summary of financial results for the fiscal year ended march 31,...

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April 30, 2009

Summary of Financial Results for the Fiscal Year Ended March 31, 2009

Company name: KOSÉ Corporation Stock listing: Tokyo Stock Exchange, First Section Stock code: 4922 URL: http://www.kose.co.jp/ President: Kazutoshi Kobayashi Contact: Hitonori Nakata, General Manager of IR Div. Tel: +81- (0) 3-3273-1511 Scheduled date of general meeting of shareholders: June 26, 2009 Scheduled date of filing of Securities Report: June 26, 2009 Scheduled date of dividend payment: June 29, 2009

(Rounded down to million yen)

1. Consolidated Financial Results for the Fiscal Year Ended March 31, 2009 (April 1, 2008 – March 31, 2009)

(1) Consolidated financial results (YoY change % represents changes from the previous fiscal year)

Net sales YoY

change Operating

income YoY

changeOrdinary income

YoY change

Net income YoY

change (Million yen) (%) (Million yen) (%) (Million yen) (%) (Million yen) (%) FY03/2009 178,121 (1.2) 12,303 (19.0) 12,017 (19.1) 4,742 (31.3) FY03/2008 180,222 2.2 15,187 10.6 14,854 4.0 6,900 0.1

Net income per share

(basic) Net income per share

(diluted) Return on

equity Ordinary income

to total assets Operating income

to net sales (Yen) (Yen) (%) (%) (%) FY03/2009 81.55 - 4.8 7.1 6.9 FY03/2008 115.50 - 7.0 8.6 8.4 (Ref.) Equity in earnings of affiliates (million yen) FY03/2009: - FY03/2008: -

(2) Consolidated financial position Total assets Net assets Equity ratio Net assets per share (Million yen) (Million yen) (%) (Yen) FY03/2009 166,920 104,468 59.1 1,699.92 FY03/2008 172,128 105,048 58.1 1,693.55 (Ref.) Shareholders’ equity (million yen) FY03/2009: 98,676 FY03/2008: 100,000

(3) Consolidated cash flow position

Net cash provided by (used in) Cash and cash equivalents at end of period Operating activities Investment activities Financing activities

(Million yen) (Million yen) (Million yen) (Million yen) FY03/2009 8,927 1,865 (5,183) 39,066 FY03/2008 14,817 (5,331) (6,800) 34,093

2. Dividends Dividend per share Total dividends

(annual) Payout ratio

(consolidated)

Dividend on equity

(consolidated)Record date 1Q-end 2Q-end 3Q-end Year-end Annual (Yen) (Yen) (Yen) (Yen) (Yen) (Million yen) (%) (%)

FY03/2008 - 20.00 - 20.00 40.00 2,381 34.6 2.4 FY03/2009 - 20.00 - 20.00 40.00 2,321 49.0 2.4 FY03/2010 (forecast)

- 20.00 - 20.00 40.00 39.4

3. Consolidated Forecast for the Fiscal Year Ending March 31, 2010 (April 1, 2009 – March 31, 2010) (YoY change % represents changes from the previous fiscal year)

Net sales YoY

change Operating

income YoY


YoY change

Net income

YoY change


(Million yen) (%) (Million yen) (%) (Million yen) (%) (Million yen) (%) (Yen) First half 88,700 0.3 4,700 2.1 4,800 (1.5) 1,800 13.7 31.01 Full year 180,000 1.1 12,500 1.6 12,600 4.8 5,900 24.4 101.64

KOSÉ Corporation (4922) Financial Results for FY03/2009

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4. Others (1) Changes in consolidated subsidiaries during the period (changes in scope of consolidation): None (2) Changes in accounting principles, procedures and presentation methods for preparation of consolidated

financial statements

1) Changes caused by revision of accounting standards: Yes

2) Other changes: Yes

Note: Please refer to “Changes in Basis of Preparation of Consolidated Financial Statements” on page 17 and “Reclassifications” on page 18 for further information.

(3) Number of shares outstanding (common shares)

1) Number of shares outstanding (incl. treasury stock) at end of the period As of March 31, 2009: 60,592,541 sharesAs of March 31, 2008: 60,592,541 shares

2) Number of treasury stock at end of the period

As of March 31, 2009: 2,544,823 sharesAs of March 31, 2008: 1,544,258 shares

Note: Please refer to “Per Share Information” on page 21 for the number of shares used in calculating net income per share.

(Reference) Non-consolidated financial results 1. Non-consolidated Financial Results for the Fiscal Year Ended March 31, 2009 (April 1, 2008 – March 31, 2009) (1) Non-consolidated financial results (YoY change % represents changes from the previous fiscal year)

Net sales YoY

change Operating

income YoY


YoY change

Net income YoY

change (Million yen) (%) (Million yen) (%) (Million yen) (%) (Million yen) (%) FY03/2009 87,895 (1.3) 589 (80.5) 2,617 (36.0) 1,381 (53.4)FY03/2008 89,093 1.5 3,029 (9.2) 4,088 (28.4) 2,963 (16.6)


(basic) Net income per share

(diluted) (Yen) (Yen) FY03/2009 23.75 - FY03/2008 49.60 - (2) Non-consolidated financial position Total assets Net assets Equity ratio Net assets per share (Million yen) (Million yen) (%) (Yen) FY03/2009 113,857 70,819 62.2 1,220.02 FY03/2008 118,505 74,293 62.7 1,258.19 (Ref.) Shareholders’ equity (million yen) FY03/2009: 70,819 FY03/2008: 74,293 *Cautionary statement with respect to forward-looking statements These materials contain forward-looking statements and statements of this nature based on assumptions judged to be valid and information available to the Company as of the announcement date of the summary. As such, these projections entail risks and uncertainties resulting from changes in the economic environment. For discussion of the assumptions and other factors considered by the Company in preparing the above projections, please refer to the section “1. Results of Operations 1. Analysis of Results of Operations.”


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1. Results of Operations

1. Analysis of Results of Operations

(1) Financial Results for the Current Fiscal Year 1) Review of Operations Millions of yen, %

Operating segment FY03/2008 FY03/2009 YoY change Amount % comp. Amount % comp. Amount %

Cosmetics 134,139 74.4 132,517 74.4 (1,622) (1.2)Cosmetaries 43,559 24.2 43,821 24.6 262 0.6Other 2,524 1.4 1,782 1.0 (741) (29.4)

Total net sales 180,222 100.0 178,121 100.0 (2,101) (1.2)

FY03/2008 FY03/2009 YoY change

Amount % of sales Amount % of sales Amount % Operating income 15,187 8.4 12,303 6.9 (2,884) (19.0)Ordinary income 14,854 8.2 12,017 6.7 (2,837) (19.1)Net income 6,900 3.8 4,742 2.7 (2,157) (31.3)

There was a steep downturn in Japan’s economy in the current fiscal year as the overseas financial crisis led to a global economic recession. Earnings of companies in Japan fell sharply and growing worries about the outlook caused consumer spending to weaken. In the Japanese cosmetics industry, there were decreases in unit volume and monetary sales according to 2008 statistics for cosmetics shipments compiled by the Ministry of Economy, Trade and Industry.

