English Translation Originally Issued in JapaneseThis is a translation of the original notice in Japanese. In the event of any discrepancy, the original
notice in Japanese shall prevail.

Asahi Breweries, Ltd.
(Ticker Code: 2502)

March 4, 2008
Dear Shareholders:

NOTICE OF THE 84th ANNUAL SHAREHOLDERS’ MEETING
You are cordially invited to attend the Annual Shareholders’ Meeting of Asahi Breweries, Ltd.
(the “Company”), which will be held as described below.
Upon attending the Meeting, please submit the enclosed voting form to the place of the
Meeting.
If you are unable to attend the Meeting in person, you may exercise your voting rights either
via postal mail or via Internet. Please review the attached “Reference Materials for
Shareholders’ Meeting” on pages 74 to 85 and exercise your voting rights no later than 5:30
p.m., Tuesday, March 25, 2008 (JST).
Voting via Postal Mail
Please indicate your consent/dissent concerning the items shown on the enclosed voting form,
and return the form to us by the deadline noted above.
Voting via Internet
After accessing our voting site at <http://www.webdk.net>, enter the voting code and password
provided on the enclosed voting form. Following the instructions on your screen, enter yourconsent/dissent concerning the items to be voted on by the deadline noted above. (This site canalso be accessed on the Internet via cellular phone.)
If you exercise your voting rights via the Internet, please review “Reminder to Shareholders
Concerning Online Voting” on pages 86 to 87.
* Please note that the online voting site is only available in the Japanese language.

Sincerely,
Hitoshi Ogita, President and Representative Director
Asahi Breweries, Ltd.
(Registered Head Office)7-1, Kyobashi 3-chome, Chuo-ku, Tokyo(Head Office)23-1, Azumabashi 1-chome, Sumida-ku, Tokyo11. DATE AND TIME
March 26 (Wednesday), 2008 at 1:00 p.m. (JST)
2. PLACE
Banquet Room “Tsuru”
The Main Banquet Floor of Hotel New Otani
4-1, Kioi-cho, Chiyoda-ku, Tokyo
3. MATTERS CONSTITUTING THE PURPOSE OF THE MEETING
Items to Be Reported:
Business Report, Consolidated Statutory Report, Non-Consolidated Statutory Report and reportof the audit of the consolidated accounts by the Independent Auditor and the Board of Statutory
Auditors for the 84th term, from January 1, 2007 to December 31, 2007.
Items to Be Resolved:
Item 1:
Item 2:Item 3:Item 4:

Appropriation of retained earnings for the 84th term
Amendments of the Articles of Incorporation
Election of eleven (11) Directors
Election of one (1) Statutory Auditor

2

BUSINESS REPORT
From January 1 to December 31, 2007

1. Overview of Operations of Asahi Breweries Group(1) Business Progress and Results
The Japanese economy continued its gradual recovery during 2007. Althoughfactors such as the high prices of oil and other raw materials and concerns about an
economic slowdown in the United States stemming from the subprime mortgage crisis
resulted in weakness in some sectors, capital investment rose backed by improved
corporate earnings, and growth in overall consumer spending remained robust.
In the alcoholic beverages industry, while the new genre market for non-maltbeer-flavored beverages maintained an expansionary trend as a result of brisk activities
in terms of new product introductions in the market for beers and beer-type beverages,
diversification of consumer preferences and the ongoing decline in the population were
the defining consumer trends. These environmental changes resulted in a year-on-yearslight decline in the size of the market for beers and beer-type beverages. A generaltrend turning from flat to declining with respect to sales volumes was also observed ineach of the categories other than beers and beer-type beverages. The low-alcohol
beverage segments, for example, stopped their continued growth.
In the soft drinks industry, aggressive efforts by every player to launch new
products and promote sales stimulated vigorous market activities. Demand was also
spurred by a record-mild winter followed by extremely hot conditions during the peaksummer consumption season. The overall industry sales volume grew by an estimated
3% compared with the previous year.
Against this backdrop, the Company and its consolidated subsidiaries and affiliates(collectively, the “Asahi Breweries Group,” or the “Group”) focused on raising
corporate brand value through efforts to establish a “new growth path” for the Group,
based on its “Third Medium-Term Management Plan” covering the three-year period tothe end of fiscal 2009.
These efforts and circumstances resulted in an increase in the Asahi BreweriesGroup’s net sales of 1.2% year-on-year to ¥1,464,071 million. Operating income
declined by 2.0% to ¥86,955 million, recurring income increased by 0.1% to ¥90,217
million, and net income increased by 0.0% to ¥44,797 million.

3

Net sales
Operating income
Recurring income
Net income

Asahi Breweries Group (Consolidated)

Asahi Breweries, Ltd. (Non-consolidated)¥1,464,071 million(up 1.2% year-on-year)¥86,955 million(down 2.0% year-on-year)¥90,217 million(up 0.1% year-on-year)¥44,797 million(up 0.0% year-on-year)¥1,030,736 million(down 0.0% year-on-year)¥79,933 million(up 1.7% year-on-year)¥77,372 million(up 1.4% year-on-year)¥40,513 million(up 4.1% year-on-year)

The following provides an overview of the Group’s operations by business segment.
Alcoholic Beverages Segment
In the domestic alcoholic beverages business, the Company implemented initiatives
to focus closely on customer needs within each market segment, based on a“back-to-basics” philosophy of pursuing customer satisfaction through the productoffering. The Company implemented energetic product development efforts aimed at
proposing new value offerings.
- Beers and Beer-type Products BusinessIn the beer sector, the Company took the opportunity presented by the 20th
anniversary of the launch of its “Asahi Super Dry” flagship brand in March 2007 to
focus on raising its brand value further while aggressively promoting sales. Led bysteady sales of canned beers from the peak summer season onwards, total annual sales
for the brand exceeded 100 million cases*1 for the 19th consecutive year.
In the happoshu (low-malt beer) sector, while working to build the “Honnama”
brand, the Company made further progress in developing a product lineup that caters to
the varied segments of the happoshu market with the launch of “Asahi Style Free,” aproduct intended to establish a new “zero-sugar”*2 market segment. This new producthas been favorably received by customers.
In the new genre sector, the Company updated the quality of “Asahi Gokuuma” and,in October 2007, launched “Asahi Ajiwai,” a product based on ingredients derived frombarley. Other efforts focused on energizing the market for beverages that use malt as aningredient.
*1 A case is a volume corresponding to 20 bottles of 633ml.
*2 “Zero-sugar” is defined as a sugar content of less than 0.5g per 100ml,
based on the Japanese labeling standards for nutritional content.

4

- Shochu, Low-Alcohol Beverages, Whisky and Other Spirits, and Wine BusinessIn the shochu sector, the Company channeled management resources into the major
brands such as “Kanoka”, “Satsuma Tsukasa” and “Daigoro”. It directed particularefforts to boosting the “Kanoka” brand with the national launch of two new brandmembers, “Honkaku-Mugi-Shochu Kanoka” and “Honkaku-Imo-Shochu Kanoka”.
In the low-alcohol beverages sector, the Company sought to expand sales of
attractive products, focusing its efforts primarily on the core brands “Asahi Cocktail
Partner” and “Asahi Shunka Shibori”. It also strove to create innovative value andstimulate demand through the introduction of new products such as “Asahi Tomate”, thefirst product to emerge from the ongoing joint development program with Kagome Co.,Ltd.
In the whisky and other spirits sector, the Company sought to develop the market
for home consumption of single malt whisky with the launch of “Single Malt Yoichi
500ml”. It also succeeded in reinforcing its market presence with the launch of arenewed version of the core “Black Nikka Clear Blend” brand to widespread acclaim.
In the wine sector, the Company promoted sales of domestically produced wine
under the “Sankaboshizai-Mutenka-Yuki Wine” (antioxidant-free organic wine) and“Sankaboshizai-Mutenka Wine Monogatari” brands, the former of which was renewedin 2007. The Company also worked on strengthening its “Sainte Neige” brand. In
imported wines, the Company focused on boosting sales by means of a varied productlineup, led by the “Baron Philippe” and “Gancia” labels among other key brands.
- International Alcoholic Beverages Business
The Group’s international business expansion efforts with respect to alcoholic
beverages continued to target Asian market. Anticipating future growth in China, theGroup invested in upgrading the production capabilities of locally based brewers inwhich it owns an equity stake. It also achieved steady growth in markets of Europe, theUnited States, Oceania and Russia.
Net sales recorded in the alcoholic beverages business segment amounted to¥1,012,255 million, an increase of 0.5% compared with the previous year. This reflected
the sluggish nature of the overall Japanese market for beers and beer-type products butwith a positive impact of a transfer of part of the Group’s wholesaling operations to
outside the Group. Operating income increased 1.4% year-on-year to ¥79,284 million,
reflecting successful efforts to improve operating efficiency to counter the impact ofsoaring raw materials prices.

5

Soft Drinks Segment- Domestic Soft Drinks BusinessIn the domestic soft drinks business, Asahi Soft Drinks Co., Ltd. pursued a growthstrategy while implementing further structural reforms and seeking to establish growthin new areas aiming at realizing dramatic growth in this sector.
Efforts focused on investing management resources for further development of the
key brands at the heart of the growth strategy, namely, “WONDA,” “Mitsuya Cider”
and “Asahi Juroku-Cha”. Efforts were also directed at strengthening and cultivatingother existing brands, notably “Asahi Fujisan-no Vanadium Ten-Nen-Sui”. Elsewhere,
aggressive product development efforts concentrated on creating new products tailoredto diverse consumer preferences.
Structural reforms within this segment targeted further improvements in theearnings structure, notably through an initiative to optimize the Group’s production andlogistics systems through enhanced cooperation among its members. This included amove to begin carbonated soft drink production at the Company’s Ibaraki Plant.
Initiatives to establish growth in new areas involved efforts to construct a fresh
platform for growth with respect to products and sales channels*3 by seizing growth
opportunities presented by the increasing diversity of customer requirements as well as
lifestyle changes. In October 2007, moreover, Asahi Soft Drinks signed a joint ventureagreement with Calpis Co., Ltd. to merge its vending machine operations with those of
Asahi Soft Drinks. This move served to increase the strength and efficiency of theGroup’s vending machine operations, a crucial sales channel for the soft drinks industry.
The joint venture Asahi Calpis Beverage Co., Ltd. was established in December 2007
by both parties.
*3 Sales channels mean direct and indirect retail sales routes for soft drinks,
including supermarkets, discount outlets, convenience stores, vending
machines, mail order and sales activities conducted by contracted distributors.
- International Soft Drinks Business
The Group’s international soft drinks business expansion efforts remained focused
primarily on China and South Korea. Tingyi-Asahi-Itochu Beverages Holding Co., Ltd.
in China continued to perform particularly well with increased productivity andprofitability.
The soft drinks business segment achieved net sales of ¥299,663 million, an
increase of 5.8% compared with the previous year. Operating income, however,declined by 40.7% year-on-year to ¥4,593 million, mainly due to the impact of soaring
raw materials prices and aggressive sales promotion campaigns expenditures.
6

Foods and Pharmaceuticals Segment
In the foods and pharmaceuticals segment, Asahi Food & Healthcare Co., Ltd.
sought to expand operations and reinforce its business base by continuing to implementa basic strategy targeting growth, structural reforms and the maintenance of high levelsof product safety.
The mainstay product “Mintia” (breath mints) retained its popularity as the leading
brand of this item during 2007. Other sales expansion efforts focused on the mainstay
products “Balance Up” (a nutritionally balanced snack bar) and “Slim Up Slim” (ahealth food for use in calorie-controlled dieting). The Group also sought to develop a
new core brand with the introduction in April 2007 of the dietary supplement“Dear-Natura”. Asahi Food & Healthcare notched up other successes in its efforts tolaunch new products and expand sales in the food product materials business including
brewer’s yeast extract and freeze-dried ingredients, and in the direct marketing business.
As a result of such efforts, the Group achieved a steady increase in sales in this sector.
Wakodo Co., Ltd. pursued a basic strategy of improving earnings whilestrengthening its business base to support further growth. Efforts during 2007 focusedon expanding the business and reinforcing the base of operations. The subsidiary
renewed its mainstay range of baby foods sold under the “Eiyo Marche” brand, as wellas “Gyunyuya-san no Kohii” (a coffee-taste powder instant drink). Alongside such
efforts to strengthen its brands, Wakodo also strove to promote structural reforms in abid to secure its profit base by making fixed-cost expenditures including promotional
spending more cost-efficient and trimming manufacturing costs.
Net sales in the foods and pharmaceuticals business segment amounted to ¥67,088
million, a gain of 24.7% compared with the previous year. Operating income rose
201.9% year-on-year to ¥1,343 million, boosted by higher sales of mainstay products
and increased cost efficiencies.
Other Businesses Segment
As a result of lower sales due to mainly the transfer of part of wholesaling
operations to outside the Group, net sales in this segment fell 16.5% as compared withthe previous year to ¥85,064 million, while operating income declined 20.7% to ¥1,724
million.

7

Asahi Breweries Group Breakdown of Net Sales (Consolidated)
83rd Term
84th Term
2007
2006
Segment(Under review)(Previous)
Alcoholic Beverages¥1,012,255¥1,007,557
Soft Drinks
299,663
283,121(Million yen)
Change inAmountChange inPercentage¥4,6980.5%

16,541

5.8

Foods and Pharmaceuticals

67,08853,791

13,296

24.7

Other Businesses

85,064

101,914(16,850)(16.5)

1,464,071

1,446,385

17,686

1.2

Total

Note: The above figures exclude intra-Group sales.

Asahi Breweries, Ltd. Breakdown of Net Sales (Non-consolidated)
84th Term
83rd Term
2007
2006
Business Area
(Under review)(Previous)
Beers and Beer-Type Products¥891,888¥893,893(Million yen)
Change inAmountChange inPercentage¥(2,004)(0.2)%(Beer)

705,462

718,169(12,707)(1.8)(Happoshu)

124,697

108,561

16,136

14.9(New Genre)

61,72967,162(5,432)(8.1)

Shochu54,87857,177(2,298)(4.0)

Low-Alcohol Beverages

35,70732,741

2,965

9.1

Whisky and Other Spirits

27,32627,436

(109)

(0.4)

Wine

15,26315,064

198

1.3

Other Alcoholic Beverages

3,234

2,896

338

11.7

Real Estate and Others

2,437

1,852

584

31.6

1,030,736

1,031,060

(324)

(0.0)

Total

Note: “Other Alcoholic Beverages” above includes beer-tasted soft drinks and soft drinks for on-sitesales.

