due to unification of accounting policies applied to foreign subsidiaries

─ ─ (728) ─ (728)

Total changes during the nine months ended December 31, 2008 (Millions of yen)

─ (2) (6,363) (60,611) (66,977)

Balance at December 31, 2008 (Millions of yen) 58,967 61,583 454,081 (67,366) 507,266

*1 This figure includes ¥31,021 million attributable to the tender offer implemented in June 2008, whereas

¥28,899 million was repurchased in the open market by a trust.

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Leases Nine months ended December 31, 2008 (From April 1, 2008, to December 31, 2008)

Finance leasing transactions other than those for which ownership is fully transferred to the lessee are treated in the same way as ordinary leasing transactions. No considerable difference is found in the balance in lease obligations compared with that at the end of the previous fiscal year.

Securities End of the third quarter, ended December 31, 2008 (As of December 31, 2008)

No securities have become important in the business operations and no considerable difference is found in the values stated in the consolidated balance sheets for the third quarter, ended December 31, 2008, and other amounts compared with those at the end of the previous fiscal year.

Derivatives End of the third quarter, ended December 31, 2008 (As of December 31, 2008)

No derivative transactions have become important in the business operations and no considerable difference is found in the contractual values and other amounts in the derivative transactions of lease transactions compared with those at the end of the previous fiscal year.

Stock options Third quarter, ended December 31, 2008 (From October 1, 2008, to December 31, 2008)

None applicable Business combination Third quarter, ended December 31, 2008 (From October 1, 2008, to December 31, 2008)

None applicable

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Segment information Business Segments Third quarter, ended December 31, 2008 (From October 1, 2008, to December 31, 2008)

(Millions of yen)

Advertising Information Services Other Business Total Eliminations/

Corporate (Consolidated)

Net sales 461,761 16,623 9,021 487,406 (5,802) 481,604

Operating income 8,875 558 631 10,066 1,004 11,070


(Millions of yen)

Advertising Information Services Other Business Total Eliminations/

Corporate (Consolidated)

Net sales 1,364,860 52,808 32,858 1,450,526 (20,299) 1,430,226Operating

income 23,454 1,381 1,214 26,050 2,815 28,866

Notes: 1. Segmentation method

Businesses of the Dentsu Group are segmented based on the Japan Standard Industry Classification (JSIC) so that the actual condition of businesses of the group-wide business activities can be specifically and appropriately disclosed.

2. Content of respective business segments

Advertising: Newspapers, magazines, radio, television, the Internet, sales promotion, movies, outdoors, transportation, plus all other businesses, strategy planning, creation, marketing, PR, and service activities of contents service for advertising Information Services: Information services and sales of information-related merchandise, etc. Other Business: Production, manufacturing and sales of video images, music and other duplicates; leasing office space; building maintenance service; temporary staffing; automated customer service for calculation

3. Change in the Business Segments Previously, Information Services was included in Other Business. From the first quarter, ended June 30, 2008, however, “Information Services” was recorded as a separate segment, due to the fact that the operating loss for Information Services was not less than 10% of the aggregate operating income of all segments that posted operating income for the first quarter, ended June 30, 2008.

Segment information for the nine months ended December 31, 2008, categorized into the same business segments as in the previous fiscal year is as follows.

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Third quarter, ended December 31, 2008 (From October 1, 2008, to December 31, 2008) (Millions of yen)

Advertising Other Business Total Eliminations/ Corporate (Consolidated)

Net sales 461,761 25,611 487,373 (5,768) 481,604

Operating income 8,875 1,198 10,074 996 11,070


(Millions of yen)

Advertising Other Business Total Eliminations/ Corporate (Consolidated)

Net sales 1,364,860 85,558 1,450,418 (20,191) 1,430,226

Operating income 23,454 2,610 26,065 2,800 28,866

The research and consulting businesses, which were previously engaged in by the Dentsu Communication Institute, Inc. and included in the Other Businesses segment, were included in the Advertising segment after its merger with Dentsu, because such functions have been unified with Dentsu’s internal functions such as consumer research and knowledge development/sharing, which had been conducted by Dentsu’s internal organizations. Sales of the relevant research and consulting businesses for the nine months ended December 31, 2008, included in the Other Business segment were ¥119 million (including ¥119 million in terms of Eliminations/Corporate), thereby meaning the value is wholly associated with the first quarter. The impact of this change in segmentation on operating income was immaterial.

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Geographic Segments Third quarter, ended December 31, 2008 (From October 1, 2008, to December 31, 2008)

(Millions of yen)

Japan Others Total Eliminations/ Corporate (Consolidated)

Net sales 438,952 46,982 485,935 (4,330) 481,604

Operating income 10,278 846 11,125 (54) 11,070

Nine months ended December 31, 2008 (From April 1, 2008, to December 31, 2008) (Millions of yen)

Japan Others Total Eliminations/ Corporate (Consolidated)

Net sales 1,303,943 136,761 1,440,705 (10,478) 1,430,226

Operating income 26,735 2,265 29,000 (134) 28,866 Note: “Others” consists substantially of the United States of America and China.