The KOSÉ Group responded by further refining its original brand marketing to meet diversifying markets and consumer needs with even greater flexibility. The Group also focused on achieving the optimal allocation of resources and improving operating efficiency and earnings.

Net sales decreased 1.2% to 178,121 million yen because of lackluster consumer spending caused by the poor economy and the yen’s strength. After excluding the effect of foreign exchange rate changes on overseas sales, net sales were down only 0.2%.

Overseas sales increased 4.0% to 19,103 million yen because of higher sales in China and other Asian countries. Overseas sales accounted for 10.7% of total consolidated sales in the fiscal year.

Earnings declined mainly because of an increase in the cost of sales ratio and head office relocation expenses and other items. Operating income decreased 19.0% to 12,303 million yen, ordinary income decreased 19.1% to 12,017 million yen and net income decreased 31.3% to 4,742 million yen. 2) Results by Business Segment

(a) Cosmetics Business Millions of yen, %


Amount % Sales to third parties 134,139 132,517 (1,622) (1.2)Intragroup sales and transfers 17 - - -

Total net sales 134,156 132,517 - -Operating income 16,198 14,572 (1,625) (10.0)Operating margin 12.1 11.0 - -

In the cosmetics business, KOSÉ concentrated on the lineup of luxury brands distributed through specialty cosmetics stores and department stores in Japan. KOSÉ also took steps to increase sales in Japan of products accompanied by counseling, such as by introducing SEKKISEI SUPREME and increasing the number of stores selling INFINITY products. Despite strong sales in these key brands and the popularity of


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JILLSTUART products, overall performance in the cosmetics business was poor because of lower sales of core brands, including makeup and other products, that use a broad range of distribution channels.

Overseas, KOSÉ expanded activities to use its brands in more markets, such as by starting sales of JILLSTUART products in Taiwan and Hong Kong. In another move to increase sales, KOSÉ started taking actions in China to increase the number of specialty cosmetics stores selling KOSÉ products. As a result, overseas sales were higher than in the previous fiscal year.

Overall, sales in the cosmetics business decreased 1.2% to 132,517 million yen and operating income decreased 10.0% to 14,572 million yen.

Major new products introduced during the fiscal year were as follows: COSME DECORTE AQ (makeup series) INFINITY (skin care series) SEKKISEI SUPREME (skin care series)

(b) Cosmetaries Business Millions of yen, %


Amount % Sales to third parties 43,559 43,821 262 0.6Intragroup sales and transfers - 0 - -

Total net sales 43,559 43,821 - -Operating income 1,383 136 (1,247) (90.2)Operating margin 3.2 0.3 - -

In the cosmetaries business, KOSÉ strengthened its brands by giving core brands a new look and conducting high-profile advertising campaigns and sales promotion activities. There were also measures to attract more customers, including the launch of the Nature & Co brand for skin care products.

Due to these activities, sales increased 0.6% to 43,821 million yen despite the negative effect of revisions concerning retailers that sell KOSÉ cosmetaries products. However, an increase in operating expenses caused operating income to fall 90.2% to 136 million yen.

Major new products introduced during the fiscal year were as follows: HAPPY BATH DAY Precious Rose (bath and body-care series) NATURE & CO (skin care series) SOFTYMO Sara-Sara Powder Sheet (skin care series)

(c) Other Business Millions of yen, %


Amount % Sales to third parties 2,524 1,782 (741) (29.4)Intragroup sales and transfers 2,356 2,412 - -

Total net sales 4,881 4,195 - -Operating income 401 444 42 10.6Operating margin 8.2 10.6 - -

In this segment, there was an increase in sales of amenities, which are sold primarily through sales agents, but orders for the manufacture of OEM products declined.

Including the effect of the sale of two subsidiaries in the previous fiscal year, sales were down 29.4% to 1,782 million yen but operating income increased 10.6% to 444 million yen.


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(2) Outlook

Based on its medium-term management policies (see “3. Management Policies”), the KOSÉ Group has been reforming its operations by concentrating on the four core management themes. To rebuild the cosmetics business in Japan, the Group is optimizing the brand portfolio. This involves making core existing brands more competitive while launching brands for products sold with counseling and taking other actions. The Group also improved operating efficiency by upgrading the operations of stores selling Group products and establishing support centers. To reinforce overseas operations, The Group expanded its core brands to more countries with the aim of developing them into global brands and started establishing new sales channels. At the same time, the Group continues to make progress regarding the themes of entering new business fields and upgrading the Group’s overall strengths. The Group will continue to take its original brand marketing to a higher level to respond with flexibility to the diversification of markets and consumers’ needs. Another objective is improving operating efficiency and earnings by using resources in the optimal manner.

In the fiscal year ending on March 31, 2010, all signs point to a continuation in the economic downturn and lackluster consumer spending. Preliminary Ministry of Economy, Trade and Industry data on cosmetics shipments in January and February 2009 show that monetary sales were lower than one year earlier.

To overcome these challenges, the Group is concentrating on enhancing brand value and counseling expertise for value-added cosmetics products, which is one of the Group’s greatest strengths. Other actions are aimed at making stores selling KOSÉ products more competitive and reinforcing the sales organization. In addition, initiatives to reform operations across the entire organization will continue in order to make the KOSÉ Group more powerful.

As a result, the Company is forecasting increase of 1.1% in net sales to 180,000 million yen, 1.6% increase in operating income to 12,500 million yen, 4.8% increase in ordinary income to 12,600 million yen, and 24.4% increase in net income to 5,900 million yen. The outlook for business segments is shown below. The Company is forecasting capital expenditures of 4,600 million yen and depreciation expenses of 5,700 million yen. The Group has a policy of reviewing and revising every year its medium-term management plan for the following three fiscal years based on performance in the preceding fiscal year and other factors. This policy enables the Group to adapt with flexibility to changes in market conditions and to reach decisions involving these changes faster. However, because of the magnitude of changes taking place in the economy and increasing uncertainty concerning the outlook, the Group is announcing only its forecast for the fiscal year ending on March 31, 2010.

Millions of yen, %

Operating segment FY03/2009 FY03/2010 (forecast) YoY change

Amount % comp. Amount % comp. Amount % Cosmetics 132,517 74.4 133,100 74.0 582 0.4Cosmetaries 43,821 24.6 45,400 25.2 1,578 3.6Other 1,782 1.0 1,500 0.8 (282) (15.9)

Total net sales 178,121 100.0 180,000 100.0 1,878 1.1

FY03/2009 FY03/2010 (forecast) YoY change

Amount % of sales Amount % of sales Amount % Operating income 12,303 6.9 12,500 6.9 196 1.6Ordinary income 12,017 6.7 12,600 7.0 582 4.8Net income 4,742 2.7 5,900 3.3 1,157 24.4

* Forecasts are based on foreign exchange rates of 92 yen to the U.S. dollar, 2.8 yen to the Taiwan dollar and 13.4 yen to the Chinese yuan.