(2) Management Perspectives
Fiscal 2008 marks the second year of the Asahi Breweries Group’s “Third
Medium-Term Management Plan”. The three major issues for the Group’s businessduring the year are “brand cultivation and reinforcement”, “reform of the earnings
structure” and “investment for dramatic growth”.
To achieve “brand cultivation and reinforcement,” the Group plans to propose newvalue offerings tailored to changing consumer lifestyles. In the alcoholic beverages
business, the focus will be on making further progress in developing brands andproducts that continue to enjoy customer support. The Group operations will
increasingly emphasize development of new value offerings through reorganization of
the R&D organization and greater use of the results achieved through business alliances.
In pursuing “reform of the earnings structure,” the Group will review and improve
its overall operations including procurement, manufacturing, logistics and marketing on
8

a segment basis and/or on an entire Group basis rather than individual member company
basis, and aim to reinforce its earnings structure less vulnerable to changes in thebusiness environment.
To achieve “investment for dramatic growth,” the Company will positively seek
and review opportunities of business investment and strategic alliances for growth
towards establishment of the Group’s future vision while each of the individual member
companies of the Group shall be responsible to pursue its own growth.
The Domestic Alcoholic Beverages BusinessIn the alcoholic beverages business, the Company plans to build its brands bystrengthening its product development capabilities in a bid to counter the adverse effectsof shifting consumer trends and unavoidable hike in manufacturer prices in beers andbeer-type beverages arising out of sharp increases in raw materials prices. The
Company also aims to reinforce its sales and marketing systems underpinning these
initiatives while working to increase its profit margins.
In the beers and beer-type beverages sector, the Company will conduct sales
promotion and other marketing campaigns for the “Asahi Super Dry” brand to reap the
benefits of the successful work undertaken in 2007 to build the value of the brand in its
20th year on the market. At the same time, the Company plans to step up its efforts tocultivate the home consumption market for premium beers. In the happoshu (low-maltbeer) sector, the Company plans to focus on developing the “Asahi Style Free” brandand the “Honnama” brand. In the new genre sector, advertising campaigns and sales
promotion activities aimed at cultivating the brands will concentrate on expanding salesof “Asahi Ajiwai” and “Clear Asahi”, a new product to be launched in March 2008. In
the categories of shochu, low-alcohol beverages, whisky and other spirits and wine, theCompany aims to achieve steady growth in sales by improving proposals that enhancethe values of core brands, while at the same time progressing with earnings structurereforms aimed at achieving more stable profits.
Group Operations
In the soft drinks business, the Company is making Asahi Soft Drinks Co., Ltd., acore member company of the Group in this segment, into a wholly owned subsidiary,
enabling the Group to pursue a dramatic growth in the soft drinks sector by more
efficient shared utilization of management resources in individual member companies
and more agile Group management. Asahi Soft Drinks will continue pursuing a growthstrategy that focuses on strengthening its core brands, while at the same time
implementing further structural reforms including optimization of its production andlogistics systems. In addition, Asahi Soft Drinks is to integrate its vending machine
operations with those of Calpis Co., Ltd. in a bid to make its vending machine business9

more competitive by generating synergistic benefits from the said integration.
In the foods and pharmaceuticals business, Asahi Food & Healthcare Co., Ltd.,
Wakodo Co., Ltd. and Sanwell Co., Ltd., the three core companies of the Group in thissegment, are struggling to promote growth in the sales of core products in thespecialized areas of each of these companies including confectionery, instant meals,
baby foods, health foods and seasonings. The Group aims to strengthen this overallbusiness with possible new investments in this sector in mind.
Development of international operations is based on the future Group vision of
securing positions of one of the leading companies in the Asian region enjoying a rapid
economic growth. The Group plans to work on strengthening the business base of its
existing operations while striving to improve profitability and at the same time withpossible new investments and entry into business alliances in the international arena inmind.
Through the “Third Medium-Term Management Plan,” the Asahi Breweries Groupwill endeavor to establish a solid growth path for each business of the Group. At thesame time, the Group will seek to boost its overall corporate value through the pursuitof optimal financial and cash flow strategies. The Group prioritizes investment
opportunities that will help expand its business base, and will pursue and implement
strategic acquisitions and alliances within the “food and healthcare” sector, both inJapan and abroad. No less important than this, the Group intends to follow a flexible
cash flow strategy designed to boost shareholder returns through an optimized mixtureof dividends and treasury stock purchases and to improve its capital efficiency.
The Company cordially requests shareholders’ continuing encouragement andsupport.
(3) Capital Investment Activities
Consolidated capital expenditures in the year under review totaled ¥44,480 million,a large portion of which represented investments made to upgrade existing facilities andimplement energy conservation measures. Other projects are specified below:
Major capital investments and facility upgrades in process during 2007
Segment concerned: Alcoholic beverages and soft drinks operations
Item and expenditure: Manufacturing facility for soft drinks and low-alcohol
beverages: ¥11,630 million (at Ibaraki Plant, Asahi Breweries, Ltd.: total projected
capital investment of ¥22,500 million, with completion scheduled for May 2009)10

(4) Financing Activities
Asahi Breweries, Ltd. procured the necessary fund including that for our capital investment
activities described in above (3) by loans from financial institutions and issuance of commercial
paper. The Company also launched two unsecured bonds, to meet funding requirements forredemption of corporate bonds matured during the year under review, on June 22, 2007, #28(¥15 billion, 4-year maturity) and #29 (¥10 billion, 7-year maturity).

(5) Status of Principal Lenders(As of December 31, 2007)
LenderOutstanding Balance(Million yen)

Sumitomo Mitsui Banking Corporation

20,500Mizuho Corporate Bank, Ltd.

15,500The Dai-ichi Mutual Life Insurance Company

10,000The Sumitomo Trust & Banking Co., Ltd.

10,000

The Norinchukin Bank

10,000

Fukoku Mutual Life Insurance Company

8,500

The Bank of Tokyo-Mitsubishi UFJ, Ltd.

7,000

Sumitomo Life Insurance Company

6,000

Development Bank of Japan

3,625

Mitsubishi UFJ Trust and Banking Corporation

3,500(6) Financial and Profit/Loss Indicators
A. Financial and Profit/Loss Indicators of Asahi Breweries Group (Consolidated)
81st Term
2004

82nd Term
2005

83rd Term
2006

84th Term
2007(Under review)

1,444,225

1,430,026

1,446,385

1,464,071

Recurring income (million yen)

95,65091,45990,10990,217

Net income (million yen)

30,59539,87044,77544,797

Earnings per share (yen)

62.52

82.22

94.02

94.94

Total assets (million yen)

1,250,818

1,218,226

1,288,501

1,324,391

Net assets (million yen)

417,827454,891

509,774

529,782

Net assets per share (yen)860.66951.12

1,012.77

1,089.33

Net sales (million yen)11

Notes:1. Earnings per share are calculated based on the average total number of shares outstanding during
the term. Net assets per share are calculated based on the total number of shares outstanding at
term-end. The number of shares outstanding is exclusive of treasury stock.
2. Effective the 83rd term (FY2006), the Asahi Breweries Group adopted Corporate AccountingStandard No. 5 and Corporate Accounting Standard Implementation Guideline No. 8 issued by the
Accounting Standards Board of Japan, both of which relate to the balance-sheet presentation of net
assets.

B. Financial and Profit/Loss Indicators of Asahi Breweries, Ltd. (Non-Consolidated)
81st Term
2004

82nd Term
2005

83rd Term
2006

84th Term
2007(Under review)

1,116,360

1,054,161

1,031,060

1,030,736

Recurring income (million yen)

88,65976,90576,307

77,372

Net income (million yen)

28,19635,49838,90240,513

Earnings per share (yen)

57.80

73.41

81.69

85.84

Total assets (million yen)

1,038,319

981,151

1,014,878

1,070,506

Net assets (million yen)403,763433,689449,270482,026

Net assets per share (yen)831.88907.02954.481,020.24

Net sales (million yen)

Notes:
1. Earnings per share are calculated based on the average total number of shares outstanding during
the term. Net assets per share are calculated based on the total number of shares outstanding at
term-end. The number of shares outstanding is exclusive of treasury stock.
2. Effective the 83rd term (FY2006), Asahi Breweries, Ltd. adopted Corporate Accounting Standard
No. 5 and Corporate Accounting Standard Implementation Guideline No. 8 issued by the
Accounting Standards Board of Japan, both of which relate to the balance-sheet presentation of
net assets.

12(7) Principal Subsidiaries
Company Name
Asahi Soft Drinks Co., Ltd.

Capital(Million yen)
11,081

Shareholdings (%)

Main Operations

97.4

Production and sales of softdrinks
Production and sales offoods and pharmaceuticals
Production and sales offoods and pharmaceuticals
Production of alcoholic
beverages
Production of alcoholic
beverages
Management of real estate
assetsCargo transportation

Asahi Food & HealthcareCo., Ltd.
Wakodo Co., Ltd.

3,200

100.0

2,918

100.0

The Nikka Whisky DistillingCo., Ltd.
Sainte Neige Wine Co.,Ltd.
Asahi Beer Real Estate,
Ltd.
Asahi Logistics, Ltd.

14,989

100.0

125

100.0

200

100.0

80

100.0

Asahi Food Create, Ltd.

40

100.0

LB Co., Ltd. (Saitama)

487

67.9

LB Co., Ltd (Nagoya)

55

97.0

4,744
(374,910 thousand RMB)
3,882
(276,000 thousand RMB)
3,032
(218,804 thousand RMB)
9,460
(100,000 million KRW)
3,720
(US$32,000 thousand)

47.0

Operation of bars andrestaurants
Production and sales of softdrinks
Production and sales of softdrinksBrewing and sales of beer

55.0

Brewing and sales of beer

53.0

Brewing and sales of beer

41.0

Production and sales ofsoft drinks
Sales of beer

Beijing Beer Asahi Co.,Ltd.
Hangzhou Xihu Beer Asahi
Co., Ltd.
Yantai Beer Asahi Co.,Ltd.
Haitai Beverage Co., Ltd.
Asahi Beer U.S.A., Inc.

99.2

Notes:
1. The percentage of shareholdings includes indirect shareholdings.
2. The Company’s shareholding in Asahi Soft Drinks Co., Ltd. increased from 51.2% to 97.4%
following a tender offer conducted during the period from October 26, 2007 to December 6, 2007.
3. Wakodo Co., Ltd. became a wholly owned subsidiary of the Company as of April 1, 2007
following a share exchange.
4. Asahi Food Create, Ltd. merged with Asahi Beer Restaurant Services, Ltd., formerly a subsidiaryof the Company, effective as of April 1, 2007.
5. The paid-in capital of Beijing Beer Asahi Co., Ltd. decreased to ¥4,744 million (from ¥11,426
million as of December 31, 2006) following a voluntary reduction in registered capital on January
23, 2007. It did not alter the percentage of shareholding by the Company.

13(8) Acquisition or Disposal of Other Company Shares, Equity Stakes and Stock
Acquisition Rights
In accordance with a resolution approved at a meeting of the Board of Directors on
February 6, 2007, Asahi Breweries, Ltd. concluded a business and capital tie-up
agreement with Kagome Co., Ltd. Pursuant to the terms of this agreement, the Company
subscribed to 10 million newly issued shares of Kagome common stock through a
private placement as the result of which the Company acquired an equity stake of 10.0%
in Kagome.
Separately, in accordance with a resolution that was approved at a meeting of theBoard of Directors on October 25, 2007, Asahi Breweries, Ltd. conducted a tender offer
for common shares in Asahi Soft Drinks, Co., Ltd. aiming to make that company awholly owned subsidiary of the Company and as the result of which successfullyacquired 24,325,297 shares of common stock of Asahi Soft Drinks increasing theCompany’s equity stake in Asahi Soft Drinks to 97.4%.
(9) Principal Operations(As of December 31, 2007)

The Group’s principal operations and products are as listed below:
Principal
Operations

Principal Products
Asahi Super Dry, Asahi Premium Draft Beer Jukusen, Asahi Prime Time,Asahi Honnama Draft, Asahi Honnama Aqua Blue, Asahi Style Free, Asahi
Zeitaku Biyori, Asahi Ajiwai, Asahi Gokuuma, Asahi Gubinama, Asahi
Shinnama 3 (beers and beer-type beverages)

Alcoholic
Beverages

Kanoka, Satsuma Tsukasa, Daigoro, Ichibanfuda, SAZAN (shochu)
Asahi Cocktail Partner, Asahi Shunka Shibori, Asahi Tomate (low-alcohol
beverages)
Taketsuru, Black Nikka Clear Blend, Single Malt Yoichi (whisky)Sainte Neige, Baron Philippe, Louis Latour, Piper-Heidsieck, Caliterra,
Gancia, ALMADEN (wine)

Soft Drinks

Mitsuya Cider, Wilkinson, Bireley’s, WONDA, Asahi Juroku-Cha, Asahi
Wakamusha, FAUCHON, Asahi Ikkyu-Chaba Oolong-Cha, Asahi Fujisan-no
Vanadium Ten-Nen-Sui, Asahi Super H2O

Foods andPharmaceuticals

EBIOS, Dear-Natura, Slim Up Slim, Mintia, Balance Up,
Haihai (baby milk), Gungun (baby milk), Eiyo Marche (baby food),
Gyunyuya-san no Kohii (coffee), Oshibori Wetty (wet tissues), Siccarol (babyskincare powder)14

(10) Principal Offices and Factories(As of December 31, 2007)
Asahi
Breweries,
Ltd.

Registered
Head Office7-1, Kyobashi 3-chome, Chuo-ku, Tokyo

Head Office23-1, Azumabashi 1-chome, Sumida-ku, Tokyo

Regional
Sales
Offices

Hokkaido Branch (Sapporo), Tohoku Regional Headquarters(Sendai), Tokyo Regional Branch (Chuo-ku, Tokyo), Chubu
Regional Headquarters (Nagoya), Hokuriku Regional Headquarters(Kanazawa), Kinkiken Regional Headquarters (Osaka),
Nishi-Chugoku Regional Branch (Hiroshima), Shikoku Regional
Headquarters (Takamatsu), Kyushu Regional Headquarters(Fukuoka)

Production
Facilities

Hokkaido Brewery (Sapporo),
Fukushima Brewery (Motomiya, Fukushima Prefecture), Ibaraki
Brewery (Moriya, Ibaraki Prefecture),
Kanagawa Brewery (Minami-ashigara, Kanagawa Prefecture),
Nagoya Brewery (Nagoya), Suita Brewery (Suita, Osaka
Prefecture), Nishinomiya Brewery (Nishinomiya, Hyogo
Prefecture), Shikoku Brewery (Saijo, Ehime Prefecture), Hakata
Brewery (Fukuoka)

Laboratories

Development Laboratories for Alcoholic Beverages,
Research Laboratories of Brewing Technology,
Development Laboratories for Food Product,
Research Laboratories for Food Technology,
Research Laboratories for Food Safety Chemistry,
Research & Development Laboratories for Packaging,Research & Development Laboratories for Sustainable Value
Creation,
Research Laboratories for Health & Gustatory Science(all in Moriya, Ibaraki Prefecture)

Overseas
Offices

North America Office (U.S.A.), Europe Branch (U.K.)
International Headquarters for China (China)

15

Subsidiaries

Domestic

Asahi Soft Drinks Co., Ltd.
Headquarters:

Sumida-ku, Tokyo

Sales offices:

Shutoken Branch Office (Chuo-ku, Tokyo),
Kinkiken Branch Office (Osaka), and nine others

Production
facilities:

Kashiwa (Kashiwa, Chiba Prefecture), Mt. Fuji
(Fujinomiya, Shizuoka Prefecture), Hokuriku(Nyuzen-machi, Shimoniikawa-gun, Toyama
Prefecture), Akashi (Akashi, Hyogo Prefecture)

Asahi Food & Healthcare Co., Ltd.
Headquarters:

Sumida-ku, Tokyo

Wakodo Co., Ltd.
Headquarters:

Chiyoda-ku, Tokyo

The Nikka Whisky Distilling Co., Ltd.
Headquarters:

Minato-ku, Tokyo

Sainte Neige Wine Co., Ltd.
Headquarters:
Overseas

Yamanashi, Yamanashi Prefecture

Beijing Beer Asahi Co., Ltd. (China),
Hangzhou Xihu Beer Asahi Co., Ltd. (China),
Yantai Beer Asahi Co., Ltd. (China),
Haitai Beverage Co., Ltd. (Korea),
Asahi Beer U.S.A., Inc. (U.S.A.)(11) Employees(As of December 31, 2007)
A. Employees of the Asahi Breweries Group (Consolidated)
Business Segment

Number of Employees

Alcoholic Beverages

7,424(up 127)

Soft Drinks

4,264(up 154)973(up 14)

2,938(up 24)

15,599(up 319)

Foods and Pharmaceuticals
Other Businesses
Total

Note: Figures in parentheses represent increases or decreases from the end of the previous term.

B. Employees of Asahi Breweries, Ltd. (Non-Consolidated)
Full-time Employees

Average Age

Average Years ofService

Average Annual
Compensation

3,725 (up 53)

40.5

14.2

¥8,617,898

Notes:
1. Figures in parentheses represent increases or decreases from the end of the previous term.
2. Full-time employees include 216 persons seconded to the Company from other companies.
3. In addition to the employees enumerated above, the Company employs 133 persons on a term
contract basis.
16

(12) Overview of other significant Asahi Breweries Group activities
Research and Development
R&D operations have principally involved the development of new products andtechnologies to reinforce the Group’s existing businesses and to foster new businessdevelopment. Notable R&D achievements in the year under review are outlined below:•

The development of happoshu brand of “Asahi Style Free” employed a production
method known as “high-fermentation brewing”. This method generates productsthat have the highest degree of fermentation of any of the beer-type products madeby the Company (up to about 30% more than regular happoshu of the Company).
It involves selecting optimal fermentation conditions to ensure the highest level ofyeast activation. As a result, the yeast consumes virtually all the sugars containedin the ingredients, producing a “zero-sugar” happoshu.

•

The Company’s studies on the hop resistance of beer-spoilage lactic acid bacteria,
which has been a major issue for the brewing industry for many years, hasreceived praise from many quarters, because the works have contributed
significantly to the development of more stable production methods for draft beer.
In 2007, the Brewing Society of Japan bestowed the “Young Scientist Award” on
one of the Company’s engineers in recognition of the value of this important
study.

•A major reorganization of the R&D function was carried out in October 2007 withthe aim of creating an organization that would enable the R&D Division to make amore definitive and strategic contribution. The move involved strengthening the
R&D focus on each of the Group’s core businesses, while at the same time
promoting horizontal intra-Group project management to facilitate generation ofsynergistic benefits from sharing of technologies among Group firms. The neworganization also aims to stimulate the development of new products andbusinesses that offer fresh value.

17

Corporate Social Responsibility (“CSR”)
The Asahi Breweries Group regards CSR-related activities as “proactive measures
to enhance corporate value.” In 2007, the Group formulated a new “Asahi BreweriesGroup CSR Policy” to promote such activities. In line with this policy, the Group has
identified six priority areas for CSR-related activities: “pursuit of quality”; “compliancewith laws and ethical norms”; “environmental conservation;” “appropriate information
disclosure”; “living in harmony with local communities”; and “educational activities toencourage responsible drinking in moderation”. The Group’s CSR Committee oversees
initiatives in these areas; related activities for 2007 are outlined below.
•

Pursuit of quality is a critical responsibility—indeed, a lifeline—for a food andbeverages manufacturer. The Company has established the Group Quality
Committee to promote the QA function and to facilitate greater sharing of
quality-related information. Many of the Group companies participated in thework of this committee during 2007, helping deepen knowledge of quality-related
issues throughout the Group.