Overseas Sales Third quarter, ended December 31, 2008 (From October 1, 2008, to December 31, 2008)

I. Overseas net sales: ¥44,094 millionII. Consolidated net sales: ¥481,604 million III. Overseas net sales as a percentage of

consolidated net sales: 9.2%


I. Overseas net sales: ¥130,320 millionII. Consolidated net sales: ¥1,430,226 million III. Overseas net sales as a percentage of

consolidated net sales: 9.1%

Notes:

1. “Others” consists substantially of the United States of America and China. 2. Consolidated overseas net sales indicate sales of the Company and its consolidated subsidiaries in

the countries or regions other than Japan.

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Per share information 1. Net assets per share


Net assets per share ¥196,211.01

Net assets per share ¥206,602.50

2. Basic and diluted net income per share


(Basic) net income per share ¥1,594.56(Diluted) net income per share ¥1,443.48

Note: Basis of computation for the basic net income per share and the diluted net income per share

Item Nine months ended December 31,

2008 (From April 1, 2008, to December 31, 2008)

Net income on the quarterly consolidated statements of income (Millions of yen) 4,142

Net income available to common shareholders (Millions of yen) 4,142

Amount of net income (loss) not attributable to common shareholders (Millions of yen) ―

Average number of common stock outstanding for the period (Thousands) 2,597

Major elements of the adjustment to net income used for computing the diluted net income per share (Millions of yen): Subscription rights to shares and the bonds with subscription rights to shares of affiliated companies

392

Adjustment to net income (Millions of yen) 392

Increase in the number of common stock used for computing the diluted net income per share (Thousands)

―

Summary of the dilutive securities that were not included in the computation of the diluted net income per share due to the lack of the dilution effect if a significant change has happened therein since the end of the previous fiscal year (March 31, 2008)

The stock options (subscription rights to shares) adopted by the ordinary general meeting of shareholders held on June 27, 2003, did not have a dilution effect for the nine months ended December 31, 2008.

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(Basic) net loss per share (¥1,599.07)(Diluted) net income per share —

Notes: 1. Although dilutive securities exist with regard to the diluted net income per share, the net loss value is not

stated in the table. 2. Basis of computation for the basic net loss per share

Item Third quarter, ended December 31,

2008 (From October 1, 2008, to December 31, 2008)

Quarterly net loss on the consolidated statements of income (Millions of yen) (3,969)

Quarterly net loss available to common shareholders (Millions of yen) (3,969)

Amount of quarterly net income (loss) not attributable to common shareholders (Millions of yen) ―

Average number of common stock outstanding for the period (Thousands) 2,482

Summary of the dilutive securities that were not included in the computation of the diluted net income per share due to the lack of the dilution effect if a significant change has happened therein since the end of the previous fiscal year (March 31, 2008)

The stock options (subscription rights to shares) adopted by the ordinary general meeting of shareholders held on June 27, 2003, did not have a dilution effect for the third quarter, ended December 31, 2008.

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Subsequent events

Third quarter, ended December 31, 2008 (From October 1, 2008 to December 31, 2008)

(Stock Split) On January 4, 2009, a stock split at a ratio of 100 shares per share was implemented, and the total

number of shares issued increased by 275,402,160 shares to 278,184,000 shares.

Net assets per share, recalculated to reflect the assumption that such stock split was implemented at the beginning of the previous fiscal year, was ¥2,066.03.

Moreover, net income per share, etc., for the nine months and the third quarter, ended December 31, 2008, also recalculated to reflect the assumption that such stock split was implemented at the beginning of the fiscal year ending March 31, 2009, was as follows.

Nine months ended December 31, 2008 (From April 1, 2008, to December 31, 2008) (Basic) net income per share ¥15.95(Diluted) net income per share ¥14.43


Net assets per share ¥1,962.11(Basic) net loss per share (¥15.99)(Diluted) net income per share ─

Note: Although dilutive securities exist with regard to the diluted net income per share, the net loss value

is not stated in the table. (Tender Offer against a Consolidated Subsidiary)

Dentsu (the “Company”) resolved at its meeting of the Board of Directors held on January 30, 2009, to acquire the common stock, preemptive rights and subscription rights to shares of Cyber Communications Inc. (the “Target Company”), a consolidated subsidiary, through a tender offer (the “Tender Offer”) in order to make the Target Company a wholly owned subsidiary.