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2. Analysis of Financial Position

(1) Balance sheet position The current ratio was 270.9%, 20.6 percentage points higher than one year earlier, and the quick ratio was 194.5%, an improvement of 13.4 percentage points, as of March 31, 2009. These increases were attributable mainly to the following items.

Assets decreased 5,207 million yen compared with the end of March 2008. Current assets decreased 351 million yen due to an increase of 2,680 million yen in cash and deposits, a decrease of 691 million yen in notes and accounts receivable-trade, a decrease of 2,340 million yen in short-term investment securities. Noncurrent assets decreased 5,466 million yen due to an increase of 464 million yen in property, plant and equipment, decreases of 542 million yen in intangible assets and 5,388 million yen in other investments.

Liabilities decreased 4,627 million yen. Current liabilities decreased 2,945 million yen mainly due to a decrease of 1,733 million yen in income taxes payable and a decrease of 624 million yen in accounts payable-other. Noncurrent liabilities decreased 1,682 million yen mainly due to a decrease in provision for retirement benefits.

Interest-bearing debt amounted to 4,593 million yen and the debt-to-equity ratio was 0.05. (2) Cash flows

Millions of yen FY03/2008 FY03/2009 YoY change

Net cash provided by (used in) operating activities 14,817 8,927 (5,889)Net cash provided by (used in) investment activities (5,331) 1,865 7,196Net cash provided by (used in) financing activities (6,800) (5,183) 1,616Increase in cash and cash equivalents 2,974 4,972 1,998Cash and cash equivalents at end of period 34,093 39,066 4,972 Cash and cash equivalents (consolidated basis) as of March 31, 2009 were 39,066 million yen, an increase of 4,972 million yen, or 14.6%, compared with March 31, 2008. Cash flows and major components during the current fiscal year are as follows.

Net cash provided by operating activities decreased 39.7% to 8,927 million yen. This was mainly the net result of income before income taxes and minority interests of 11,261 million yen, depreciation and amortization, a non-cash expense, of 5,593 million yen, loss on disposal of noncurrent assets of 381 million yen, a decrease in provision for retirement benefits of 1,918 million yen, an increase in inventories of 1,075 million yen, foreign exchange losses of 606 million yen, a decrease in other provision of 204 million yen, an increase in notes and accounts receivable-trade of 273 million yen, an increase in notes and accounts payable-trade of 938 million yen, a decrease in other liabilities of 293 million yen, and income taxes paid of 6,612 million yen.

Net cash provided by investment activities was 1,865 million yen compared with net cash used of 5,331 million yen one year earlier. The major components were a net payment of 400 million yen into time deposits, net proceeds of 5,586 million yen from sale, purchase and redemption of short-term investment securities, purchase of property, plant and equipment of 5,771 million yen, purchase of intangible assets of 1,120 million yen, and net proceeds of 4,177 million yen for the sale, purchase and redemption of investment securities.

Net cash used in financing activities decreased 23.8% to 5,183 million yen. This was mainly due to net decrease in loans payable of 317 million yen, net increase of 2,440 million yen in treasury stock (including a 2,438 million yen stock repurchase approved by the Board of Directors) and cash dividends paid of 2,413 million yen.


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(3) Cash flow indicators FY03/2005 FY03/2006 FY03/2007 FY03/2008 FY03/2009

Shareholders’ equity ratio (%) 53.2 55.4 57.3 58.1 59.1Shareholders’ equity ratio based on market prices (%) 136.1 156.3 121.8 73.9 63.6

Interest-bearing debt to cash flow ratio 0.5 0.6 0.6 0.3 0.5Interest coverage ratio 152.2 543.9 322.9 209.5 193.0Notes:

Shareholders’ equity ratio: Shareholders’ equity / Total assets Shareholders’ equity ratio based on market prices: Market capitalization / Total assets Interest-bearing debt to cash flow ratio: Interest-bearing debt / Cash flows Interest coverage ratio: Cash flows (before Interests and income taxes paid) / Interest payments - These indices are calculated on a consolidated basis. - Market capitalization is based on the number of shares issued less treasury stock.

The closing price of stock on the balance sheet date is adjusted in case the Company conducts a stock split for shareholders of record at fiscal year end.

- Cash flows are calculated using the figures for operating cash flows in the consolidated statements of cash flows. - Interest-bearing debt includes all liabilities on the consolidated balance sheets that incur interest. Interest paid on the

consolidated statement of cash flows is used for interest payments. 3. Profit Allocation Policy and Dividends for FY03/2009 and FY03/2010

Preserving a stable dividend is the fundamental policy for profit allocations. KOSÉ plans to return earnings to shareholders while taking into account the need to retain earnings to fund future growth as well as the Company’s current financial soundness, operating results and the dividend payout ratio.

KOSÉ has a fundamental policy of paying an interim dividend and a year-end dividend. Shareholders determine the year-end dividend at the annual meeting and the Board of Directors determines the interim dividend.

KOSÉ plans to pay a year-end ordinary dividend of 20 yen per share. In addition, shareholders received an interim dividend of 20 yen per share on December 10, 2008. This will result in a dividend of 40 yen per share applicable to FY03/2009 (ended March 31, 2009).

In FY03/2010 (ended March 31, 2010), KOSÉ plans to keep the dividend unchanged at 40 yen per share.

2. The KOSÉ Group

Information concerning the business activities of group companies and the relationships of these companies is not presented because there have been no significant changes since the most recent Securities Report dated June 27, 2008.


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3. Management Policies

1. Fundamental Management Policy

The KOSÉ Group is guided by the philosophy of providing cosmetics and services with the outstanding quality that can earn the true satisfaction of customers. This spirit is evident in many ways. One is R&D activities and manufacturing technology that create new cosmetics such as innovative foundation products and the industry’s first beauty serum. Another is a distinctive brand marketing program in which brands that match the needs of consumers are supplied through the most suitable retail channels. The philosophy also serves as a driving force behind the Group’s growth and development.

The KOSÉ Group will continue to make effective use of these resources while conducting business operations in line with three new guidelines for our activities. (1) Products: KOSÉ will propose the value of” Beauty” and ground it in customer needs. (2) Place: KOSÉ would like to grow with business partners who share the value of our brand and products. (3) Service: KOSÉ will offer value-added services in order to achieve the greatest possible customer

satisfaction. At the same time, the Group will fulfill its social responsibilities by further increasing its commitment to strict compliance with laws and regulations and to environmental protection. 2. Performance Indicators

The Group is placing priority on improving the operating margin and return on total assets (ROA).