•As part of its environmental conservation activities, the Group has set a target for
reduction of CO2 emissions for fiscal 2010, the middle year in the five-year period(fiscal 2008–2012) of emissions reduction commitments under the first stage ofthe Kyoto Protocol. Energy conservation programs are ongoing across the Group.
The Group also places importance on activities that help educate the next
generation about the environment as part of its environmental conservation
activities. In 2007 it sponsored an environmental education program that targets
high-school students in the Tohoku region of Japan. The main emphasis of thisprogram is on practical steps that can be taken to tackle environmental issues.

•

As part of activities to encourage responsible drinking, the Company published aJapanese translation of “Drinking in Context,” a book originally published by theInternational Center for Alcohol Policies (ICAP). By promoting deeper
understanding of the role played by alcohol in society, this publication aims topromote responsible drinking from the viewpoints in Japan as well as different
cultures in the world. The Group, as a company group doing alcohol productbusinesses in carrying out its social responsibility, continuously conductededucational activities in a bid to eradicate drunken driving and prevent minors
from drinking alcohol.

18

2. Overview of the Company(1) Shares Outstanding(As of December 31, 2007)
A. Total number of authorized shares

972,305,309

B. Number of shares issued

483,585,862

C. Number of shareholders

115,588(Increased by 1,745 from the end of the previous term)

D. Major shareholders
Shareholders’ Investment in the Company
Number of
Shares Held(in hundreds)

Percentage ofShares Held (%)

The Master Trust Bank of Japan, Ltd. (Trust Account)

288,796

6.0

Japan Trustee Services Bank, Ltd. (Trust Account)

189,688

3.9

Asahi Kasei Corporation

187,853

3.9

The Dai-ichi Mutual Life Insurance Company

179,200

3.7

Fukoku Mutual Life Insurance Company

168,830

3.5

Sumitomo Mitsui Banking Corporation

90,280

1.9

The Sumitomo Trust & Banking Co., Ltd.

81,2601.7

Sumitomo Life Insurance Company

70,9001.5State Street Bank and Trust Company 505103

70,234

1.5

Mizuho Corporate Bank, Ltd.

69,447

1.4

Total

1,396,488

28.9

Note: The Company holds treasury stock numbering 111,240 hundred shares. However, the Company is
excluded from the above list of major shareholders.

19(2) Status of Share Purchase Warrants, etc.
Share purchase warrants held by Directors and Statutory Auditors of the Company,
granted as part of remuneration for execution of their duties(As of December 31, 2007)
A. Stock option system based on acquisition of treasury stock, adopted by resolution of theBoard of Directors at its meeting of March 30, 2000.
•

Class and number of shares subject to the warrants:
Common shares: 21,000 shares•

Payment due upon exercise of the warrants:¥1,115 per share•

Exercise period:
January 1, 2005 to March 29, 2010•

Conditions for exercise of the warrants:
The warrants are exercisable even after the resignation of Directors or
Statutory Auditors, as the case may be.
The warrants may be passed on to heirs.
The warrants shall be extinguished if the holders are dismissed for certain
specific reasons.
Any assignment or pledging of the warrants is prohibited.

•

Situation of holding of the share purchase warrants by Directors and Statutory
Auditors:

Type of Grantee

Number of Shares
Subject to Share
Purchase Warrants

Number of Holders

Directors(except Outside Directors)

14,000 shares

6

Outside Directors

4,000

2

Statutory Auditors

3,000

1

B. Stock option system based on acquisition of treasury shares, adopted by resolution of
the Board of Directors at its meeting of March 29, 2001.
•

Class and number of shares subject to the warrants:
Common shares: 88,000 shares

20

•

Payment due upon exercise of the warrants:¥1,185 per share•

Exercise period:
January 1, 2005 to March 28, 2011•

Conditions for exercise of the warrants:
The warrants are exercisable even after resignation of Directors or Statutory
Auditors, as the case may be.
The warrants may be passed on to heirs.
The warrants shall be extinguished if the holders are dismissed for certain
specific reasons.
Any assignment or pledging of the warrants is prohibited.

•

Situation of holding of the share purchase warrants by Directors and Statutory
Auditors:

Type of Grantee

Number of Shares
Subject to Share
Purchase Warrants

Number of Holders

Directors(except Outside Directors)

56,000 shares

6

Outside Directors

16,0002

Statutory Auditors

16,0001

C. Stock option system based on subscription rights, adopted by resolution of the Board of
Directors at its meeting of March 28, 2002•

Class and number of shares subject to the subscription rights:
Common shares: 143,000 shares•

Payment due upon exercise of the subscription rights:¥1,090 per share•

Exercise period:
January 1, 2005 to March 27, 2012•

Conditions for exercise of the subscription rights:
The rights are exercisable even after resignation of Directors or Statutory
Auditors, as the case may be.
The rights may be passed on to heirs.
The rights shall be extinguished if the holders are dismissed for certain
specific reasons.
Any assignment or pledging of the rights is prohibited.
21

•Situation of holding of share purchase warrants by Directors and Statutory
Auditors:
Type of Grantee

Number of Shares
Subject to Subscription
RightsNumber of Holders

Directors(except Outside Directors)

83,000 shares

7

Outside Directors

20,0002

Statutory Auditors

40,0002

D. The First Issue of share purchase warrants adopted by resolution of the Board of
Directors at its meeting of March 28, 2003.
•

Number of share purchase warrants:
109•

Class and number of shares subject to the share purchase warrants:
Common shares: 109,000 shares•

Payment due upon exercise of the share purchase warrants:¥830 per share•

Exercise period:
March 28, 2005 to March 27, 2013•

Conditions for exercise of the share purchase warrants:
The rights are exercisable even after the resignation of Directors or Statutory
Auditors, as the case may be.
The warrants may be passed on to heirs.
The warrants shall be extinguished if the holders are dismissed for certain
specific reasons.
Any assignment or pledging of the warrants is prohibited.

•

Situation of holding of the share purchase warrants by Directors and Statutory
Auditors:
Type of Grantee

Number of Share
Purchase Warrants

Number of Shares
Subject to Share
Purchase Warrants

Number of Holders

Directors(except Outside Directors)

54

54,000 shares

4

Outside Directors

20

20,0002

Statutory Auditors

35

35,0003

22

E. The Second Issue of share purchase warrants adopted by resolution of the Board of
Directors at its meeting of March 30, 2004.
•

Number of share purchase warrants:
1,800

•

Class and number of shares subject to the share purchase warrants:
Common shares: 180,000 shares•

Payment due upon exercise of the share purchase warrants:¥1,205 per share•

Exercise period:
March 30, 2006 to March 29, 2014•

Conditions for the exercise of the share purchase warrants:
The warrants are exercisable even after the resignation of Directors or
Statutory Auditors, as the case may be.
The warrants may be passed on to heirs.
The warrants shall be extinguished if the holders are dismissed for certain
specific reasons.
Any assignment or pledging of the warrants is prohibited.

•

Situation of holding of the share purchase warrants by Directors and Statutory
Auditors:
Type of Grantee
Directors(except Outside Directors)

Number of Share
Purchase Warrants

Number of Shares
Subject to Share
Purchase Warrants

Number of Holders

1,100

110,000 shares

7

Outside Directors

200

20,0002

Statutory Auditors

500

50,0004

F. The Third Issue of share purchase warrants adopted by resolution of the Board of
Directors at its meeting of March 30, 2005.
•

Number of share purchase warrants:
1,950

•

Class and number of shares subject to the share purchase warrants:
Common shares: 195,000 shares•

Payment due upon exercise of the share purchase warrants:¥1,374 per share

23

•

Exercise period:
March 30, 2007 to March 29, 2015•

Conditions for exercise of the share purchase warrants:
The warrants are exercisable even after the resignation of Directors or
Statutory Auditors, as the case may be.
The warrants may be passed on to heirs.
Any assignment or transfer of the share purchase warrants is subject toapproval of the Board of Directors.

•

Situation of holding of the share purchase warrants by Directors and Statutory
Auditors:
Type of Grantee
Directors(except Outside Directors)

Number of Share
Purchase Warrants

Number of Shares
Subject to Share
Purchase Warrants

Number of Holders

1,150

115,000 shares

7

Outside Directors

200

20,0002

Statutory Auditors

600

60,0005

G. The Fourth Issue of share purchase warrants adopted by resolution of the Board of
Directors at its meeting of March 30, 2006.
•

Number of share purchase warrants:
2,250

•

Class and number of shares subject to the share purchase warrants:
Common shares: 225,000 shares•

Payment due upon exercise of the share purchase warrants:¥1,688 per share•

Exercise period:
March 30, 2008 to March 29, 2016•

Conditions for the exercise of the share purchase warrants:
The warrants are exercisable even after the resignation of Directors or
Statutory Auditors, as the case may be.
The warrants may be passed on to heirs
Any assignment or transfer of the share purchase warrants is subject toapproval of the Board of Directors.

24

•

Situation of holding of the share purchase warrants by Directors and Statutory
Auditors:

Type of Grantee
Directors(except Outside Directors)

Number of Share
Purchase Warrants

Number of Shares
Subject to Share
Purchase Warrants

Number of Holders

1,450

145,000 shares

8

Outside Directors

200

20,0002

Statutory Auditors

600

60,000525

(3) Directors and Statutory Auditors of the Company
A. Directors and Statutory Auditors(As of December 31, 2007)
Name

Position

Areas of responsibility, primary positions, andrepresentation of other companies andorganizations

Kouichi Ikeda

Chairman of the Board andRepresentative Director

Hitoshi Ogita
Masatoshi Takahashi

President and Representative
Director
Senior Managing Director

Yoshifumi Nishino

Senior Managing Director

Senior Managing Executive Officer, Group
Headquarters (Quality Assurance
Department) and Research & Development
Headquarters of the Company
Chairman of the Board of Asahi Breweries
Foundation

Masahiko Osawa

Managing Director

Managing Executive Officer, Senior General
Manager of International Headquarters of theCompany
President and Representative Director of
AI Beverages Holding Co., Ltd.
Representative Director and Chairman ofHaitai Beverage Co., Ltd.

Naoki Izumiya

Managing Director

Managing Executive Officer, Senior General
Manager of Liquor Sales & Marketing
Headquarters and Marketing Headquarters of
the Company

Kazuo Motoyama

Managing Director

Managing Executive Officer, Group
Headquarters (Corporate Planning
Department, Public Relations Department,
Logistics Department and IT Strategy &BPM Department) of the Company

26

Chairman of the Board of Asahi Beer Arts
Foundation

Senior Managing Executive Officer, Domestic
Marketing Headquarters of the Company

Name

Position

Areas of responsibility, primary positions, andrepresentation of other companies andorganizations

Akiyoshi Koji

Managing Director

Managing Executive Officer, Group
Headquarters (Personnel Department, Finance
Department and Institute of Lifestyle &Culture) of the Company

Shin Iwakami

Managing Director

Managing Executive Officer, Group
Headquarters (Procurement Department),
Senior General Manager of Production
Headquarters of the Company

Nobuo Yamaguchi

Outside Director

Yukio Okamoto

Outside Director

Chairman of the Board and Representative
Director of Asahi Kasei Corporation
President and CEO of Okamoto Associates,
Inc.
General Partner of Pacifica Neo Ventures LLC

Sugao Nishikawa

Standing Statutory Auditor

Yoshihiro Goto

Standing Statutory Auditor

Takahide Sakurai

Outside Statutory Auditor

Senior Advisor to The Dai-ichi Mutual Life
Insurance Company

Naoto Nakamura

Outside Statutory Auditor

Partner and Attorney at Law, Nakamura,Tsunoda & Matsumoto Law Offices

Tadashi Ishizaki

Outside Statutory Auditor

Professor, Faculty of Commerce, Chuo
University

Notes:
1. Directors Nobuo Yamaguchi and Yukio Okamoto are outside directors as defined in Item 15, Article 2of the Corporation Law.
2. Statutory Auditors Takahide Sakurai, Naoto Nakamura and Tadashi Ishizaki are outside statutory
auditors as defined in Item 16, Article 2 of the Corporation Law.
3. Statutory Auditors Sugao Nishikawa and Yoshihiro Goto were formerly Directors in charge of financeof the Company and they have considerable expertise in finance and accounting.
4. Statutory Auditor Naoto Nakamura who is an attorney at law is jurisprudent, among others, tocorporate legal affairs; he also has considerable expertise in finance and accounting.
5. Statutory Auditor Tadashi Ishizaki has carried out research on accounting for many years as auniversity professor; he has considerable expertise in finance and accounting.
6. In addition to the foregoing, important concurrent positions held by Directors and Statutory
Auditors are as follows.

Directors
Name

Companies and other organizations inwhich Directors hold concurrent
positions

Specific concurrent
position

Kouichi Ikeda

New Otani Co., Ltd

Director

Masatoshi Takahashi

Director

Yoshifumi Nishino

ORION BREWERIES, LTD.
Asahi Food & Healthcare Co., Ltd.
Wakodo Co., Ltd.

Masahiko Osawa

Tingyi-Asahi-Itochu Beverages Holding
Co., Ltd.

Director

27

Director
Director

Name

Companies and other organizations in which
Directors hold concurrent positions

Specific concurrent
position

Kazuo Motoyama

Asahi Logistics, Ltd.
Asahi Soft Drinks Co., Ltd.
Asahi Food & Healthcare Co., Ltd.
Wakodo Co., Ltd.

Director
Statutory Auditor
Statutory Auditor
Statutory Auditor

Akiyoshi Koji

AI Beverages Holding Co. Ltd.
Tingyi-Asahi-Itochu Beverages Holding Co.,Ltd.
Haitai Beverage Co., Ltd.

Director
Director

Asahi Soft Drinks Co., Ltd.
The Nikka Whisky Distilling Co., Ltd.

Director
Director

Haitai Beverage Co., Ltd.

Senior Officer

Nobuo Yamaguchi

Nippon Television Network Corp.
The Yomiuri Shimbun Holdings

Director
Statutory Auditor

Yukio Okamoto

Mitsubishi Materials Corporation
Mitsubishi Motors Corporation

Director
Statutory Auditor

Shin Iwakami

Senior Officer

Statutory Auditors
Name

Companies and other organizations in which
Statutory Auditors hold concurrent positions

Specific concurrent
position

Sugao Nishikawa

Asahi Soft Drinks Co., Ltd.
Asahi Food & Healthcare Co., Ltd.
Wakodo Co., Ltd.

Statutory Auditor
Statutory Auditor
Statutory Auditor

Yoshihiro Goto

The Nikka Whisky Distilling Co., Ltd.

Statutory Auditor

Takahide Sakurai

Imperial Hotel, Ltd.
Seven Bank, Ltd.
Tokyu Corp.
Yokogawa Electric Corp.

Director
Director
Statutory Auditor
Statutory Auditor

Naoto Nakamura

Mitsui & Co., Ltd.

Statutory Auditor

B. Remuneration Paid to Directors and Statutory Auditors
Category

Number of persons
remunerated

Directors[of which Outside Directors]

11[2]

Total amount of
remuneration paid(yen)444,620,000[26,100,000]

Statutory Auditors[of which Outside Auditors]

5[3]

86,150,000[30,030,000]

Notes:
1. Remuneration above includes total bonuses of ¥98,300,000 paid to Directors (including¥5,400,000 to two Outside Directors) and total bonuses of ¥3,800,000 paid to Statutory Auditors(including ¥1,500,000 to three Outside Auditors).

28

2. At the 83rd Annual Shareholders’ Meeting held on March 27, 2007, a resolution was adopted
authorizing a total payment of ¥166,500,000 to the eight Directors (of which ¥34,500,000 was tobe paid to the two Outside Directors) and a total payment of ¥48,000,000 to the four Statutory
Auditors (of which ¥33,000,000 was to be paid to the three Outside Statutory Auditors) at the timeof their respective retirement. The payments mark the termination of the Company’s system ofretirement bonuses for Directors and Statutory Auditors. From among them, two Directors and one
Statutory Auditor will be retiring at the conclusion of the 84th Annual Shareholders’ Meeting to beheld on March 26, 2008. Accordingly, ¥30,000,000 will be paid to these two Directors (including a
total of ¥15,000,000 to one Outside Director) and ¥15,000,000 will be paid to the Statutory
Auditor.
3. The total amount of Directors’ remuneration is limited to ¥760 million (including ¥50 million for
Outside Directors) per year according to the resolution passed at the 83rd Annual Shareholders’Meeting held on March 27, 2007.
4. The total amount of Statutory Auditors’ remuneration is limited to ¥120 million (including ¥40
million for Outside Statutory Auditors) per year according to the resolution passed at the 83rd
Annual Shareholders’ Meeting held on March 27, 2007.