(1) Purpose of the Tender Offer

The Company’s Group, including the Target Company, needs to positively implement measures that will strengthen the competitiveness of the Company’s Group, including the Target Company, from a medium- to long-term perspective and will contribute to the expansion of the corporate value, such as the development of technologies in the digital field and the expansion of its platform business; therefore, the Company has reached a decision to conduct the Tender Offer in consideration that making the Target Company the Company’s wholly owned subsidiary is necessary to ensure the smooth and prompt implementation of the restructuring of the system for the digital field of the Dentsu Group.

(2) Outline of the Target Company

1) Trade name: Cyber Communications Inc. 2) Business description: Internet advertising business 3) Date of establishment: June 5, 1996 4) Location of head office: 14-1, Higashi-Shimbashi 2-chome, Minato-ku, Tokyo 5) Title and name of representative: President and CEO Hideyuki Nagasawa 6) Capital stock: ¥2,387 million (as of December 31, 2008)

(3) Class of share certificates and other securities to be purchased

Common stock, preemptive rights and stock acquisition rights (4) Period for the Tender Offer

1) Period for the Tender Offer planned at the time of filing From February 2, 2009, to March 16, 2009

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Third quarter, ended December 31, 2008 (From October 1, 2008 to December 31, 2008)

2) Possible extension of the period for the Tender Offer based on a request by Target Company Not applicable

(5) Price for the Tender Offer ¥42,500 per share of the Target Company ¥1 per stock preemptive rights and subscription rights to shares

(6) Number of share certificates and other securities to be purchased

Number of share certificates and other securities to be purchased, when converted into shares: 282,078 shares

Notes: 1. As no maximum and minimum number of share certificates and other securities to be purchased

has been set for the Tender Offer, Dentsu will purchase all of the tendered share certificates and other securities.

2. The Tender Offeror does not plan to acquire treasury stock held by the Target Company through the Tender Offer.

3. The number of share certificates and other securities to be purchased indicated above as the maximum number of share certificates and other securities of the Target Company to be acquired by Dentsu through the Tender Offer is obtained by adding (i) the maximum number of the shares of the Target Company that may be issued or transferred on or prior to the last day of the tender offer period upon exercise of the preemptive rights or the subscription rights to shares (11,434 shares) to (ii) the total number of shares issued of the Target Company as of December 31, 2008 (515,458 shares), and deducting (iii) (a) the number of Target Company shares held by Dentsu as of February 2, 2009 (244,800 shares), and (b) the number of treasury stock held by the Target Company as of December 31, 2008 (14 shares).

4. Any of the preemptive rights or the subscription rights to shares may be exercised on or prior to the last day of the tender offer period. The shares of the Target Company that are to be issued or transferred upon such exercise are also subject to the Tender Offer.

(7) Amount of Funds Necessary for the Tender Offer

¥12,148 million Note: Estimated amount of commissions for Tender Offer are included in the above amount.

(8) Commencement date of settlement March 24, 2009

(9) Prospects after the Tender Offer

In the event that the Company does not acquire all of the Target Company’s outstanding shares excluding treasury stock held by the Target Company through the Tender Offer, the Company plans to implement a share exchange that will enable it to become the wholly owning parent company and the Target Company to become its wholly owned subsidiary. Such share exchange may be implemented as a summary share exchange (“Ryakushiki Kabushiki Kokan”) in accordance with Section 1, Article 784, of the Corporate Law without a resolution of the general meeting of shareholders of the Target Company with respect to the approval of the share exchange agreement.

As of February 16, 2009, the common stock of the Target Company was listed on the Mothers market of the Tokyo Stock Exchange. Depending on the result of the Tender Offer, the shares of the Target Company may be delisted upon completion of the Tender Offer through prescribed procedures, subject to the delisting standards of the Mothers market of the Tokyo Stock Exchange relating to the liquidity of shares on such market. Moreover, even if the requirements under the above delisting standards are not applicable to the Target Company at the completion of the Tender Offer, the shares of the Target Company will be delisted if the Target Company becomes a wholly owned subsidiary of the Company through the above share exchange, as planned. Following delisting, the shares of the Target Company will not be traded on the Mothers market of the Tokyo Stock Exchange.

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2. Other Information With regard to an interim dividend for the year ending March 31, 2009 (the 160th Term, from April 1,

2008, to March 31, 2009), the Company resolved, at the Board of Directors meeting held on November 12, 2008, that dividends shall be distributed to the shareholders whose names are listed or recorded on the last register of shareholders and the last register of beneficiary shareholders and to the register of odd-lot shareholders whose names are listed or recorded on the last ledger of odd-lot shareholders, all as of September 30, 2008, in the following manner.

1) Total amount of dividends: ¥4,964 million 2) Dividend per share: ¥2,000

3) Effective date of the right to demand payment and commencement date of dividend payment: December 8, 2008

part 5: financial section - dentsu · part 5: financial section . 1. preparation method of the...

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