Note: ROA = (Operating income + Interest and dividend income) / Total assets (average of assets at beginning and end of year) X 100

3. Medium- and Long-Term Strategies and Important Issues

The Group is placing priority on expanding all of its businesses, not only by increasing its market share in Japan, but also by moving faster to target opportunities in growing markets. The Group is also building a powerful operating framework that can succeed against new forms of competition with other companies. To accomplish these goals, the Group is concentrating on four core management themes: rebuilding the cosmetics business in Japan; reinforcing overseas operations; entering new business fields; and upgrading the Group’s overall strengths. (1) Rebuilding the cosmetics business in Japan

In Japan, KOSÉ is taking its distinctive brand marketing to a higher level in order to adapt to changes in distribution channels and sales formats with greater flexibility. Actions include optimizing the KOSÉ Group’s brand portfolio and developing core brands into highly competitive brands that offer considerable value. Plans also include making stores selling KOSÉ products more appealing as select stores and building a more powerful sales system. The ultimate goal is build a solid base of operations for the domestic cosmetics business.


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(2) Reinforcing overseas operations

KOSÉ aims to increase sales outside Japan, particularly in rapidly growing markets in Asia. In the luxury cosmetics category, a market sector where the KOSÉ Group has a particularly high profile, the priorities are promoting global brands and making brands more powerful. Plans also include expanding operations through acquisitions, alliances and other actions to add overseas brands. In addition, KOSÉ is working on establishing a presence in countries where its products are not yet marketed. (3) Entering new business fields

KOSÉ will establish a presence in categories of the beauty care market where there are good prospects for growth. The goal is to expand the scope of business activities while retaining cosmetics products as the nucleus. (4) Upgrading the Group’s overall strengths

The KOSÉ Group is dedicated to making constant improvements in operating efficiency and profitability. The Group will review its entire cost structure with the aim of cutting the cost of sales and administrative expenses. Marketing activities are fully integrated, extending from R&D through manufacturing and sales. Through this approach, the Group intends to build a product manufacturing system that can quickly adapt to shifts in market trends. In addition, the Group is committed to the consistent development of personnel with outstanding skills. Actions include upgrading training systems and facilities as well as reviewing the personnel system to improve the utilization and training of human resources.


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4. Consolidated Financial Statements

(1) Consolidated Balance Sheets Millions of yen

FY03/2008

(As of Mar. 31, 2008) FY03/2009

(As of Mar. 31, 2009) Assets

Current assets Cash and deposits 19,107 21,787Notes and accounts receivable-trade 24,735 24,044Short-term investment securities 28,875 26,534Inventories 21,299 -Merchandise and finished goods - 11,549Work in process - 1,262Raw materials and supplies - 9,034Deferred tax assets 4,725 4,637Other 2,035 2,194Allowance for doubtful accounts (276) (283)Total current assets 100,502 100,760

Noncurrent assets Property, plant and equipment

Buildings and structures 28,420 31,367Accumulated depreciation (16,653) (17,461)Buildings and structures, net 11,767 13,905

Machinery, equipment and vehicles 13,855 13,550Accumulated depreciation (11,507) (11,463)Machinery, equipment and vehicles, net 2,347 2,087

Tools, furniture and fixtures 25,474 26,344Accumulated depreciation (19,857) (21,057)Tools, furniture and fixtures, net 5,616 5,286

Land 17,773 17,701Lease assets - 114

Accumulated depreciation - (13)Lease assets, net - 100

Construction in progress 1,326 214Total property, plant and equipment 38,831 39,296

Intangible assets Software 2,947 1,924Other 600 1,081Total intangible assets 3,548 3,005

Investments and other assets Investment securities 13,161 7,958Deferred tax assets 13,260 12,610Other 3,070 3,615Allowance for doubtful accounts (246) (326)Total investments and other assets 29,246 23,858

Total noncurrent assets 71,625 66,159Total assets 172,128 166,920


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Millions of yen

FY03/2008

(As of Mar. 31, 2008) FY03/2009

(As of Mar. 31, 2009) Liabilities

Current liabilities Notes and accounts payable-trade 14,002 14,187Short-term loans payable 4,824 4,485Lease obligations - 28Accounts payable-other 6,686 6,062Accrued expenses 7,288 7,332Income taxes payable 3,711 1,978Accrued consumption taxes 617 327Provision for sales returns 2,321 2,116Other 692 681Total current liabilities 40,145 37,199

Noncurrent liabilities Lease obligations - 79Provision for retirement benefits 23,197 21,279Provision for directors’ retirement benefits 3,649 3,845Other 87 48Total noncurrent liabilities 26,935 25,252

Total liabilities 67,080 62,452Net assets

Shareholders’ equity Capital stock 4,848 4,848Capital surplus 6,391 6,390Retained earnings 92,577 94,977Treasury stock (4,789) (7,228)Total shareholders’ equity 99,027 98,988

Valuation and translation adjustments Valuation difference on available-for-sale securities 230 145Foreign currency translation adjustment 743 (456)Total valuation and translation adjustments 973 (311)

Minority interests 5,047 5,791Total net assets 105,048 104,468

Total liabilities and net assets 172,128 166,920


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(2) Consolidated Statements of Income Millions of yen

FY03/2008

(Apr. 1, 2007 – Mar. 31, 2008)FY03/2009

(Apr. 1, 2008 – Mar. 31, 2009)Net sales 180,222 178,121Cost of sales 45,304 45,279Gross profit 134,918 132,841Selling, general and administrative expenses

Advertising expenses 9,071 8,640Promotion expenses 38,105 37,749Freightage and packing expenses 5,221 5,287Salaries and allowances 38,348 37,682Retirement benefit expenses 874 1,093Welfare expenses 6,554 -Legal welfare expenses - 5,067Depreciation 2,682 2,744Other 18,871 22,272Total selling, general and administrative expenses 119,730 120,538

Operating income 15,187 12,303Non-operating income

Interest income 336 351Dividends income 109 122Patent royalty income 83 75Miscellaneous income 149 152Total non-operating income 678 700

Non-operating expenses Interest expenses 77 82Foreign exchange losses 853 869Miscellaneous loss 82 34Total non-operating expenses 1,012 986

Ordinary income 14,854 12,017Extraordinary income

Gain on sales of noncurrent assets 274 1Gain on sales of investment securities - 36Gain on sales of investment securities and other 10 -Gain on sales of subsidiaries and affiliates’ stocks 36 -Compensation for transfer 77 85Total extraordinary income 398 123

Extraordinary loss Loss on disposal of noncurrent assets 245 382Loss on valuation of investment securities and other 158 -Loss on valuation of investment securities - 336Bad debts written off 167 -Loss on abandonment of inventories 176 -Impairment loss 27 154Other - 7Total extraordinary losses 775 880

Income before income taxes and minority interests 14,477 11,261Income taxes-current 6,122 4,895Income taxes-deferred 430 796Total income taxes 6,553 5,691Minority interests in income 1,023 827Net income 6,900 4,742


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(3) Consolidated Statements of Changes in Net Assets Millions of yen

FY03/2008

(Apr. 1, 2007 – Mar. 31, 2008)FY03/2009

(Apr. 1, 2008 – Mar. 31, 2009)Shareholders’ equity

Capital stock Balance at the end of previous period 4,848 4,848Changes of items during the period

Total changes of items during the period - -Balance at the end of current period 4,848 4,848