C. Outside Directors and Outside Statutory Auditors•

Concurrent positions held by Outside Directors (as for persons who are involved in
execution of operations of other companies or who are outside directors or outside
statutory auditors of other companies)
Name

Companies at which concurrent positions are held and positions held

Nobuo Yamaguchi

Chairman of the Board and Representative Director of Asahi Kasei Corporation
Outside Director of Nippon Television Network Corp.
Outside Statutory Auditor of The Yomiuri Shimbun Holdings

Yukio Okamoto

President and CEO of Okamoto Associates, Inc.
General Partner of Pacifica Neo Ventures LLC
Outside Director of Mitsubishi Materials Corporation
Outside Statutory Auditor of Mitsubishi Motors Corporation

Notes:
1. Director Nobuo Yamaguchi is Chairman of the Board and Representative Director of Asahi Kasei
Corporation. Although Asahi Kasei is one of the major shareholders of the Company, it does nothave a significant commercial relationship with the Company.
2. Director Yukio Okamoto is President and CEO of Okamoto Associates, Inc., which does not have asignificant commercial relationship with the Company. Further, Mr. Okamoto is a General Partnerof Pacifica Neo Ventures LLC, which manages Pacifica Fund I, L.P., in which the Company has
certain investments.
•

Concurrent positions held by Outside Auditors (as for persons who are involved in
execution of operations of other companies or who are outside directors or outside
statutory auditors of other companies)
Name

Companies at which concurrent positions are held and positions held

Takahide Sakurai

Outside Director of Imperial Hotel, Ltd.
Outside Director of Seven Bank, Ltd.
Outside Statutory Auditor of Tokyu Corp.
Outside Statutory Auditor of Yokogawa Electric Corp.

Naoto Nakamura

Outside Statutory Auditor of Mitsui & Co., Ltd.

29

•

Major activities of Outside Directors and Outside Statutory Auditors
Name

Position

Major activities

Nobuo Yamaguchi

Outside Director

Participated in 6 of the 12 Board of Directors
meetings held during the fiscal year under review;
when necessary, he made statements mainly fromthe perspective of his long and successful career inmanagement.

Yukio Okamoto

Outside Director

Participated in 9 of the 12 Board of Directors
meetings held during the fiscal year under review;
when necessary, he made statements mainly fromthe perspective of his substantial knowledge andvaried experience as an expert in diplomatic andinternational affairs.

Takahide Sakurai

Outside Statutory
Auditor

Participated in 9 of the 12 Board of Directors
meetings and in 6 of the 7 Board of Statutory
Auditors meetings held during the fiscal year underreview; when necessary, he made statements
mainly from the perspective of his long andsuccessful career in management.

Naoto Nakamura

Outside Statutory
Auditor

Participated in 11 of the 12 Board of Directors
meetings and in 5 of the 7 Board of Statutory
Auditors meetings held during the fiscal year underreview; when necessary, he made statements
mainly from his expert perspective as an attorney atlaw.

Tadashi Ishizaki

Outside Statutory
Auditor

Participated in 10 of the 12 Board of Directors
meetings and in all the 7 Board of Statutory
Auditors meetings held during the fiscal year underreview; when necessary, he made statements
mainly from his expert perspective as a scholar ofaccounting.

•

Summary of agreements limiting liability
In accordance with Paragraph 1, Article 423 of the Corporation Law, the Company
has entered into an agreement with each of its Outside Directors and Outside
Statutory Auditors limiting his liability for damages to either ¥20,000,000 or theminimum amount stipulated by law, whichever is higher.

(4) Independent Auditor
A. Name of the Independent Auditor

AZSA & Co.

30

B. Remuneration paid to the Independent Auditor for the fiscal year under review
Amount payable
Remuneration paid for the fiscal year under review¥78 million

Total of cash and other financial profits payable by the Company andits subsidiaries to the Independent Auditor¥190 million

Notes:
1. In its agreement with the Independent Auditor, the Company makes no distinction between the
remuneration that it pays for auditing services governed by the Corporation Law and for auditing
services governed by the Financial Instruments and Exchange Law. Consequently, the amountshown above is a sum of these two amounts.
2. All subsidiaries which are subject to statutory audit by an independent auditor have been audited
by AZSA & Co.

C. Nature of non-audit professional services provided by the Independent Auditor

The Company also assigns to its Independent Auditor professional duties,
including “advice on construction of internal control system in financial reporting,”
which are not statutory auditing duties stipulated in Paragraph 1, Article 2 of theCertified Public Accountants Law.
D. Company Policy regarding dismissal of or decision not to reappoint the Independent
Auditor

Article 340 of the Corporation Law stipulates that the Board of Statutory Auditors
shall be entitled to dismiss the Independent Auditor for reasons stipulated therein. In
addition, when it is reasonably recognized that the Independent Auditor is no longer
able to execute its duties in an appropriate manner, the Company, with a prior consent of,or a request by, the Board of Statutory Auditors, shall offer to the Shareholders’ Meetinga resolution to dismiss or not to reappoint the Independent Auditor.

3. Systems to Ensure Appropriate Execution of Directors’ Duties in
Conformity With Laws and Regulations and the Articles ofIncorporation, and Other Systems to Ensure Appropriate Business
Operations
The Board of Directors passed the following resolution with respect to theabove-mentioned systems:
The Company has adopted the following corporate philosophy: “The Asahi
Breweries Group aims to satisfy its customers with the highest levels of quality andintegrity, while contributing to the promotion of healthy living and enrichment of thesociety worldwide.” To make these aims a reality, the Company shall:•establish, in accordance with the Corporation Law and the Enforcement
Regulations of the Corporation Law, the following basic policies (the “Basic
Policies”) to improve systems designed to ensure appropriate business operations
31

of the Company and its subsidiaries (the “Group Companies”) (the “Internal
Control”);•

recognize that it is the Representative Director(s) who shall assume the ultimate
responsibility for the improvement of the Internal Control in accordance with thisresolution and demand the Representative Director(s) to cause the Directors andExecutive Officers, through the respective departments they are in charge of, todevelop and fully enforce individual internal regulations and manuals required
based on the Basic Policies; and•take steps to maintain and enhance the effectiveness of the Internal Control byreviewing the Basic Policies and relevant internal regulations and manuals, etc. ina timely and appropriate manner in accordance with changes in conditions andcircumstances.

<System to ensure execution of duties by Directors and employees in conformity withlaws and regulations and the Articles of Incorporation of the Company>A.

In accordance with a statement of “fair and transparent corporate ethics” asstipulated in its Corporate Action Guidelines, the Company shall establish the“Regulations on Corporate Ethics for the Asahi Breweries Group” and procure its
Directors, Statutory Auditors and employees abide by these regulations.

B.

The Company shall establish the “Corporate Ethics Committee for the Asahi
Breweries Group,” which will oversee the compliance affairs of the Asahi
Breweries Group. One of the committee’s members shall be an outside
attorney-at-law.

C.

An Executive Officer of the Company in charge of compliance shall have theauthority to manage compliance-related risks within the Asahi Breweries Group.
The General and Legal Affairs Management Department shall handle day-to-day
tasks of implementation of the compliance program.

D.

The Company shall assign one person as compliance-promotion personnel in eachof the business establishments of the Company and the Group Companies tooversee the promotion of compliance in each business establishment. In
conjunction with the Company’s Legal Section and the General Affairs Department
at each business establishment of the Group Companies, all compliance-promotion
personnel shall endeavor to disseminate legal knowledge and to heighten a generalawareness of importance of compliance in each business establishment.

E.

The Company shall establish a “Clean Line System” for employees of the Asahi
Breweries Group, enabling them to blow the whistle on illicit behavior of others toa specific section of the Company or a designated outside attorney-at-law.
32

F.

The Company shall establish a “Basic Policy on Procurement” addressing mutual
cooperation for fair deals and social responsibilities between the Company andsuppliers and a “Clean Line System for Suppliers”enabling suppliers to blow awhistle on illicit behavior of employees of the Company to a specific section of theCompany. The Company shall inform and spell out these measures to its suppliersin a bid to enable the Company to improve and develop the system of the Internal
Control in cooperation with its suppliers.

G.

The operational details of the aforementioned agencies and systems shall bespelled out under a separately prepared set of internal regulations entitled “Basic
Regulations on Corporate Ethics of the Asahi Breweries Group.”< System to ensure the preservation and management of information related to
execution of duties by Directors>
A.

Information related to execution of duties by Directors shall be properly preserved
and managed in accordance with document-management regulations and otherrelated regulations and manuals.

B.

The aforementioned information shall be preserved and managed in a way
accessible by Directors and Statutory Auditors for inspection at any time.

C.

Control over the clerical tasks related to preservation and management of theforegoing information shall be determined by individual relevant regulations.

<Regulations and other organizational structures to manage risk of loss>A.

The Company shall develop and adopt basic regulations related to risk
management and shall affirm such regulations as the highest standards governing
risk management within the Asahi Breweries Group. It shall also develop andadopt an operational manual on risk management and disseminate the same among
all over the Group.

B.

In addition to having the appropriate departments manage risk in their respective
areas, the Company shall establish the “Asahi Breweries Group Risk Management
Committee” as a vehicle for comprehensive risk management across the entire
Asahi Breweries Group. This committee shall periodically analyze and evaluate
risks in accordance with the regulations and manuals cited in the previous
paragraph and, when necessary, carry out comprehensive reviews of the risk
management system. An utmost attention shall be paid to the risk of failing tomaintain product quality. As food and drink manufacturers, Asahi Breweries Groupstrongly recognizes their social responsibility to consumers to ensure the safety of
their products.
33

C.

In the event of any major accident, disaster or scandal, the Company shall establish
a crisis-response meeting chaired by a Representative Director.

<System to ensure efficient execution of duties by Directors>
A.

To ensure efficient performance of duties by Directors, the Board of Directors shalldivide duties in a reasonable way to be delegated to different Directors and shallappoint appropriate persons as Executive Officers in charge of different divisions.

B.

The Company shall establish standards on authority stipulating rules of delegationof power and for a mutual checks-and-balances mechanism among different
divisions.

C.

The Company shall ensure effective utilization of the system of the Corporate
Strategy Board and the Business Unit Management Board.

D.

To maximize operational efficiency, the Company shall utilize indices that provide
an objective and rational way of measuring its management and control ofoperations; and it shall employ a unified system of follow-up and evaluation.

<System to ensure appropriate operations of the corporate group consisting of theCompany and its parent (if any) and its subsidiaries>
A.

All systems required for the Internal Control, including those for compliance andrisk management, shall apply comprehensively across the entire Asahi BreweriesGroup. As the corporate headquarters of the Group, the Company shall manage andoperate the said systems of the Group Companies in accordance with theconditions and circumstances individual companies are facing.

B.

The Company’s Internal Auditing Division shall conduct audits of the Group
Companies.

C.

Each of the Group Companies shall be required to provide reports on performanceof its operations including risk-related information, to the Statutory Auditors of theCompany.

D.

Decision-making authority related to business activities of the Group Companies
shall be subject to the document entitled “Standards of Authority for Group
Companies.”<Securement of employees in the event that Statutory Auditors request staff to assist
in their auditing duties>
The Board of the Statutory Auditors shall retain staff from among employees of
the Company, for assistance in the day-to-day activities of the Statutory Auditors.
<Independence of employees assigned to assist the Statutory Auditors from the
Directors>
34

A.

When a member of the staff of the Board of Statutory Auditors, as stipulated in theprevious paragraph, receives an order from a Statutory Auditor in relation toauditing duties, he/she shall not be subject to directives or orders from Directors orother employees regarding that order.

B.

Any issuance of orders to, personnel transfers of, merit evaluations of, or
reprimands of a member of the staff of the Board of Statutory Auditors shallrequire the prior concurrence of Statutory Auditors.

<System for Directors’ and employees’ reporting to Statutory Auditors; system relating
to other reporting to Statutory Auditors>
A.

Directors and employees shall report regularly to Statutory Auditors on mattersrelated to the Internal Control, and shall report on an as-needed basis when asignificant event occurs. When necessary, the Statutory Auditors shall be entitled torequest reports from the Directors and employees (including from Directors andemployees of the Group Companies).

B.

Directors shall ensure that Statutory Auditors have every opportunity to participate
in the Board of Directors meetings, the Corporate Strategy Board meetings and theBusiness Unit Management Board meetings. Directors shall provide details of theagenda items of such meetings beforehand for Statutory Auditors.

C.

Statutory Auditors shall at all times have the right to review the minutes ofimportant meetings, documents of approval, etc.

<Other systems ensuring effective auditing by Statutory Auditors>
To ensure the effectiveness of auditing activities, Directors shall ensure
opportunities for Statutory Auditors to exchange information and opinions regularly
with members of the Internal Auditing Division of the Company and with the
Independent Auditor.

4. Basic Policy Regarding Control of the Company in Deciding its
Policies on Finance and Business<Basic policy>
The Company believes that control over decision-making related to its finance andbusiness policies must reside in persons who make it possible for the Company topreserve and enhance corporate value and the common interests of shareholders on asustained and continuous basis. Such persons must, the Company believes, exert thiscontrol on the basis of a proper understanding of various factors including factors that
constitute corporate value for the Asahi Breweries Group, beginning with the principles
that are its sources: “the creation of attractive products”; “commitment to product35

quality and craftsmanship”; and “actions that deliver inspiration to customers.” They
must understand as well how the Group’s tangible and intangible management resources
contribute to corporate value and how measures that are executed with an eye toward
the future also potentially impact such value.
The Asahi Breweries Group has adopted as its management creed “creating
customer satisfaction, and contributing to the health of the world’s peoples and to theenrichment of society, through outstanding product quality and sincere action”. Guided
by these ideals, the Group has positioned itself successfully in several core businesses:
beer and other alcoholic beverages, soft drinks, and foods and pharmaceuticals.
Based on this management creed, the Group has endeavored to enhance its overall
growth and corporate value through actions that reinforce the sources of this growth andvalue: by anticipating customer needs in “the creation of attractive products”; bycollaborating company-wide in its “commitment to product quality and craftsmanship” as epitomized by the actions of its production, distribution and sales divisions to bringcustomers the freshest beer possible; and by demonstrating through such products andservices “actions that deliver inspiration to customers”.
The Board of Directors of the Company (the “Board”) is not always in a position toautomatically object to a so-called “hostile takeover”, which is pursued without
approval from the Board provided that such takeover is intended to contribute to theenhancement of the Company's corporate value and the common interests ofshareholders of the Company. Also, the Board recognizes that the final decision as towhether to accept a proposal for an acquisition of shares in the Company that would
lead to a transfer of control of the Company should be made based on the will of theshareholders as a whole.
It shall be noted, however, that, there are not a few cases of large-scale sharepurchases that would not contribute to the enhancement of the corporate value and thecommon interests of shareholders of target companies, including ones that would, inlight of their purposes, cause obvious damage to the corporate value and the common
interests of shareholders or could effectively coerce shareholders to sell their shares,
ones that the purchaser does not provide information and time reasonably necessary forthe target company’s board of directors and shareholders to review and examine detailsof the proposed purchase or for the target company’s board of directors to make analternative proposal, and ones where the target company’s board of directors would
have to conduct negotiation with the purchaser so as to seek more favorable terms thanthose initially proposed by the purchaser.
In this way, investors contemplating a large-scale purchase of shares in the
Company could thus damage the Group’s corporate value and the common interests ofshareholders if they do not understand the sources of the Group’s corporate value and36are unable to preserve and enhance these sources over the medium-to-long term.
Accordingly, the Company believes that it is absolutely essential for it to establish aframework that deters large-scale share purchases that undermine the Group’s corporate
value and the common interests of its shareholders.
<A framework that contributes to the realization of the basic policy>
The Company is implementing the following measures to preserve and enhance its
corporate value and the common interests of shareholders. It believes that thesemeasures will contribute to the realization of the basic policy spelled out above.
A. Medium-Term Management Plan of the Asahi Breweries Group

Under its Third Medium-Term Management Plan, which the Company developed
and adopted in 2007, the Company has formulated a long-term Group vision inwhich it defines its thinking with respect to strengthening specific areas ofoperation and enhancing its corporate value. It declares in the plan that “the Asahi
Breweries Group will make ‘food and healthcare’ its business domain, and that it
will aim to become a fast-growing leader in the industry, principally in the Asian
region, by continuing to provide customers with joy and inspiration throughout
their lifetimes”.
To make this long-term vision a reality, the Group will seek first of all tostrengthen its competitiveness in “craftsmanship-based manufacturing”. With thisas a point of departure, the entire Group will endeavor to establish a new growth
path and enhance the value of its corporate brands by elevating the value of the
Asahi brand and by creating self-sustaining interactions and synergies between the
Asahi brand and the Group’s diverse array of other brands.
B.

Corporate governance

On March 30, 2000, the Company adopted a system of executive officers. Its aim
was to separate the decision-making functions of management from the executionof operations. In addition to expediting the execution of operations, it sought tostrengthen the oversight function of the Board of Directors. It also selected Outside
Directors and made it possible for these Directors to perform a monitoring function
by establishing a Nomination Committee and a Compensation Committee under the
Board of Directors with Outside Directors as part of its members.
To underscore the responsibilities of management to shareholders, moreover, theCompany changed the terms of office of Directors from two years to one year at the83rd Annual Shareholders’ Meeting held on March 27, 2007.

37

<Framework to prevent persons who are deemed inappropriate in light of theCompany’s basic policy from taking control of the Company in deciding its policies
on finance and business (framework of takeover defense measures)>
With the approval of the shareholders at the 83rd Annual Shareholders’ Meeting
held on March 27, 2007, the Company adopted a plan against large-scale purchases ofthe shares in the company (hereinafter, “the Plan”).
The Plan, with a view to enhancing the Company's corporate value and thecommon interests of shareholders, lays down procedures for measures to be taken in theevent that the Company becomes a target of a large-scale purchase of shares or a similar
move or a proposal thereof (hereinafter collectively, a “Purchase”). Such measures
include: (1) requiring a person contemplating a Purchase (a “Purchaser”) to provide
necessary and sufficient information in advance; (2) securing time necessary forgathering and examining information concerning the Purchase; and (3) presenting analternative proposal to shareholders of the Company or conducting negotiations with thePurchaser.
The Plan shall be applicable to any of the following two types of Purchases:
A. A purchase of shares in the Company as a result of which the purchaser’s
shareholding ratio will rise to 20% or more of the total outstanding shares in the
Company; or
B. A tender offer for shares in the Company as a result of which the purchaser’s
shareholding ratio targeted by the tender offer and the holding ratio of its “special
affiliates”, when combined, will be 20% or more of the total outstanding shares in
the Company.
A Purchaser contemplating a Purchase shall be requested to provide in advance ofcommencement of the Purchase a document containing the information necessary toevaluate the content of the Purchase and a written pledge to observe and follow theprocedures set forth in the Plan in conducting the Purchase. Thereafter, the information
submitted by the Purchaser will be presented to the Independent Committee whose
members shall consist of Outside Directors, Outside Statutory Auditors and/or experts
all of whom are independent of management of the Company. The information will beassessed and evaluated by this committee. On its own accord, the Independent
Committee will obtain advice from independent third parties (including financial
advisers, CPAs, lawyers, consultants and other experts) and, on the basis of such advice,
will assess and evaluate the content of the Purchase, evaluate alternative proposals
offered by the Company’s Board of Directors, negotiate with the Purchaser, anddisclose information to shareholders of the Company. If the Independent Committee
determines that the information provided by the Purchaser does not meet the criteria for
the Required Information (as defined in the Plan), it may, either directly or indirectly,
38request the Purchaser to submit additional information within an appropriate period oftime as designated by the Independent Committee. In this event, the Purchaser shallsubmit such additional information within the period of time provided.
The Independent Committee will make recommendations to the Board to executethe Plan to allot gratis the Stock Acquisition Rights (as defined in the Plan) toshareholders of the Company if the Independent Committee has determined that thePurchase meets either of the requirements for exercise of the Plan and it is appropriate
to so exercise: e.g. in case the Purchaser has not observed and followed the procedures
specified in the Plan or in case, as a result of review by the Committee, the Committee
concludes the Purchase could cause obvious damage to the Company’s corporate value
and the common interests of shareholders in the opinion of the Committee. These stockacquisition rights shall entitle their holders to acquire one share of the common stock in
the Company by exercising the rights at a price to be determined by the Company’s
Board of Directors - which shall be set at a level between a minimum of one (1) yen anda maximum of one-half the market value per share of the Company’s stock. In addition,these rights shall contain conditions that exclude the Purchaser from exercising therights and shall also be accompanied by provisions that enable the Company to acquireone (1) stock acquisition right in exchange for one (1) share of the Company’s stockfrom persons other than the Purchaser.
While paying its utmost respect to the recommendation made by the Independent
Committee as stated above, the Company’s Board of Directors shall, as theorganizational body authorized to do so under the Corporation Law, promptly decide
whether or not to execute the gratis Allotment of the Stock Acquisition Rights.
The Plan shall be effective from the close of the 83rd Annual Shareholders’ Meeting
held on March 27, 2007 until the close of the Company’s annual shareholders’ meetingthat concerns the last one of the Company’s business years that end within three years
from the close of the 83rd Meeting.
Notwithstanding the above, the Company may abrogate the Plan even before theeffective period expires upon a decision thereof by the Board. Also, the Board may
amend or alter the Plan during its effective period subject to approval by the
Independent Committee.
When the Plan is thus abrogated, amended or altered, the Company shall promptly
disclose to the public information with regard to the background of such abrogation,
amendment or alteration, as the case may be, and, in the case of amendment oralteration, the outline of such amendment or alteration and other necessary matters.
Under the Plan, shareholders of the Company remain directly and specificallyunaffected unless and until the gratis Allotment of the Stock Acquisition Rights is
executed. On the other hand, if the Plan is set in motion and a gratis Allotment of theStock Acquisition Rights is executed, the shares held by a shareholder of the Company
will be subject to dilution unless he/she carries out the procedures required for the
exercise of the Stock Acquisition Rights (note, however, no dilution shall occur in case39

the Company exercises option of acquisition of the Stock Acquisition Rights for sharesin the Company).
<Judgment of the Company’s Board of Directors regarding the framework of
takeover defense measures described above in <Framework to prevent persons who
are deemed inappropriate in light of the Company’s basic policy from taking controlof the Company in deciding its policies on finance and business (framework of
takeover defense measures)>
The following elements having been taken into consideration and incorporated into
the design of the Plan, the Board of Directors of the Company believes that the Plan
conforms to the basic policy of the Company as described above and meets thecorporate value and the common interests of shareholders of the Company and that it isnever for the purpose of maintaining the status of Directors and Statutory Auditors of
the Company.
A.

The Plan fully reflecting the intentions of the shareholders•

The Plan was approved at the 83rd Annual Shareholders’ Meeting held on March 27,
2007.

•

The effective period of the Plan is limited, running until the close of the Company’s
annual shareholders’ meeting that concerns the last one of the Company’s businessyears that end within three years from the close of the above annual shareholders’meeting.

•

The term of office of Directors is one year, allowing the shareholders to have theirintentions reflected through elections of Directors every year.

B. Judgments by highly independent outsiders to be respected; information disclosure

A system of the Independent Committee is incorporated in the designing of thePlan, which shall preclude possible arbitrary judgments by the Board of Directors andmake substantial judgments objectively for the interest of the shareholders regarding
operations of the Plan including execution and abolishment thereof. The members of the
Independent Committee are appointed by the Board from among Outside Directors,
Outside Statutory Auditors and/or experts who meet the requirements stipulated in the
Company’s internal rules for the Independent Committee.
Once a Purchase having been commenced, the Independent Committee, in
accordance with the aforementioned rules, would make a substantial judgment onwhether the Purchase in question would or would not damage the Company’s corporate
value and the common interests of shareholders. The Board of Directors, paying its
utmost respect to the Committee’s judgment, would then adopt a resolution under the
Corporation Law.
40

In this way, the Independent Committee would keep a close check and monitoringover any possible arbitrary actions by the Board of Directors and the Company would
disclose to the shareholders the main points of judgment made by the Committee.
Consequently, the Board believes that the framework is in place to ensure transparency
in the operation of the Plan within the scope of contributing to the corporate value andthe common interests of shareholders.
C.

The establishment of reasonable and objective conditions

The Plan is designed so as not to be set in motion unless reasonable, detailed andobjective conditions are met. This ensures a framework to prevent arbitrary actions by
the Company’s Board of Directors.

41

CONSOLIDATED BALANCE SHEETSAs of December 31, 2007
Million yen
ASSETS
Current assets:
Cash and deposits

11,627

Notes and accounts receivable278,238

Securities

52

Inventories

90,436

Deferred tax assets

6,930

Other current assets

30,502

Allowance for doubtful accounts(6,576)

Total current assets

411,211

Fixed assets:
Tangible fixed assets:
Buildings and structures

205,995

Machinery, equipment and vehicles

184,888

Tools, furniture and fixtures
Land

47,626
180,760

Construction in progress

3,447

Total tangible fixed assets

622,718

Intangible fixed assets:
Goodwill

65,325

Other intangible fixed assets

15,696

Total intangible fixed assets

81,022

Investments and other assets:
Investment securities

158,037

Long-term loans receivable

5,759

Long-term prepaid expenses

11,319Deferred tax assets

18,983

Other investments

22,492

Allowance for doubtful accounts(7,154)

Total investments and other assets

209,438

Total fixed assets

913,179

Total assets

1,324,391

42

CONSOLIDATED BALANCE SHEETSAs of December 31, 2007
Million yen
LIABILITIES AND NET ASSETSLIABILITIESCurrent liabilities:
Notes and trade accounts payable

100,720

Short-term borrowings

140,980

Bonds due within one year

10,000Alcohol tax payable

134,358

Consumption taxes payable

8,352

Income taxes payable

14,003

Other accounts payable

57,196

Accrued expenses

48,025

Deposits received

25,662

Commercial paper

52,000

Other current liabilities

5,496

Total current liabilities

596,796

Long-term liabilities:
Bonds

70,000Long-term borrowings

59,477

Allowance for employees’ severance and retirement benefits

23,819449

Allowance for retirement benefits for directors and statutory
auditors
Deferred tax liabilities
Other long-term liabilities

5,018
39,048

Total long-term liabilities

197,813

Total liabilities

794,60943

As of December 31, 2007
Million yen
NET ASSETS
Shareholders’ equity:
Common stock

182,531

Capital surplus

151,259Retained earnings

178,079

Treasury stock(14,674)

Total shareholders’ equity

497,195

Valuation and translation adjustments:
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges

13,037(43)

Foreign currency translation adjustments

4,477

Total valuation and translation adjustments

17,471

Minority interests

15,115

Total net assets

529,782

Total liabilities and net assets

1,324,391

44

CONSOLIDATED STATEMENTS OF INCOME
For the year ended December 31, 2007
Million yen
Net sales

1,464,071

Cost of sales

961,181

Gross profit
Selling, general and administrative expenses

502,890415,934

Operating income

86,955Non-operating income:Interest income

678

Dividend income
Equity in net income of unconsolidated subsidiaries and affiliatedcompanies
Other non-operating income

1,369
9,010
2,659
13,718Non-operating expenses:
Interest expenses

5,020

Loss on sale and disposal of inventories
Other non-operating expenses

3,400
2,035
10,457

Recurring profit

90,217Extraordinary gains:
Gain on sale of fixed assets
Gain on sale of investment securities

1,248
102

Gain on reverse of allowance for doubtful accounts

1,081
2,432

Extraordinary losses:
Loss on sale and disposal of fixed assets
Retirement benefits for directors and statutory auditors
Loss on sale of investment securities

6,689
137
804

Loss on devaluation of investment securities
Impairment loss on fixed assets

343
1,387

Loss on adjustment of estimated consumption of gift coupons

1,545
10,908

Income before income taxes
Income taxes:

81,741

Current

31,227

Deferred

5,543
36,770Minority interests in net gain (loss) of unconsolidated subsidiaries
Net income

173
44,79745

CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETSFor the year ended December 31, 2007

(Million yen)

Shareholders' equity

Millions of yen
Balance as of Dec. 31, 2006

Commonstock

Capital surplus Retained earnings

182,531

150,504

Treasury stock

Total
shareholders'equity(16,946)

458,418

142,329

Changes during the term
Dividends(9,428)(9,428)Net income (loss)

44,79744,797

Acquisition of treasury stock
Disposal of treasury stock

755

Increase in retained earnings
due to increase in number ofconsolidated subsidiaries
Increase in retained earnings
due to decrease in number ofconsolidated subsidiaries

(230)

(230)

2,502

3,257

231

231

148

148

Other changes in
non-shareholders' equity items
during the term (net)Total changes during the term
Balance as of Dec. 31, 2007

182,531755

35,7492,272

38,777

151,259

178,079(14,674)

497,195

Valuation and translation adjustments

Millions of yen
Balance as of Dec. 31, 2006

Valuation
Deferred gains
difference onor losses onavailable-forhedges
sale securities
14,563(28)

Foreign
Total valuation
currency
and translationtranslation
adjustments
adjustments
3,753

18,289Minority
interests

Total
net assets

33,067509,774

Changes during the term
Dividends(9,428)Net income (loss)

44,797

Acquisition of treasury stock(230)

Disposal of treasury stock

3,257

Increase in retained earnings
due to increase in number ofconsolidated subsidiaries

231

Increase in retained earnings
due to decrease in number ofconsolidated subsidiaries

148

Other changes in
non-shareholders' equity items
during the term (net)(1,526)

(15)

723

(818)

(17,951)(18,769)

Total changes during the term

(1,526)

(15)

723

(818)

(17,951)

20,007

Balance as of Dec. 31, 2007

13,037

(43)

4,477

17,471

15,115

529,78246

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. Basis for Preparation of Consolidated Financial Statements(1) Items in the scope of the consolidation
A. Number of consolidated subsidiaries: 51
Principal consolidated subsidiaries
Please see Item 1 of the “Business Report” {“Overview of Operations of Asahi
Breweries Group, section (7) “Principal Subsidiaries”}, for a summary of the current
status of important subsidiaries.
During the fiscal year under review, the Company added the newly established Asahi
Calpis Beverage Co., Ltd. to its list of consolidated subsidiaries. It also added N. S.
Cargo, Ltd. and Zhejiang Xihu Beer Asahi Co., Ltd. because of their increasedmateriality in the Group.
On the other hand, the Company eliminated the following companies from the list of its
consolidated subsidiaries: Asahi Beer Restaurant Service, Ltd., which was merged intoanother consolidated subsidiary; Asahi Internet Service Co., Ltd., which was merged
into the Company; and Yoshikawa Shuhan Corporation because the Company had sold
all the stake in that company to a third party company. Also eliminated fromconsolidation were the following: Asahi Beer International Finance B.V., for which theCompany completed liquidation procedures; and Asahi Beer Europe Ltd., following thecompletion of the company’s final distribution of liquidation dividends.
B. Principal unconsolidated subsidiaries:
Sumidagawa Brewing Co., Ltd.
Rationale for exclusion from the scope of consolidation:
The unconsolidated subsidiaries are all small in terms of total assets, sales, net profit orloss, and retained earnings (amount corresponding to equity ownership); they have nomaterial impact as a whole on the consolidated financial statements and are thus
excluded from the scope of consolidation.
(2) Items concerning application of the equity method
A. Number of companies subject to application of the equity method: 29
Unconsolidated subsidiary subject to application of the equity method: 1
Asahi Beer Engineering Co., Ltd.
Affiliates subject to application of the equity method: 28
These include Asahi Business Solutions Corp., Qingdao Tsingtao Beer & Asahi
Beverage Co., Ltd., Tingyi-Asahi-Itochu Beverages Holding Co., Ltd. and its 25
affiliated companies.
47

The newly incorporated three (3) companies affiliated with Tingyi-Asahi-Itochu
Beverages Holding Co., Ltd. were accounted for under the equity method effective fromthe fiscal year under review.
B. Principal unconsolidated subsidiaries and affiliates not subject to application of the equity
methodUnconsolidated subsidiaries:

Sumidagawa Brewing Co., Ltd.

Affiliates:

Asahi Business Produce Co., Ltd.