Capital surplus Balance at the end of previous period 6,391 6,391Changes of items during the period

Disposal of treasury stock (0) (0)Total changes of items during the period (0) (0)

Balance at the end of current period 6,391 6,390Retained earnings

Balance at the end of previous period 88,078 92,577Changes of items during the period

Dividends from surplus (2,401) (2,341)Net income 6,900 4,742Total changes of items during the period 4,498 2,400

Balance at the end of current period 92,577 94,977Treasury stock

Balance at the end of previous period (1,827) (4,789)Changes of items during the period

Purchase of treasury stock (2,961) (2,441)Disposal of treasury stock 0 1Total changes of items during the period (2,961) (2,439)

Balance at the end of current period (4,789) (7,228)Total shareholders’ equity


Dividends from surplus (2,401) (2,341)Net income 6,900 4,742Purchase of treasury stock (2,961) (2,441)Disposal of treasury stock 0 1Total changes of items during the period 1,536 (39)

Balance at the end of current period 99,027 98,988


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Millions of yen

FY03/2008

(Apr. 1, 2007 – Mar. 31, 2008)FY03/2009

(Apr. 1, 2008 – Mar. 31, 2009)Valuation and translation adjustments

Valuation difference on available-for-sale securities Balance at the end of previous period 347 230Changes of items during the period

Net changes of items other than shareholders’ equity (117) (84)Total changes of items during the period (117) (84)Balance at the end of current period 230 145

Deferred gains or losses on hedges Balance at the end of previous period 4 -Changes of items during the period

Net changes of items other than shareholders’ equity (4) -Total changes of items during the period (4) -

Balance at the end of current period - -Foreign currency translation adjustment

Balance at the end of previous period 424 743Changes of items during the period

Net changes of items other than shareholders’ equity 318 (1,200)Total changes of items during the period 318 (1,200)

Balance at the end of current period 743 (456)Total valuation and translation adjustments


Net changes of items other than shareholders’ equity 196 (1,284)Total changes of items during the period 196 (1,284)

Balance at the end of current period 973 (311)Minority interests


Net changes of items other than shareholders’ equity 952 744Total changes of items during the period 952 744

Balance at the end of current period 5,047 5,791Total net assets


Dividends from surplus (2,401) (2,341)Net income 6,900 4,742Purchase of treasury stock (2,961) (2,441)Disposal of treasury stock 0 1Net changes of items other than shareholders’ equity 1,149 (540)Total changes of items during the period 2,686 (580)



15

(4) Consolidated Statements of Cash Flows Millions of yen

FY03/2008

(Apr. 1, 2007 – Mar. 31, 2008)FY03/2009

(Apr. 1, 2008 – Mar. 31, 2009)Net cash provided by (used in) operating activities

Income before income taxes and minority interests 14,477 11,261Depreciation and amortization 5,452 5,593Impairment loss 27 154Bad debts expenses 167 -Increase (decrease) in allowance for doubtful accounts (14) 92Increase (decrease) in provision for retirement benefits (2,472) (1,918)Increase (decrease) in provision for directors’ retirement benefits

248 195

Increase (decrease) in other provision 1,437 (204)Loss (gain) on disposal of noncurrent assets (28) 381Compensation for removal (77) (85)Interest and dividends income (445) (473)Interest expenses 77 82Foreign exchange losses (gains) 71 606Loss (gain) on sales of investment securities - (36)Loss (gain) on sales of investment securities and other (47) -Loss (gain) on valuation of investment securities - 336Loss (gain) on valuation of investment securities and other

158 -

Decrease (increase) in notes and accounts receivable-trade

1,839 (273)

Decrease (increase) in inventories (89) (1,075)Increase (decrease) in notes and accounts payable-trade 1,396 938Decrease (increase) in other assets 97 (217)Increase (decrease) in other liabilities (1,721) (293)Subtotal 20,552 15,062Interest and dividends income received 439 472Interest expenses paid (100) (80)Proceeds from compensation for removal 77 85Income taxes paid (6,151) (6,612)Net cash provided by (used in) operating activities 14,817 8,927

Net cash provided by (used in) investment activities Payments into time deposits (3,800) (2,200)Proceeds from withdrawal of time deposits 6,090 1,800Purchase of short-term investment securities (31,550) (24,969)Proceeds from sales and redemption of securities 30,959 30,555Purchase of property, plant and equipment (4,940) (5,771)Proceeds from sales of property, plant and equipment 589 15Purchase of intangible assets (83) (1,120)Purchase of investment securities (2,590) (1,640)Proceeds from sales and redemption of investment securities

112 5,817

Decrease (increase) in other investments (117) (621)Net cash provided by (used in) investment activities (5,331) 1,865


16

Millions of yen

FY03/2008

(Apr. 1, 2007 – Mar. 31, 2008)FY03/2009

(Apr. 1, 2008 – Mar. 31, 2009)Net cash provided by (used in) financing activities

Net increase (decrease) in short-term loans payable 128 (317)Repayment of long-term loans payable (1,500) -Net decrease (increase) in treasury stock (2,961) (2,440)Cash dividends paid (2,401) (2,341)Cash dividends paid to minority shareholders (65) (72)Other, net - (11)Net cash provided by (used in) financing activities (6,800) (5,183)

Effect of exchange rate change on cash and cash equivalents

288 (637)

Net increase (decrease) in cash and cash equivalents 2,974 4,972Cash and cash equivalents at beginning of period 31,119 34,093Cash and cash equivalents at end of period 34,093 39,066


17

Going Concern Assumption

Not applicable.

Basis of Preparation of Consolidated Financial Statements

The basis of preparation of the consolidated financial statements is not presented since there are no significant changes from the most recent Securities Report (filed on June 27, 2008). Changes in Basis of Preparation of Consolidated Financial Statements

1. Valuation criteria and methods for principal assets

Inventories The Company has adopted “Accounting Standards for Measurement of Inventories” (ASBJ Statement No. 9: July 5, 2006) from the current fiscal year.

The application of this standard does not have a material effect on earnings. 2. Practical Solution on Unification of Accounting Policies Applied to Foreign Subsidiaries for Consolidated Financial

Statements

Effective from the current fiscal year, the Company has adopted “Practical Solution on Unification of Accounting Policies Applied to Foreign Subsidiaries for Consolidated Financial Statements” (PITF No. 18: May 17, 2006) and has made the necessary adjustments to the consolidated financial statements. The application of this standard has a negligible effect on earnings. 3. Accounting standards for lease transactions

In prior years, the Company accounted for finance leases where there is no transfer of ownership as ordinary lease transactions for accounting purposes. Starting from the current fiscal year, the Company has adopted “Accounting Standards for Lease Transactions” (ASBJ Statement No. 13: originally issued on June 17, 1993 by Section 1 of the Business Accounting Deliberation Counsel, and revised on March 30, 2007 by Accounting Standards Board of Japan) and “Guidance on Accounting Standards for Lease Transactions” (ASBJ Guidance No. 16: originally issued on January 18, 1994 by Accounting Standards Committee of the Japanese Institute of Certified Public Accountants, and revised on March 30, 2007 by Accounting Standards Board of Japan), and using an accounting method for leases that is based on the method used for ordinary purchases and sales. For finance leases where there is no transfer of ownership that started prior to the fiscal year when these standards were first applied, the Company continues to use an accounting method that is based on the method used for ordinary lease transactions. This change has a negligible effect on earnings.