Rationale for not applying the equity method to the unconsolidated subsidiaries andaffiliates:
The companies in question have extremely slight impact on net profit or loss andretained earnings (amount corresponding to the Company’s equity ownership); they
have no material impact as a whole on the consolidated financial statements and thus
the equity method was not applied.
(3) Accounting period of the consolidated subsidiaries
The accounting period of Asahi Beer U.S.A., Inc., is October 1 to September 30 and isdifferent from that of the Company. Thus, a provisional fiscal year ending at December 31(calculated by a reasonable procedure in accordance with legitimate accounting methods)
was used for Asahi Beer U.S.A., Inc. for consolidation purposes. All other consolidated
subsidiaries have the same accounting period as the Company.
(4) Significant accounting policies
A. Policies and methods of valuation for important assets
1) Valuation basis and method for securities:
Held-to-maturity debt securities
Held-to-maturity debt securities are stated at the amortized cost.
Other securities
Securities with market value
Carried at the average market value for the month immediately preceding theconsolidated balance sheet date. (Related valuation differences are directly
charged or credited to net assets, and the cost of securities sold is computed by
the moving-average method.)
Securities without market value
Stated at cost based on the moving-average method.
2) Valuation basis and method for derivatives:
Market price method483) Valuation basis and method for inventories:
Merchandise, finished goods and semi-finished goods are stated at cost determined
mainly by the weighted-average method.
Raw materials and supplies are stated at cost determined mainly by themoving-average method.
B. Depreciation methods for major assets:
Tangible fixed assets:
1) Production facilities of the Company
Assets acquired on or before March 31, 2007: the former straight-line method
Assets acquired on or after April 1, 2007: the straight-line method
2) Other tangible fixed assets of the Company
Assets acquired on or before March 31, 2007: the former declining-balancemethodAssets acquired on or after April 1, 2007: the declining-balance method
3) Consolidated subsidiaries
Assets acquired on or before March 31, 2007: mainly the former
declining-balance method
Assets acquired on or after April 1, 2007: mainly the declining-balance method
Buildings (excluding of fixtures), acquired on or after April 1, 1998
Assets acquired on or before March 31, 2007: mainly the former straight-line
methodAssets acquired on or after April 1, 2007: mainly the straight-line method
The estimated useful life of fixed assets are based on the same standards as mainly
specified in the Corporation Tax Law.
Intangible fixed assets:
Intangible fixed assets are amortized using the straight-line method. The estimateduseful lives of the assets are based mainly on the same standards as specified in the
Corporation Tax Law.
Software for internal use is amortized by the straight-line method, however, over auseful life of five years.
C. Accounting criteria for major allowances:
Allowance for doubtful accounts:
The allowance for doubtful accounts consists of the individually estimateduncollectible amounts with respect to certain identified doubtful receivables and an
amount calculated using the rate of actual collection losses with respect to the other49

receivables.
Allowance for employees’ severance and retirement benefits:
The Company and its consolidated subsidiaries make provisions in the necessaryamount of allowance for employees’ severance and retirement benefits deemed tohave accrued during the term, based on each company’s projected benefit obligations
and the pension fund balance at term-end. Actuarial gain or loss is amortized,
beginning in the year following the year in which the gain or loss is recognized, by
the straight-line method for a given number of years (generally 10 years) within theemployees’ average remaining years of service.
Prior service costs are amortized by the straight-line method within the averageremaining years of service of employees (generally 10 years) from the time theyarise.
Allowance for retirement benefits for directors and statutory auditors:
Some of the consolidated subsidiaries calculate the required amount, based oninternal regulations, in preparation for payment of retirement benefits to directors andstatutory auditors as of the end of the fiscal year under review.
At the Company and several of its consolidated subsidiaries’ annual shareholders’meetings held in March 2007, the proposal of one-time payments marking thetermination of their systems of retirement bonuses for directors and statutory auditors(under which payments would be made at the time of each person’s retirement) wasapproved. Accordingly, the Company and the consolidated subsidiaries in question
reversed the entire amount of their allowances for retirement benefits for directors
and statutory auditors, and recognized unpaid balances of these newly authorized
payments in the “Other long-term liabilities” section of the balance sheets.
D. Other significant items associated with the preparation of consolidated financial statements
1) Methods of major lease transactions
Finance leases other than those in which ownership of the leased property is deemed
to be transferred to the lessee are accounted for in the manner followed in operatinglease transactions.
2) Accounting for hedging
a. Accounting for hedging
The Company defers gains or losses on its hedges.
For foreign currency swaps, the Company allocates differences in the values of hedging
instruments when such hedges meet all requirements for such allocations. For interest
rate swaps, the Company applies exceptional treatment when the swap in question meetsthe conditions for application of such exceptional treatment.
50

b. Hedging instruments and risks hedged:
Hedging instruments: Foreign exchange contracts, forward foreign exchange
currency swaps and interest rate swaps
Risks hedged:

Transactions in foreign currencies and interest on borrowingsc. Hedging policy:
Derivative transactions are used to avoid risks associated with fluctuations in foreignexchange markets and in interest rates and to reduce the costs of financing. It is theCompany’s policy not to engage in speculative transactions that deviate from realdemand or in highly leveraged transactions.
d. Method of evaluating the effectiveness of hedging:
The Company assesses the effectiveness of its hedges by comparing changes in themarket values of the hedged items and of the hedging instruments over the entire
period of the hedge. When the Company allocates differences in the values ofhedging instruments or when it accounts for the value of swaps under special
exceptions, these determinations allow it to forgo evaluation of the effectiveness ofhedges in these cases.
3) Consumption tax and similar taxes
Consumption tax and similar taxes are excluded from the statements of income,
except in the case of non-deductible consumption tax related to fixed assets that are
charged when incurred.
(5) Evaluation of consolidated subsidiaries’ assets and liabilities
A kind of fair market value method evaluating all assets and liabilities of consolidated
subsidiaries by fair market value as at the date of acquisition thereof is used.
(6) Goodwill
Goodwill is amortized by the straight-line method over a five- to twenty-year period.
(Changes in accounting treatment)(1) Change in the method of converting revenues and expenses of overseas subsidiaries
Previously, revenues and expenses of overseas subsidiaries were converted on the basis of
the exchange rates in effect on the day of the consolidated closing of accounts. In the fiscal
year under review, however, the Company began using average exchange rates for theperiod as its basis of conversion.
This change was made because of the increasing materiality of the results of overseas
subsidiaries and because of the possibility that the actual conditions of the companies inquestion might be incorrectly presented due to fluctuations in exchange rates on the day of51

closing. The Company believes that conversion using less volatile average exchange rates
will result in reporting that more closely reflects actual conditions.
As a result of this change, net sales were ¥1,713 million higher than would have been thecase had the previous method been used. At the same time, however, this change resulted inoperating income that was ¥84 million lower and in recurring profit and income before
income taxes that were ¥188 million and ¥236 million lower, respectively.
(2) Accounting related to items no longer recognized as liabilities
Previously, based on provisions of the Corporation Tax Law, the Company recognized asrevenue certain reversals of its deposits for beer gift coupons issued and distributed by theCompany. In the fiscal year under review, however, the Company began to recognize as“deposits received” the amount of gift coupons that it estimates will be redeemed in the
future. This was done in accordance with a new auditing standard released by the JapaneseInstitute of Certified Public Accountants entitled “Audit Treatment for Reserves of Special
Taxation Measures Law, Allowances or Reserves of Special Law and Allowances for
Retirement Benefits to Officers (The Audit and Assurance Implementation Committee
Report No. 42, April 13, 2007).
As a result of this change, the Company adjusted its “deposits received” account andrecognized a loss of ¥1,545 million from “Loss on adjustment of estimated consumption ofgift coupons.” Net income before income taxes consequently declined by this same amount.
(3) Change in depreciation method for tangible fixed assets
The Company has changed its depreciation methods for assets acquired on or after April 1,
2007 in accordance with fiscal 2007 amendments of the Corporation Tax Law, the Law to
Amend Part of the Income Tax Law (March 30, 2007, Law No. 6) and the Cabinet Order toAmend Part of the Corporation Tax Law (Cabinet Order No. 83, March 30, 2007).
The impact of this change on profits or losses was insignificant.
(4) Accounting standards related to business combinations
In the fiscal year under review, the Company began applying the “Accounting Standard forBusiness Combinations” (Business Accounting Council, October 31, 2003) and the“Accounting Standard for Business Divestitures” {Accounting Standards Board of Japan(ASBJ), December 27, 2005, ASBJ Statement No. 7}. It also began applying“Implementation Guidance on Accounting Standard for Business Combinations andAccounting Standard for Business Divestitures” (ASBJ, December 27, 2005; latest revision,
December 22, 2006, ASBJ Implementation Guidance No. 10).
The impact of this change on earnings was insignificant.

52

2. Notes to the Consolidated Balance Sheets(1) Pledged assets and secured liabilities
The following assets have been provided as security for short-term borrowings of ¥1,971
million and long-term borrowings of ¥10,497 million:
Deposits:¥100 million

Buildings and structures:¥9,044 million

Machinery, equipment and vehicles:¥2,899 million

Land:¥27,162 million

Total¥39,207 million¥607,341 million(2) Accumulated depreciation of tangible fixed assets:(3) Contingent liabilities
Guarantees:¥3,932 million(4) Matured notes at term-end
The balance sheet date for the term fell on a bank holiday, and trade notes with maturity on
the balance sheet date were cleared on the clearing houses next business day. Current assets
and current liabilities thus respectively include trade notes receivable and trade notes
payable with maturity on the balance sheet date as follows:
Notes receivable:¥436 million

Notes payable:¥461 million

3. Notes to the Consolidated Statements of Income
Impairment losses on fixed assets
In the fiscal year under review, the Group (the Company and its consolidated subsidiaries)
recognized impairment losses in the following asset groups:
Use of Asset

Operating assets(assets for foodbusiness)
OthersLocation of Asset

Sakura, Tochigi Prefecture―

Type of Asset

Buildings and structures

Goodwill

The Group divides their respective assets, in principle, according to individual breweries,
plants and other business establishments and determines their groupings based oncomplementary relations of cash flows among the various assets. At the same time, however,
the Company and its Group companies count each of the individual leased assets and idle
assets as a stand-alone asset group. Headquarters buildings and employee welfare facilitiesof the Company and its Group companies are categorized as common-use assets, as they do
not generate cash flows on their own.
53

The impairment losses on the above operating assets concerned follow a decision to divest
these assets during the year under review. The goodwill that had been recognized in thefood and pharmaceutical business in relation to the assets concerned was also subject toimpairment. The Company determined that the profits that had been projected in thebusiness plan it considered at the time of the acquisition were unattainable. Thus, it reduced
the value of the assets by the difference between the recoverable amount and the book value,
and recognized this reduction as an impairment loss (¥98 million for buildings andstructures and ¥1,289 million for goodwill).
The Company estimated the recoverable amount by considering both the net sales value andthe utility value of the assets. The net sales value was based on the sales agreement for theassets concerned, while the utility value was calculated by projected future cash flow
discounted by 4.3%.

4. Notes to the Consolidated Statements of Changes in Net Assets(1) Total shares issued and outstanding as of the end of the fiscal year under review
Common shares
As of the end of the fiscal year (Dec. 31, 2007):

483,585,862 sharers(2) Dividends from retained earnings distributed during the fiscal year under review
A. It was resolved at the Annual Shareholders’ Meeting of March 27, 2007 as follows:
Item related to dividends on common stock
Total amount of dividends:¥4,942 million

Dividend per share:¥10.50Record date:

December 31, 2006

Effective date:

March 28, 2007

B. It was resolved at the Board of Directors Meeting of August 2, 2007 as follows:
Item related to interim dividends on common stock
Total amount of interim dividends:¥4,485 million

Interim dividend per share:¥9.50

Record date:June 30, 2007

Effective date:

September 4, 200754

(3) Dividends from retained earnings to be distributed after the final day of the fiscal year underreview
The following item has been placed on the agenda for approval at the Annual Shareholders’ Meetingscheduled for March 26, 2008.
Item related to dividends on common stock
Source of dividends:

Retained earnings

Total amount of dividends:¥4,488 million

Dividend per share:¥9.50

Record date:

December 31, 2007

Effective date:

March 27, 2008

(4) Number of shares subject to share purchase warrants upon exercise thereof (as of December
31, 2007)The First Issue of share purchase warrants (issued March 28, 2003)
Number of share purchase warrants:

260

Class and number of shares subject to the share purchase warrants:

260,000 common shares

Amount to be paid in per share upon exercise of the share purchase warrants:
Exercise period:¥830

March 28, 2005 to March 27, 2013

The Second Issue of share purchase warrants (issued March 30, 2004)
Number of share purchase warrants:

5,670

Class and number of shares subject to the share purchase warrants:

567,000 common shares

Amount to be paid in per share upon exercise of the share purchase warrants:
Exercise period:¥1,205

March 30, 2006 to March 29, 2014

The Third Issue of share purchase warrants (issued March 30, 2005)
Number of share purchase warrants:

6,000

Class and number of shares subject to the share purchase warrants:

600,000 common shares

Amount to be paid in per share upon exercise of the share purchase warrants:
Exercise period:¥1,374

March 30, 2007 to March 29, 2015

5. Per share information(1) Net assets per share:¥1,089.33(2) Net income per share:¥94.94

6. Other notes
Figures in amounts of less than one million yen are omitted.

55

Reference: CONSOLIDATED STATEMENTS OF CASH FLOWS (Summary)
For the year ended December 31, 2007
Million yen
Cash flows from operating activities:
Income before income taxes

81,741

Depreciation

45,250Decrease in allowance for employees’ severance and retirement
benefits(3,908)Decrease in allowance for doubtful accounts(3,480)

Increase in trade receivables
Decrease in inventories(2,049)1,343

Decrease in trade payables(2,716)

Increase in alcohol tax payable
Other cash flows from operating activities

1,833(3,199)SubtotalInterest and dividend income received

114,8146,478Interest expenses paid

(5,200)

Income taxes paid

(46,519)

Net cash provided by operating activities
Cash flows from investing activities:
Proceeds from sale of securities

69,573

5,120

Purchase of fixed assets(41,404)

Purchase of investment securities(28,648)

Purchase of investments in subsidiaries(52,090)

Other cash flows from investing activities(804)

Net cash used in investing activities(117,828)

Cash flows from financing activities:
Increase in financial liabilities

44,541

Purchase of treasury stock(230)

Cash dividends paid

(9,428)Other cash flows from financing activities

1,243

Net cash provided by financing activities

36,126

Effect of exchange rate change on cash and cash equivalents(182)

Net decrease in cash and cash equivalents(12,311)

Cash and cash equivalents at beginning of year

23,778

Increase in cash and cash equivalents due to change in scope of
consolidation
Cash and cash equivalents at end of year274
11,74156

NON-CONSOLIDATED BALANCE SHEETSAs of December 31, 2007
Million yen
ASSETS
Current assets:
Cash and deposits
Notes receivable
Accounts receivable
Merchandise and finished goods
Semi-finished goods
Raw materials
Supplies
Short-term loans receivable
Prepaid expenses
Deferred tax assets
Other current assets
Allowance for doubtful accounts
Total current assets

2,525
3,593
200,668
11,098
9,583
10,8904,494
13,508
8,307
4,136
4,104
(4,649)268,262

Fixed assets:
Tangible fixed assets:
Buildings
Structures
Machinery and equipment
VehiclesTools, furniture and fixtures
Land
Construction in progress

140,077
20,103
148,25139
44,244130,025
2,969
485,711

Intangible fixed assets:
Rights to use of facilities
Software
Other intangible fixed assets

697
8,370
13
9,080

Investments and other assets:
Investment securities
Shares in affiliates
Capital invested in affiliates
Long-term loans receivable
Deferred tax assets
Other investments
Allowance for doubtful accounts

100,778
170,802
4,891
11,385
5,094
22,273(7,773)
307,451
802,244
1,070,506

Total fixed assets
Total assets

57

NON-CONSOLIDATED BALANCE SHEETSAs of December 31, 2007
Million yen

LIABILITIES AND NET ASSETSLIABILITIESCurrent liabilities:
Notes payable
Trade accounts payable
Short-term borrowings
Bonds due within one year
Other accounts payable
Alcohol taxes payable
Consumption and similar taxes payable
Income taxes payable
Accrued expenses
Deposits received
Commercial paper
Allowance for employees’ bonuses
Allowance for directors’ and statutory auditors’ bonuses
Other current liabilities
Total current liabilities

105
52,416
106,000
10,00017,472125,041
6,851
11,12636,65434,93252,0001,726
99
106454,534

Long-term liabilities:
Bonds
Long-term borrowings
Long-term deposits received
Allowance for employees’ severance and retirement benefits
Other long-term liabilities
Total long-term liabilities
Total liabilities

70,00026,62533,3893,259
670
133,945588,479

NET ASSETS
Shareholders’ equity:
Common stock
Capital surplus
Capital reserve
Other capital surplus
Retained earnings
Other retained earnings
Reserve for reduction in entry of fixed assets
General reserve
Retained earnings carried forward
Treasury stock
Total shareholders’ equity

182,531
160,277
130,292
29,984
140,775
140,775
1,289
95,00044,486(14,674)
468,909

Valuation and translation adjustments:
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges
Total valuation and translation adjustments
Total net assets
Total liabilities and net assets

13,180(64)
13,116
482,026
1,070,506

58

NON-CONSOLIDATED STATEMENTS OF INCOME
For the year ended December 31, 2007
Million yen
Net sales

1,030,736

Cost of sales

729,597

Gross profit

301,138

Selling, general and administrative expenses

221,204

Operating income

79,933Non-operating income:Interest and dividend income

2,361

Other non-operating income

1,097
3,458

Non-operating expenses:
Interest expenses

2,905

Loss on sale and disposal of inventories

1,056

Other non-operating expenses

2,059
6,020

Recurring profit

77,372Extraordinary gains:
Gain on sale of fixed assets

50

Gain on sale of investment securities

0Gain on liquidation of affiliates
Gain on extinguishment of tie-in shares

1,441
29

Reversal of allowance for doubtful accounts

999
2,520

Extraordinary losses:
Loss on sale and disposal of fixed assets

5,446

Loss on sale of investment securities

0

Loss on devaluation of investment securities

230

Loss on sale of investment in affiliates

618

Loss on devaluation of investment in affiliates
Loss on devaluation of equity participation in affiliates
Loss on adjustment of estimated consumption of gift coupons

1,958
314
1,545
10,113

Income before income taxes
Income taxes:

69,779Current

25,243

Deferred

4,022
29,265

Net income

40,51359

NON-CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETSFor the year ended December 31, 2007

CommonstockMillions of yen
Balance as of Dec. 31,
2006

182,531(Million yen)

Shareholders' equity
Capital surplus
Retained earnings
Other retained earnings
Retained
Capital Other capital Total capital Reserve forGeneralearnings
reserve
surplussurplus reduction incarriedentry ofreserve
fixed assets
forward130,292

29,221

159,513

1,431

65,00043,260Total
retainedearnings
109,691

Total
Treasuryshareholders'stockequity(16,946)434,790

Changes during theterm
Dividends(9,430)(9,430)(9,430)Net income (loss)

40,51340,51340,513Acquisition oftreasury stock
Disposal of treasury
stock

763

763

Reversal of reserve
for reduction in entryof fixed assets(142)

Increase (decrease)in general reserve

(191)

(191)

2,463

3,227

142

–

–

30,000(30,000)––

Other changes in
non-shareholders'equity items during
the term (net)Total changes during
the term
Balance as of Dec. 31,
2007

Millions of yen
Balance as of Dec. 31,
2006

763

763

(142)

30,0001,225

31,083

2,272

34,11929,984160,277

1,289

95,00044,486

140,775(14,674)

468,909

Valuation and translation adjustments
Valuation
Total
Deferreddifference on
valuation
gains oravailableandlosses ontranslation
for-salehedgesadjustments
securities

Total net
assets

182,531

14,508130,292(28)

14,480449,270

Changes during theterm
Dividends(9,430)Net income (loss)

40,513Acquisition oftreasury stock(191)

Disposal of treasury
stock

3,227

Reversal of reserve
for reduction in entryof fixed assets–

Increase (decrease)in general reserve–

Other changes in
non-shareholders'equity items during
the term (net)(1,327)(35)(1,363)(1,363)

Total changes during
the term(1,327)(35)(1,363)32,756

Balance as of Dec. 31,
2007

13,180(64)

13,116

482,026

60

NOTES TO THE NON-CONSOLIDATED FINANCIAL STATEMENTS

1. Significant Accounting Policies(1) Valuation basis and method for securities
Investment in subsidiaries and affiliates:
Stated at cost based on the moving-average method.
Other securities with market value
Carried at the average market value for the month immediately preceding the balance
sheet date (valuation differences are all debited or credited directly to the net assets
section, with the cost of securities sold computed by the moving-average method).
Securities without market value
Stated at cost based on the moving-average method.
(2) Valuation basis and method for derivatives
Market price method(3) Valuation basis and method for inventories:
Merchandise, finished goods and semi-finished goods are stated at cost based on theweighted-average method. Raw materials and supplies are stated at cost based on themoving-average method.
(4) Depreciation methods for fixed assets:
Tangible fixed assets:
A. Production facilities:
Assets acquired on or before March 31, 2007: the former straight-line method
Assets acquired on or after April 1, 2007: the straight-line method
B. Other tangible assets
Assets acquired on or before March 31, 2007: the former declining-balancemethodAssets acquired on or after April 1, 2007: the declining-balance method
Buildings (excluding of fixtures) acquired on or after April 1, 1998:
Assets acquired on or before March 31, 2007: the former straight-line method
Assets acquired on or after April 1, 2007: the straight-line method
The estimated useful life of the fixed assets are based on the same standards as specified
in the Corporation Tax Law.

61

Intangible fixed assets:
Intangible fixed assets are amortized using the straight-line method. The estimateduseful lives of the assets are based on the standards specified in the Corporation Tax
Law. Software for internal use is amortized by the straight-line method, however, over auseful life of five years.
(5) Accounting criteria for allowances:
Allowance for doubtful accounts:
The allowance for doubtful accounts consists of the individually estimated uncollectible
amounts with respect to certain identified doubtful receivables and an amountcalculated using the rate of actual collection losses with respect to the other receivables.
Allowance for employees’ severance and retirement benefits:
The Company makes provisions in the necessary amount of allowance for employees’
severance and retirement benefits deemed to have accrued during the term, based on the
Company’s projected benefit obligations and the pension fund balance as of the end of
the fiscal year under review. Actuarial gain or loss is amortized, beginning in the year
following the year in which the gain or loss is recognized, by the straight-line method
for a given number of years (10 years) within the employees’ average remaining yearsof service.
Prior service costs are amortized by the straight-line method over 10 years within the
average remaining years of service of employees from the time they arise.
Allowance for employees’ bonuses:
An allowance for employees’ bonuses is provided at the estimated amount applicable tothe fiscal year under review.
Allowance for directors’ and statutory auditors’ bonuses:
An allowance for directors’ and statutory auditors’ bonuses is provided at the estimatedamount applicable to the fiscal year under review.
(6) Lease contracts:
Finance leases other than those in which ownership of the leased property is deemed to betransferred to the lessee are accounted for in the manner followed in operating leasetransactions.
(7) Accounting for hedging
A. Accounting for hedging
The Company defers gains or losses on its hedges. For interest rate swaps, it applies
exceptional treatment when the swap in question meets the conditions for application ofsuch exceptional treatment.

62

B. Hedging instruments and risks hedged:
Hedging instruments:

Interest rate swaps

Risks hedged:

Interest on borrowings

C. Hedging policy:
Derivative transactions are used to avoid risks associated with fluctuations in foreignexchange markets and in interest rates and to reduce the costs of financing. It is theCompany’s policy not to engage in speculative transactions that deviate from real demandor in highly leveraged transactions.
D. Method of evaluating the effectiveness of hedging:
The Company assesses the effectiveness of its hedges by comparing changes in the market
values of the hedged items and of the hedging instruments over the entire period of thehedge. When the Company allocates differences in the values of hedging instruments orwhen it accounts for the value of swaps under special exceptions, these determinations
allow it to forgo evaluation of the effectiveness of hedges in these cases.
(8) Consumption tax and similar taxes:
Consumption tax and similar taxes are excluded from the statements of income, except in
the case of non-deductible consumption tax related to fixed assets that are charged whenincurred.
(Changes in accounting treatment)(1) Accounting related to items no longer recognized as liabilities
Previously, based on provisions of the Corporation Tax Law, the Company recognized asrevenue certain reversals of its deposits for beer gift coupons issued and distributed by theCompany. In the fiscal year under review, however, the Company began to recognize as“deposits received” the amount of gift coupons that it estimates will be redeemed in the
future. This was done in accordance with a new auditing standard released by the JapaneseInstitute of Certified Public Accountants entitled “Audit Treatment for Reserves of Special
Taxation Measures Law, Allowances or Reserves of Special Law, and Allowances for
Retirement Benefits to Officers (The Audit and Assurance Implementation Committee
Report No. 42, April 13, 2007).
As a result of this change, the Company adjusted its “deposits received” account andrecognized a loss of ¥1,545 million from “Loss on adjustments of estimated consumption ofgift coupons.” Income before income taxes consequently declined by this same amount.
(2) Change in depreciation method for tangible fixed assets
The Company has changed its depreciation methods for assets acquired after April 1, 2007
in accordance with fiscal 2007 amendments of the Corporation Tax Law–the Law to Amend
Part of the Income Tax Law (March 30, 2007, Law No. 6) and with the Cabinet Order to63Amend Part of the Corporation Tax Law (Cabinet Order No. 83, March 30, 2007). The
impact of this change on earnings was insignificant.
(3)Accounting standards related to business combinations
In the fiscal year under review, the Company began applying the “Accounting Standard forBusiness Combinations” (Business Accounting Council, October 31, 2003) and the“Accounting Standard for Business Divestitures” {Accounting Standards Board of Japan(ASBJ), December 27, 2005, ASBJ Statement No. 7}. It also began applying“Implementation Guidance on Accounting Standard for Business Combinations andAccounting Standard for Business Divestitures” (ASBJ, December 27, 2005; latest revision,
December 22, 2006, ASBJ Implementation Guidance No. 10).
This change has only an insignificant impact on earnings.

2. Notes to the Non-Consolidated Balance Sheets(1) Pledged assets and secured liabilities
The following assets have been provided as collateral for ¥3,625 million in long-termborrowings:
Land:¥13,332 million(2) Accumulated depreciation on tangible fixed assets:¥474,693 million(3) Contingent liabilities
A. Guarantees, etc., against bank borrowings
Guarantees:¥25,813 million

Comfort letters, etc.:¥1,866 million

B. Guarantees, etc., against derivatives
Guarantees:
Contract amount, etc.:¥2,000 million

Unrealized gains (losses):¥(1) million(4) Matured notes at term-end
The balance sheet date for the term fell on a bank holiday, and trade notes with maturity on
the balance sheet date were cleared on the clearing houses next business day. Current assets
and current liabilities thus respectively include trade notes receivable and trade notes
payable with maturity on the balance sheet date as follows:
Notes receivable:¥45 million

Notes payable:none(5) Monetary claims and obligations with affiliates
Short-term monetary claims on affiliates:¥19,945 million

Long-term monetary claims on affiliates:¥6,560 million

Short-term monetary obligations to affiliates:¥29,952 million

643. Notes to the Non-Consolidated Statements of Income
Transactions with affiliates:
Net sales:¥37,829 million

Purchases:¥85,580 million

Selling, general and administrative expenses:¥34,636 million

Transactions other than operating transactions:¥705 million

4. Notes related to the Non-Consolidated Statement of Changes in Net Assets
Treasury stock
Type of stock

Balance as of the end of
the fiscal year
(Dec. 31, 2006)

Increase

Decrease

Balance as of the end of
the fiscal year underreview (Dec. 31, 2007)

Common shares

12,888,400

108,527

1,872,854

11,124,073(Reasons for change)
The increase in shares was the result of the following:
Increase resulting from purchases of shares of less than one voting unit fromshareholders of such shares responding to their request:

57,027 shares

Increase resulting from purchases of shares in response to request of shareholders inaccordance with the provisions of Paragraph 1, Article 797 of the Corporation Law: 51,500 shares
The decrease in shares was the result of the following:
Decrease resulting from sales of shares of less than one voting unit to shareholders ofshares of less than one voting unit to make their fractional shares a voting unit
responding to their demand:
2,585 shares
Decrease resulting from exercise of stock options:
316,000 shares
Decrease resulting from a share exchange:
1,554,269 shares

65

5. Tax Effect Accounting(1) Deferred tax assets and liabilities
Deferred tax assets
Allowance for doubtful accounts, in excess of tax-deductible amount:
Allowance for employees’ bonuses, non-tax deductible:
Allowance for employees’ severance and retirement benefits,
in excess of tax-deductible amount:
Loss on devaluation of investment in affiliates, non-tax deductible:
Loss on devaluation of land, non-tax deductible:
Depreciation, in excess of tax-deductible amount:
Loss on establishment of retirement benefit trust, non-tax deductible:
Loss on devaluation of investment securities, non-tax deductible:
Loss on devaluation of capital contributions for affiliates,
non-tax deductible:
Amortization of deferred charges, in excess of tax-deductible amount:
Losses from the liquidation of affiliates:
Disapproval of unpaid enterprise taxes:
Impairment loss on fixed assets:
Estimated cost of removal of fixed assets, non-tax deductible:
Loss on adjustment of estimated consumption of gift coupons,
non-tax deductible:
Others:Subtotal deferred tax assets:
Valuation allowance:
Total deferred tax assets:¥4,490 million¥672 million¥7,899 million¥6,305 million¥11 million¥318 million¥1,470 million¥4,365 million¥3,002 million¥117 million¥1,082 million¥927 million¥1,294 million¥282 million¥515 million¥2,272 million¥35,028 million¥(15,653) million¥19,375 million

Deferred tax liabilities
Reserve for reduction in entry of fixed assets:
Valuation difference on available-for-sale securities:
Prepaid pension expenses:¥(873) million¥(8,930) million¥(340) million¥(10,144) million

Total deferred tax liabilities:¥9,231 million

Net deferred tax assets:(2) Effective tax rates before and after application of tax effect accounting
Statutory effective tax rates:

40.4%

Adjustment
Permanent difference (non-deductible), including entertainment expenses:

1.8%

Valuation allowance:

1.1%

Permanent difference (non-taxable), including dividend income:(0.4)%Tax credit:(0.8)%

Others:(0.1)%

Effective tax rates after application of tax effect accounting:

41.9%

66

6. Notes related to leased fixed assets(1) As of the end of the fiscal year under review
Amount equivalent to acquisition costs:¥34,014 million(2) As of the end of the fiscal year under review
Amount equivalent to accumulated depreciation:¥17,309 million(3) As of the end of the fiscal year under review
Amount equivalent to prepaid lease rents:¥17,081 million

7. Transactions with related parties
Subsidiaries
Relationship
Attribute

Name of

Votingcompany

interest

Amount ofTransactions

Interlocking

Relationshipof directors

in business

transactions

Account(Million yen)

Balance at
end of year

Debt guarantee
for bank loansAI
Subsidiary(Note 1)

Beverages

80% direct

Holdingownership

2 directors

17,248Debt
guaranteeCo., Ltd.

–

Debt guarantee
for swap
transactions

2,000(Note 2)

Notes: Condition of transactions and decision policy of condition of transactions
1. The Company guarantees the subsidiary’s bank loans.
2. The Company guarantees the subsidiary’s debts arising from swap transaction contracts. Amounts oftransactions concerning swap transactions described above are notional principal.

8. Per share information(1) Net assets per share:¥1,020.24(2) Net income per share:¥85.84

9. Other notes
Figures in amounts of less than one million yen are omitted.

67–

INDEPENDENT AUDITOR’S REPORT
January 31, 2008
To: The Board of Directors
Asahi Breweries, Ltd.
AZSA & Co.
Hikoyuki Miwa (Seal)
Designated and Engagement Partner
Certified Public Accountant
Tatsunaga Fumikura (Seal)
Designated and Engagement Partner
Certified Public Accountant
Yasuyuki Nagasaki (Seal)
Designated and Engagement Partner
Certified Public Accountant
In accordance with the provisions of Paragraph 4, Article 444 of the Corporation Law,
we have audited the consolidated financial statements of Asahi Breweries, Ltd. (the“Company”) for the fiscal year from January 1, 2007 to December 31, 2007. Thesestatements consist of the consolidated balance sheets, the consolidated statements of income,the consolidated statements of changes in net assets, and notes on significant accounting
policies used in consolidation. These consolidated financial statements are the responsibilityof the Company’s management. Our responsibility is to express an opinion on these financial
statements based on our audit conducted as Independent Auditor.
We conducted our audit in accordance with generally accepted auditing standards inJapan. Those auditing standards require that we obtain reasonable assurance that theconsolidated financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in the financial
statements, and assessing the accounting principles used, the methods of application thereof,and estimates made by management, as well as evaluating the overall presentation of theconsolidated financial statements. We believe that our audit provides a reasonable basis forour opinion.
In our opinion, the foregoing consolidated financial statements present fairly, in allmaterial aspects, the financial position and results of operations of the Company and its
consolidated subsidiaries for the period covered by the aforesaid financial statements inconformity with generally accepted accounting principles in Japan.
Our firm and engagement partners have no interests in the Company requiring disclosure
pursuant to the relevant provisions of the Certified Public Accountants Law of Japan.

68

REPORT OF THE BOARD OF STATUTORY AUDITORS CONCERNINGTHE CONSOLIDATED FINANCIAL STATEMENTS

The Board of Statutory Auditors has prepared the following report on the consolidated
financial statements (consisting of the consolidated balance sheets, the consolidated statements
of income, the consolidated statements of changes in net assets, and notes on significant
accounting policies used in consolidation) for the 84th fiscal year, the period from January 1,
2007 to December 31, 2007. This report was prepared on the basis of audit reports prepared byindividual Statutory Auditors and represents a unanimous opinion of all the Statutory Auditors
after due discussions and consultations among them.
1. Methods used in audits by the individual Statutory Auditors and by the Board of
Statutory Auditors; content of audits
The Board of Statutory Auditors established auditing policies and auditing plans for the
fiscal year under review and received reports from each of the Statutory Auditors on theexecution of his auditing activities and the results thereof. In addition, it received reports on thebusiness performance from the Directors et al. and from the Independent Auditor, and, whennecessary, requested explanations regarding such reports.
In accordance with the auditing policies and auditing plans established by the Board of
Statutory Auditors for the period under review, each of the Statutory Auditors received reports
from the Directors, employees and others regarding the consolidated financial statements, and,
when necessary, requested explanations regarding these reports. The Statutory Auditors also
monitored and examined whether the Independent Auditor maintains its independence andcarries out audits in an appropriate manner. The Statutory Auditors received reports from the
Independent Auditor on the execution of duties and, when necessary, requested explanations
regarding those reports. They also received notification from the Independent Auditor that it had
taken steps to improve the “system for ensuring appropriate execution of its duties” (asenumerated in Article 159 of the Company Accounting Regulation Ordinance) in compliancewith the “Quality Control Standards Relating to Auditing” (adopted by the Business Accounting
Deliberation Council on October 28, 2005), and, when necessary, requested explanations andconsequently confirmed that the system under which the Independent Auditor operates isappropriate. Based on the foregoing methods, the Statutory Auditors reviewed the consolidated
financial statements for the fiscal year under review.
2. Result of the Audit
In our opinion, the auditing methods used by AZSA & Co., the Independent Auditor, andthe results of its audit are appropriate.