18

Reclassifications

FY03/2008 (Apr. 1, 2007 – Mar. 31, 2008)

FY03/2009 (Apr. 1, 2008 – Mar. 31, 2009)

(Consolidated balance sheets) Effective from the current fiscal year, the Company has adopted the revised accounting standards under the new Financial Instruments and Exchange Law. In conformation with the new accounting standards, “Certificates of deposits” (5,800 million yen in the current fiscal year), included in “Cash and deposits” under current assets in prior periods, is reclassified and included in “Short-term investments in securities.”

(Consolidated statements of income) In prior periods, the Group has classified certain expenses involving research and development as “Salaries and wages” and “Depreciation.” These expenses were then deducted by using the other account transfers included in “Other” and these expenses were added to research and development expenses included in “Other.” This process made it possible to recognize research and development expenses for the entire Group properly. Effective from the current fiscal year, these expenses are included directly in “Other” as research and development expenses in order to more clearly disclose the status of the Group’s operations. Compared with the method used in the previous fiscal year, this change reduced “Salaries and wages” by 827 million yen and “Depreciation” by 123 million yen and increased “Other” by 951 million yen.

(Consolidated balance sheets) Effective from the current fiscal year, the Company has adopted the revised accounting standards under the new Financial Instruments and Exchange Law. In conformation with the new accounting standards, “Mortgage securities” (3,000 million yen in the current fiscal year), included in “Other current assets” in prior periods, is reclassified and included in “Short-term investments in securities.”

(Consolidated statements of income) “Legal welfare expenses” (4,975 million yen,) included in “Welfare expenses” under selling, general and administrative expenses in the prior periods, is reclassified and presented as a separate line item in the current fiscal year, to clarify its contents. Accordingly, “Welfare expenses” (1,637 million yen in the current fiscal year) has decreased the materiality of impact in the context of consolidated financial statements and included in “Other.”

(Consolidated statements of income) “Travel expense” (4,547 million yen in the current fiscal year) and “Taxes other than income” (717 million yen in the current fiscal year), presented as separate accounts under SG&A expenses in prior periods, are reclassified and included in “Miscellaneous expenses” in the current fiscal year, since the amount has decreased the materiality of impact in the context of consolidated financial statements.

(Consolidated statements of income) “Loss on valuation of investment securities and other” under “Extraordinary loss” is divided into “Loss on valuation of investments securities” (153 million yen in the previous fiscal year) and “Other” (5 million yen in the previous fiscal year) in the current fiscal year. The purpose is to better facilitate comparisons of consolidated financial statements in conjunction with the switch of the EDINET system to XBRL.

(Consolidated statements of income) “Patent royalty income” (67 million yen), included in “Miscellaneous revenue” under non-operating income in prior periods, is reclassified and presented as a separate line item in the current fiscal year, given that it now represents more than 10/100 of total non-operating income.

(Consolidated statements of cash flows) “Loss (gain) on sales of investment securities and other” under “Net cash provided by (used in) operating activities” is reclassified and presented as “Loss (gain) on sales of investment securities” in the current fiscal year. The purpose is to better facilitate comparisons of consolidated financial statements in conjunction with the switch of the EDINET system to XBRL. In the previous fiscal year, “Loss (gain) on sales of investment securities” was 10 million yen and “Gain on sales of subsidiaries and affiliates’ stock” was 36 million yen.


19

FY03/2008 (Apr. 1, 2007 – Mar. 31, 2008)

FY03/2009 (Apr. 1, 2008 – Mar. 31, 2009)

(Consolidated statements of cash flows) “Loss (gain) on valuation of investment securities and other” under “Net cash provided by (used in) operating activities” is reclassified and presented as “Loss (gain) on valuation of investment securities” in the current fiscal year. The purpose is to better facilitate comparisons of consolidated financial statements in conjunction with the switch of the EDINET system to XBRL. In the previous fiscal year, “Loss (gain) on valuation of investment securities” was 153 million yen and “Decrease (increase) in other assets” was 5 million yen.

Notes to Consolidated Financial Statements

Notes to Consolidated Statements of Income Millions of yen

FY03/2008 (Apr. 1, 2007 – Mar. 31, 2008)

FY03/2009 (Apr. 1, 2008 – Mar. 31, 2009)

1. R&D expenses included in general and administrative expenses, and current period manufacturing costs

4,282

1. R&D expenses included in general and administrative expenses, and current period manufacturing costs

4,333

2. Gain on sale of fixed assets is due to sale of land. 2. Gain on sales of noncurrent assets is due to sale of machinery.

3. Loss on disposal of fixed assets is due to disposal of furniture and fixtures.

3. Loss on disposal of noncurrent assets is due to disposal of tools, furniture and fixtures and other.

Segment Information

a. Business segments

Business segment information for the two most recent consolidated fiscal years is as follows.

FY03/2008 (Apr. 1, 2007 – Mar. 31, 2008) Millions of yen

Cosmetics Cosmetaries Other Total Eliminations or corporate

Consolidated

I. Net sales and operating income

Net sales (1) Sales to third parties 134,139 43,559 2,524 180,222 - 180,222(2) Intragroup sales and

transfers 17 - 2,356 2,374 (2,374) -

Total sales 134,156 43,559 4,881 182,597 (2,374) 180,222Operating expenses 117,958 42,175 4,479 164,613 421 165,035Operating income 16,198 1,383 401 17,983 (2,796) 15,187II. Assets, depreciation,

impairment loss and capital expenditures

Assets 74,577 22,968 6,279 103,825 68,303 172,128Depreciation 3,410 1,209 378 4,998 454 5,452Impairment loss - - - - 27 27Capital expenditures 4,173 972 289 5,435 368 5,804


20

FY03/2009 (Apr. 1, 2008 – Mar. 31, 2009) Millions of yen

Cosmetics Cosmetaries Other Total Eliminations or corporate

Consolidated

I. Net sales and operating income

Net sales (1) Sales to third parties 132,517 43,821 1,782 178,121 - 178,121(2) Intragroup sales and

transfers - 0 2,412 2,412 (2,412) -

Total sales 132,517 43,821 4,195 180,534 (2,412) 178,121Operating expenses 117,944 43,685 3,751 165,380 437 165,818Operating income 14,572 136 444 15,153 (2,850) 12,303II. Assets, depreciation,

impairment loss and capital expenditures

Assets 74,599 23,210 5,958 103,769 63,151 166,920Depreciation 3,559 1,187 367 5,114 479 5,593Impairment loss - - - - 154 154Capital expenditures 4,444 1,274 393 6,113 509 6,622Notes: (1) Segmentation policies and breakdown of principal products by business segment

Information on business segments is based on operating segments reported for internal use by management. (Cosmetics) Principal products: KOSÉ, BEAUTÉ de KOSÉ, COSME DECORTE, PRÉDIA, INFINITY, JILLSTUART, CRIE, ALBION,

export of manufactured products and merchandise and overseas production (Cosmetaries)

Principal products: FASIO, ELSIA, SALON STYLE, SOFTYMO, STEPHEN KNOLL Collection, and RIMMEL (Other)

Principal products: Amenity products, real estate leasing and raw material exports

(2) Unallocated operating expenses included in eliminations or corporate consists primarily of expenses related to the administration division at the Company and expenses for basic research. Amounts are as follows:

Millions of yen FY03/2008 FY03/2009

2,799 2,852

(3) Corporate assets included in eliminations or corporate consist primarily of financial assets (cash and deposits, short-term investment securities and investment securities, etc.), deferred tax assets, and assets related to the administration division at the Company. Amounts are as follows:

Millions of yen FY03/2008 FY03/2009

68,343 63,213

(4) Depreciation and capital expenditures include amortization value and amount of increase of long-term prepaid expenses.

b. Geographic segment information

FY03/2008 (Apr. 1, 2007 – Mar. 31, 2008) No information on geographic segments has been presented because the Company and its consolidated subsidiaries have conducted over 90% of their total sales in Japan, and over 90% of the Company’s consolidated total assets were located in Japan. FY03/2009 (Apr. 1, 2008 – Mar. 31, 2009) No information on geographic segments has been presented because the Company and its consolidated subsidiaries have conducted over 90% of their total sales in Japan, and over 90% of the Company’s consolidated total assets were located in Japan.


21

c. Overseas sales

FY03/2008 (Apr. 1, 2007 – Mar. 31, 2008) I. Overseas sales (Millions of yen) 18,363 II. Consolidated sales (Millions of yen) 180,222 III. Share of overseas sales in total consolidated sales (%) 10.2

Notes: 1. No information on sales breakdown by country and region (excluding Japan) is presented since sales in none of these countries and regions did not exceed 10% of total consolidated sales.

2. Total overseas sales represent exports of the Company and its domestic consolidated subsidiaries, plus sales of the Company’s overseas consolidated subsidiaries in regions other than Japan. Intragroup sales have been eliminated from total sales.

FY03/2009 (Apr. 1, 2008 – Mar. 31, 2009) Asia Other area Total I. Overseas sales (Millions of yen) 18,530 573 19,103II. Consolidated sales (Millions of yen) 178,121III. Share of overseas sales in total consolidated sales (%) 10.4 0.3 10.7Notes: 1. Geographic area segments are based on geographical proximity and major market. 2. Countries and regions outside Japan are broken down into the following geographical areas (1) Asia: Taiwan, China, South Korea, Hong Kong, Singapore, etc. (2) Other area: Asia, other countries or regions other than Japan 3. Total overseas sales represent exports of the Company and its domestic consolidated subsidiaries, plus sales

of the Company’s overseas consolidated subsidiaries in regions other than Japan. Intragroup sales have been eliminated from total sales.

Per Share Information

Yen FY03/2008

(Apr. 1, 2007 – Mar. 31, 2008) FY03/2009

(Apr. 1, 2008 – Mar. 31, 2009)

Net assets per share 1,693.55Net income per share 115.50

Net assets per share 1,699.92Net income per share 81.55

Net income per share (diluted) is not presented since the Company has no outstanding securities.

Net income per share (diluted) is not presented since the Company has no outstanding securities.

Note: The following is a reconciliation of net income per share

Millions of yen

FY03/2008

(Apr. 1, 2007 – Mar. 31, 2008)FY03/2009

(Apr. 1, 2008 – Mar. 31, 2009)Net income 6,900 4,742Net income not available to common shareholders - -Net income applicable to common stock 6,900 4,742Average number of shares outstanding (thousand shares) 59,745 58,156


22

Subsequent Events

FY03/2008 (Apr. 1, 2007 – Mar. 31, 2008)

FY03/2009 (Apr. 1, 2008 – Mar. 31, 2009)

Acquisition of treasury stock The Company’s Board of Directors on May 8, 2008 approved the resolution to acquire its own shares pursuant to Article 156 which is applicable in accordance with Article 165, paragraph 3 of the Company Act, and the repurchase program was implemented as follows. 1. Details of the stock repurchase program authorized at the

Board of Directors meeting (1) Rationale The stock repurchase program will enable the Company to adopt timely and flexible financial strategies. (2) Type of shares authorized Common stock of the Company (3) Total number of shares authorized Up to 1,000,000 shares (4) Total value of shares authorized Up to 3,000 million yen (5) Repurchase schedule From May 9, 2008 to July 8, 2008 (6) Method of repurchase Purchase of treasury stock from market 2. Schedule From May 15, 2008 to June 6, 2008 3. Other The Company acquired 1,000,000 shares (2,438 million yen) of its common stock as a result of the above open-market purchases.

Omission of Disclosure

Notes on lease transactions, securities, retirement benefits, tax-effect accounting and related party transactions are not presented since the disclosure of this information is not significant in the context of the summary of financial results.


23

5. Non-consolidated Financial Statements

(1) Non-consolidated Balance Sheets Millions of yen

FY03/2008

(As of Mar. 31, 2008) FY03/2009

(As of Mar. 31, 2009) Assets

Current assets Cash and deposits 6,299 5,091Notes receivable-trade 47 60Accounts receivable-trade 12,575 12,733Short-term investment securities 28,776 26,452Merchandise 1,503 -Finished goods 3,468 -Raw materials 2,980 -Merchandise and finished goods - 5,355Work in process 450 359Supplies 2,069 -Raw materials and supplies - 4,868Prepaid expenses 156 364Deferred tax assets 2,513 2,515Short-term loans receivable 3,285 3,299Accounts receivable-other 803 884Other 1,307 1,592Allowance for doubtful accounts (1,166) (1,401)Total current assets 65,071 62,175

Noncurrent assets Property, plant and equipment

Buildings 20,493 23,059Accumulated depreciation (13,067) (13,581)Buildings, net 7,426 9,478

Structures 1,966 2,015Accumulated depreciation (1,609) (1,658)Structures, net 357 356

Machinery and equipment 10,797 10,498Accumulated depreciation (9,220) (9,181)Machinery and equipment, net 1,576 1,317

Vehicles 270 268Accumulated depreciation (236) (233)Vehicles, net 33 34

Tools, furniture and fixtures 17,445 17,997Accumulated depreciation (14,607) (15,419)Tools, furniture and fixtures, net 2,838 2,577

Land 12,830 12,830Construction in progress 1,233 3Total property, plant and equipment 26,294 26,598


24

Millions of yen

FY03/2008

(As of Mar. 31, 2008) FY03/2009

(As of Mar. 31, 2009) Intangible assets

Right of trademark 6 6Software 2,458 1,557Other 337 770Total intangible assets 2,802 2,334

Investments and other assets Investment securities 9,385 7,364Stocks of subsidiaries and affiliates 4,988 5,488Long-term loans receivable 44 42Long-term loans receivable from subsidiaries and affiliates

1,489 1,584

Long-term accounts receivable-other 5 10Long-term prepaid expenses 8 55Deferred tax assets 8,688 8,198Guarantee deposits 664 1,136Other 331 322Allowance for doubtful accounts (1,267) (1,456)Total investments and other assets 24,336 22,748

Total noncurrent assets 53,434 51,681Total assets 118,505 113,857Liabilities

Current liabilities Notes payable-trade 6,903 6,958Accounts payable-trade 2,028 2,282Short-term loans payable 3,400 3,400Accounts payable-other 3,366 3,058Accrued expenses 3,320 3,374Income taxes payable 366 96Accrued consumption taxes 273 -Deposits received 6,732 7,002Unearned revenue 12 10Provision for sales returns 972 912Notes payable-facilities 114 99Other 156 154Total current liabilities 27,647 27,349

Noncurrent liabilities Provision for retirement benefits 13,797 12,850Provision for directors’ retirement benefits 2,493 2,549Other 272 288Total noncurrent liabilities 16,563 15,688

Total liabilities 44,211 43,037


25

Millions of yen

FY03/2008

(As of Mar. 31, 2008) FY03/2009

(As of Mar. 31, 2009) Net assets

Shareholders’ equity Capital stock 4,848 4,848Capital surplus

Legal capital surplus 6,390 6,390Other capital surplus 0 0Total capital surplus 6,391 6,390

Retained earnings Legal retained earnings 774 774Other retained earnings

Reserve for reduction entry of replaced property 383 375General reserve 63,487 64,107Retained earnings brought forward 2,982 1,409

Total retained earnings 67,627 66,666Treasury stock (4,789) (7,228)Total shareholders’ equity 74,077 70,677

Valuation and translation adjustments Valuation difference on available-for-sale securities 215 142Total valuation and translation adjustments 215 142

Total net assets 74,293 70,819Total liabilities and net assets 118,505 113,857


26

(2) Non-consolidated Statements of Income Millions of yen

FY03/2008

(Apr. 1, 2007 – Mar. 31, 2008)FY03/2009

(Apr. 1, 2008 – Mar. 31, 2009)Net sales

Total net sales 89,093 87,895Cost of sales

Total cost of sales 35,764 36,263Gross profit 53,329 51,632Selling, general and administrative expenses

Selling expenses 24,787 24,642General and administrative expenses 25,511 26,400Total selling, general and administrative expenses 50,299 51,042

Operating income 3,029 589Non-operating income

Interest income 218 165Interest on securities 205 218Dividends income 1,991 2,305Miscellaneous income 154 133Total non-operating income 2,570 2,823

Non-operating expenses Interest expenses 79 92Provision of allowance for doubtful accounts 675 585Foreign exchange losses 744 107Miscellaneous loss 11 9Total non-operating expenses 1,512 795

Ordinary income 4,088 2,617Extraordinary income

Gain on sales of noncurrent assets 27 0Reversal of allowance for doubtful accounts 183 173Compensation for transfer - 85Total extraordinary income 210 259

Extraordinary loss Loss on disposal of noncurrent assets 54 185Loss on valuation of stocks of subsidiaries and affiliates

54 -

Loss on valuation of investment securities - 243Loss on valuation of investment securities and other 5 -Bad debts expenses 181 -Loss on abandonment of inventories 143 -Impairment loss 203 154Other - 7Total extraordinary losses 644 589

Income before income taxes 3,655 2,286Income taxes-current 409 367Income taxes-deferred 282 537Total income taxes 691 905Net income 2,963 1,381


27

(3) Non-consolidated Statements of Changes in Net Assets Millions of yen

FY03/2008

(Apr. 1, 2007 – Mar. 31, 2008)FY03/2009

(Apr. 1, 2008 – Mar. 31, 2009)Shareholders’ equity

Capital stock Balance at the end of previous period 4,848 4,848Changes of items during the period


Capital surplus Legal capital surplus



Other capital surplus Balance at the end of previous period 0 0Changes of items during the period

Disposal of treasury stock (0) (0)Total changes of items during the period (0) (0)

Balance at the end of current period 0 0Retained earnings

Legal retained earnings Balance at the end of previous period 774 774Changes of items during the period

Total changes of items during the period - -Balance at the end of current period 774 774

Other retained earnings Reserve for reduction entry of replaced property


Reversal of reserve for reduction entry of replaced property

(10) (7)

Total changes of items during the period (10) (7)Balance at the end of current period 383 375

General reserve Balance at the end of previous period 62,287 63,487Changes of items during the period

Provision of general reserve Total changes of items during the period 1,200 620

Balance at the end of current period 1,200 620Retained earnings brought forward 63,487 64,107

Balance at the end of previous period Changes of items during the period 3,609 2,982

Reversal of reserve for reduction entry of replaced property

10 7

Provision of general reserve (1,200) (620)Dividends from surplus (2,401) (2,341)Net income 2,963 1,381Total changes of items during the period (627) (1,572)



28

Millions of yen

FY03/2008

(Apr. 1, 2007 – Mar. 31, 2008)FY03/2009

(Apr. 1, 2008 – Mar. 31, 2009)Treasury stock

Balance at the end of previous period (1,827) (4,789)Changes of items during the period

Purchase of treasury stock (2,961) (2,441)Disposal of treasury stock 0 1Total changes of items during the period (2,961) (2,439)

Balance at the end of current period (4,789) (7,228)Total shareholders’ equity


Dividends from surplus (2,401) (2,341)Net income 2,963 1,381Purchase of treasury stock (2,961) (2,441)Disposal of treasury stock 0 1Total changes of items during the period (2,399) (3,400)

Balance at the end of current period 74,077 70,677Valuation and translation adjustments

Valuation difference on available-for-sale securities Balance at the end of previous period 334 215Changes of items during the period

Net changes of items other than shareholders’ equity

(118) (73)


Total valuation and translation adjustments Balance at the end of previous period 334 215Changes of items during the period

Net changes of items other than shareholders’ equity

(118) (73)


Total net assets Balance at the end of previous period 76,811 74,293Changes of items during the period

Dividends from surplus (2,401) (2,341)Net income 2,963 1,381Purchase of treasury stock (2,961) (2,441)Disposal of treasury stock 0 1Net changes of items other than shareholders’ equity

(118) (73)

Total changes of items during the period (2,518) (3,474)Balance at the end of current period 74,293 70,819


29

Going Concern Assumption

Not applicable. Note: This is a translation of Japanese kessan Tanshin (including attachments), a summary of financial statements

prepared in accordance with accounting principles generally accepted in Japan. This translation is prepared and provided for the purpose of the reader’s convenience. All readers are recommended to refer to the original version in Japanese of the report for complete information.

summary of financial results for the fiscal year ended march 31,...

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