February 1, 2008

69

Board of Statutory Auditors
Asahi Breweries, Ltd.
Sugao Nishikawa (Seal)
Standing Statutory Auditor
Yoshihiro Goto (Seal)
Standing Statutory Auditor
Takahide Sakurai (Seal)
Outside Statutory Auditor
Naoto Nakamura (Seal)
Outside Statutory Auditor
Tadashi Ishizaki (Seal)
Outside Statutory Auditor

70

INDEPENDENT AUDITOR’S REPORT
January 31, 2008
To: The Board of Directors
Asahi Breweries, Ltd.
AZSA & Co.
Hikoyuki Miwa (Seal)
Designated and Engagement Partner
Certified Public Accountant
Tatsunaga Fumikura (Seal)
Designated and Engagement Partner
Certified Public Accountant
Yasuyuki Nagasaki (Seal)
Designated and Engagement Partner
Certified Public Accountant
In accordance with the provisions of Item 1, Paragraph 2, Article 436 of the Corporation
Law, we have audited the financial statements of Asahi Breweries, Ltd. (the “Company”) for its
84th fiscal year, the period from January 1, 2007 to December 31, 2007. These statements
consist of the non-consolidated balance sheets, the non-consolidated statements of income, thenon-consolidated statements of changes in net assets, notes on significant accounting policies,
and supporting schedules thereto. These financial statements and supporting schedules thereto
are the responsibility of the Company’s management. Our responsibility is to express an opinion
on these financial statements and supporting schedules thereto based on our audit conducted as
Independent Auditor.
We conducted our audit in accordance with generally accepted auditing standards in Japan.
Those auditing standards require that we obtain reasonable assurance that the financial
statements and supporting schedules thereto are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in the financial
statements and assessing the accounting principles used, the methods of application thereof, andestimates made by management, as well as evaluating the overall presentation of the financial
statements and supporting schedules thereto. We believe that our audit provides a reasonablebasis for our opinion.
In our opinion, the foregoing financial statements and supporting schedules thereto present
fairly, in all material aspects, the financial position and results of operations of the Company forthe period covered by the aforesaid financial statements and supporting schedules thereto in
conformity with generally accepted accounting principles in Japan.
Our firm and our engagement partners have no interests in the Company requiring
disclosure pursuant to the relevant provisions of the Certified Public Accountants Law of Japan.

71

REPORT OF THE BOARD OF STATUTORY AUDITORSThe Board of Statutory Auditors has prepared the following report concerning theexecution of duties by the Directors for the 84th fiscal year, the period from January 1, 2007 to
December 31, 2007. The report was prepared on the basis of audit reports prepared byindividual Statutory Auditors and represents a unanimous opinion of all the Statutory Auditors
after due discussions and consultations among them.
1. Methods used in audits by the individual Statutory Auditors and by the Board of
Statutory Auditors; content of audits
The Board of Statutory Auditors established auditing policies and auditing plans for the
fiscal year under review and received reports from each of the Statutory Auditors on theexecution of his auditing activities and the results thereof. In addition, it received reports on thebusiness performance from the Directors et al. and from the Independent Auditor, and, whennecessary, requested explanations regarding such reports.
In accordance with the auditing standards for Statutory Auditors set by the Board of
Statutory Auditors, each of the Statutory Auditors communicated with the Directors, the internal
auditing division, and employees of the Company and endeavored to gather information andcreate an improved environment for auditing, in accordance with the auditing policies andauditing plans established for the year under review. The Statutory Auditors also attended Boardof Directors’ Meetings and other important meetings, received reports from the Directors andthe internal auditing division of the Company on its business performance, and, when necessary,requested explanations regarding those reports. The Statutory Auditors also inspected
documents related to important decisions and examined the operations and assets of theCompany’s head offices and major operational establishments. The Statutory Auditors also
monitored and examined the systems established to ensure that the execution of duties by the
Directors were in compliance with laws and regulations and with the Company’s Articles ofIncorporation, and monitored and examined the systems established pursuant to Paragraphs 1
and 3, Article 100 of the Enforcement Regulations of the Corporation Law to ensure that theCompany’s operations were conducted appropriately (internal control systems). As required
under Items 1 and 2 of Article 127 of the Enforcement Regulations of the Corporation Law, theCompany stated in the Business Report its basic policy concerning company control and thevarious measures to be implemented to preserve and enhance corporate value. The Statutory
Auditors evaluated the content of these statements, taking into consideration discussions held at
Board of Directors’ Meetings and at other senior management meetings. With respect tosubsidiaries, the Statutory Auditors took steps to facilitate communications with the directors
and statutory auditors of subsidiaries and, when necessary, received reports from subsidiaries on
the status of their businesses. Using the foregoing methods, the Statutory Auditors reviewed theBusiness Report and the supporting schedules thereto for the fiscal year under review. In
addition, the Statutory Auditors monitored and examined whether the Independent Auditor
maintains its independence and carries out audits in an appropriate manner. The Statutory
Auditors received reports from the Independent Auditor on the execution of its duties and, whennecessary, requested explanations regarding those reports. The Statutory Auditors also received
notification from the Independent Auditor that it had taken steps to improve the “system forensuring appropriate execution of its duties” (as enumerated in Article 159 of the Company
Accounting Regulation Ordinance) in compliance with the “Quality Control Standards Relating
to Auditing” (adopted by the Business Accounting Deliberation Council on October 28, 2005).
When necessary, the Statutory Auditors requested explanations of these reports andnotifications and consequently confirmed that the system under which the Independent Auditor
operates is appropriate. Based on the foregoing methods, the Statutory Auditors reviewed thenon-consolidated financial statements for the fiscal year under review (non-consolidated balance
sheets, non-consolidated statements of income, non-consolidated statements of changes in net
assets, and notes on significant accounting policies) and supporting schedules thereto.
72

2. Results of the Audit(1) Results of audit of the Business Report•
In our opinion, the Business Report and the supporting schedules thereto present thesituation of the Company fairly, in compliance with the provisions of applicable laws
and regulations and the Articles of Incorporation.
•
In our opinion, there are no wrongful acts or material violations of applicable laws andregulations or the Articles of Incorporation in the execution of their duties by the
Directors.
•
In our opinion, the content of the resolution by the Board of Directors regarding internal
control systems is appropriate, and, furthermore, execution of the internal control
systems by the Directors has been appropriate.
•

In our opinion, the Company’s basic policy regarding persons who exercise control overdecision-making with respect to the Company’s finances and business policies isappropriate. In our opinion, furthermore, the measures the Company is taking under
Item 2, Article 127 of the Enforcement Regulations of the Corporation Law are inaccord with this basic policy. Finally, in our opinion, these measures do not harm thecommon interests of the Company’s shareholders and do not have as their aim
maintaining the status of the Company’s Directors.

(2) Results of the audit of financial statements and the supporting schedules thereto
In our opinion, the auditing methods used by AZSA & Co., the Independent Auditor, andthe results of its audit are appropriate.
February 1, 2008
Board of Statutory Auditors
Asahi Breweries, Ltd.
Sugao Nishikawa (Seal)
Standing Statutory Auditor
Yoshihiro Goto (Seal)
Standing Statutory Auditor
Takahide Sakurai (Seal)
Outside Statutory Auditor
Naoto Nakamura (Seal)
Outside Statutory Auditor
Tadashi Ishizaki (Seal)
Outside Statutory Auditor

73

REFERENCE MATERIALS FOR SHAREHOLDERS’ MEETING
Agenda Items and Reference Materials
Item 1: Appropriation of retained earnings for the 84th term
The Company proposes the appropriation of retained earnings in the following manner:
1. Year-end dividends
The Company considers the return of profits to shareholders to be an important management
policy. While endeavoring to enhance its profitability and to strengthen its financial standing,
the Company’s fundamental aim is to reward shareholders appropriately in light of its businessperformance. Its policy with respect to dividends is essentially to maintain the continuity andstability of payouts, while at the same time targeting to increase the payout ratio up to 20
percent or higher on a consolidated basis. In accordance with this policy, and taking into
consideration a variety of factors, including the consolidated financial standing and businessperformance during the fiscal year under review of the Company, the Company proposes
distribution of the following dividend:(1) Type of dividend asset
Cash(2) Allocation of dividend assets to shareholders and total amount of allocation¥9.50 yen per share of common stock
Total amount of payout: ¥4,488,386,996
Since the Company previously paid out ¥9.50 per share as an interim-period dividend,
the total dividend for the fiscal year under review will amount to ¥19 per share.
(3) Effective date of dividend payment
March 27, 2008
2. Appropriation of other retained earnings(1) Retained-earnings accounts showing an increase, and the amount of such increases
General reserves:¥30,000,000,000(2) Retained-earnings accounts showing a decrease, and the amount of such decreases
Retained earnings carried forward:¥30,000,000,000

74Item 2: Amendments of the Articles of Incorporation
We propose to amend the Articles of Incorporation of the Company as follows:
1. Reason for amendments(1) As on September 1, 2008, the Company will relocate the place of its registered head officefrom Chuo-ku, Tokyo, to Sumida-ku, Tokyo, because of reconstruction of the officebuilding where the current registered head office of the Company is located (Article 3 of thepresent Articles of Incorporation).
(2) To promote agile and efficient decision-making in response to various changes in thebusiness environment, the Company would like to establish a provision that enables theBoard of Directors to adopt resolutions in writing without holding a meeting, provided that
there is unanimous agreement among all the Directors on the matter to be resolved and that
there are no objections from the Statutory Auditors (proposed amendment to Article 23).
In this connection, a renumbering of the articles necessitated by the establishment of thisnew article shall also be made as a part of this amendment.

75

2. Details of amendments
The proposed amendments are as follows:(Amended portions are indicated by underlining.)
Current

AmendedChapter I: GENERAL PROVISIONS

Chapter I: GENERAL PROVISIONS

Article 3 (Location of Registered Head Office) Article 3 (Location of Registered Head Office)
The Company shall have its registered head
The Company shall have its registered head
office in Chuo-ku, Tokyo.
office in Sumida-ku, Tokyo.
Chapter IV: DIRECTORS AND BOARD OF
DIRECTORS

Chapter IV: DIRECTORS AND BOARD OF
DIRECTORS(Inserted)

Article 23 (Omission of resolution by the Boardof Directors)
When the requirements of Article 370 of the
Corporation Law are met, the Company shall deemthat a resolution with respect to the subject matterhas been adopted by the Board of Directors.

Article 23 - Article 25 (Text omitted)

Article 24 - Article 26 (Text unchanged)

Chapter V: STATUTORY AUDITORS AND
BOARD OF STATUTORY AUDITORS

Chapter V: STATUTORY AUDITORS AND
BOARD OF STATUTORY AUDITORS

Article 26- Article 33 (Text omitted)

Article 27 - Article 34 (Text unchanged)

Chapter VI: INDEPENDENT AUDITOR

Chapter VI: INDEPENDENT AUDITOR

Article 34 - Article 36 (Text omitted)

Article 35 - Article 37 (Text unchanged)

Chapter VII: ACCOUNTS

Chapter VII: ACCOUNTS

Article 37 - Article 39 (Text omitted)

Article 38 - Article 40 (Text unchanged)(Inserted)

Supplementary provision
The amendment in Article 3 shall be effective asof September 1, 2008. This supplementaryprovision will be deleted after the date it comes
into force.

Item 3: Election of eleven (11) Directors
At the close of this Annual Shareholders’ Meeting, the term of office of all the Directors will
expire. We would therefore like shareholders to elect eleven (11) Directors.
The candidates for the Directors are as follows:76

Candidate
NumberName(date of birth)

Career summary, positions in the Company, areasof responsibility, and representation of othercompanies and other organizations

Number ofshares in the
Company
owned bythe candidate

Specialinterests intheCompany

22,200See
Note 1

Apr. 1963 Entered Asahi Breweries, Ltd.
Mar. 1996 Director; General Manager ofKyushu, Chugoku and Shikoku
Regional Headquarters
Mar. 1997 Managing Director, Senior Deputy
General Manager of Sales Division
and Senior General Manager ofKyushu and Chugoku Regional
Headquarters
Sep. 1997 Managing Director, Senior Deputy
General Manager of Sales Division,and Senior General Manager of
Shutoken Regional Headquarters
and Kanshin-etsu Regional
Headquarters
Sep. 1998 Managing Director, Senior Deputy
General Manager of Sales Division,
Senior General Manager of
Shutoken Regional Headquarters

1

Kouichi
Ikeda(April 21, 1940)

Mar. 1999 Senior Managing Director, Senior
Deputy General Manager of Sales
Division, Senior General Managerof Shutoken Regional Headquarters
Mar. 2000 Senior Managing Executive
Officer, Senior Deputy General
Manager of Sales Division, Senior
General Manager of Shutoken
Regional Headquarters
Oct. 2000

Senior Managing Executive
Officer, Senior General Manager of
Liquor Sales & Marketing
Headquarters

Mar. 2001 Senior Managing Director
Jan. 2002

President and Representative
Director

Mar. 2006 Chairman of the Board andRepresentative Director(to the present)< Representation of other companies and otherorganizations >Chairman of the Board of Asahi Beer Arts
Foundation

77Candidate
NumberName(date of birth)

Career summary, positions in the Company, areasof responsibility, and representation of othercompanies and other organizations

Apr. 1965

Number ofshares in the
Company
owned bythe candidate

Specialinterests intheCompany

31,000---26,502---Entered Asahi Breweries, Ltd.

Mar. 1997 Director, General Manager of
Fukuoka Branch
Sep. 1997

Director, Senior General Manager
of Kyushu Regional Headquarters

Mar. 2000 Managing Executive Officer,
Senior General Manager ofKyushu Regional Headquarters
Oct. 2000

2

Hitoshi Ogita

Managing Executive Officer,
Senior General Manager ofKanshin-etsu Regional
Headquarters(January 1, 1942) Mar. 2002 Senior Managing Executive
Officer, Senior General Manager
of Kanshin-etsu Regional
Headquarters
Sep. 2002

Executive Officer; Vice Presidentof Asahi Soft Drinks Co., Ltd.

Mar. 2003

President and Representative
Director of Asahi Soft Drinks Co.,
Ltd.

Mar. 2006

President and Representative
Director of Asahi Breweries, Ltd.
(to the present)

Apr. 1969

Entered Asahi Breweries, Ltd.

Mar. 2000 Executive Officer, Senior General
Manager of Chubu Regional
Headquarters
Sep. 2001

Masatoshi
Takahashi
3(October 24,
1946)

Executive Officer, Senior General
Manager of Liquor Sales &Marketing Headquarters

Mar. 2002 Managing Executive Officer, Senior
General Manager of Liquor Sales &Marketing Headquarters
Sep. 2003

Managing Executive Officer, Senior
General Manager of Kinkiken
Regional Headquarters

Mar. 2005 Senior Managing Executive Officer,
Senior General Manager of
Kinkiken Regional Headquarters
Mar. 2006 Senior Managing Director, Senior
Managing Executive Officer(to the present)78

Candidate
NumberName(date of birth)

Career summary, positions in the Company, areasof responsibility, and representation of othercompanies and other organizations

Apr. 1968

Number ofshares in the
Company
owned bythe candidate

Specialinterests intheCompany

31,652See
Note 1Entered Asahi Breweries, Ltd.

Mar. 2000 Executive Officer, Senior General
Manager of Logistics Department

4

Masahiko
Osawa(January 28,
1946)

Sep. 2001

President of Asahi Beer (Shanghai)
Product Services Co., Ltd.

Sep. 2002

Managing Executive Officer, Chief
Representative of China
Representative OfficeJan. 2005

Managing Executive Officer,
Senior General Manager of China
Business Headquarters, Chief
Representative of China
Representative Office

Oct. 2005

Managing Executive Officer,
Senior General Manager of China
Headquarters, Chief
Representative of China
Representative Office

Mar. 2007 Managing Director, Managing
Executive Officer
Sep. 2007

Managing Director, Managing
Executive Officer, Senior General
Manager of International
Headquarters(to the present)< Representation of other companies and otherorganizations >President and Representative Director of
AI Beverages Holding Co., Ltd.
Representative Director and Chairman ofHaitai Beverage Co., Ltd.

79

Candidate
NumberName(date of birth)

Career summary, positions in the Company, areasof responsibility, and representation of othercompanies and other organizations

Apr. 1972

Number ofshares in the
Company
owned bythe candidate

Specialinterests intheCompany

19,400---

10,200---Entered Asahi Breweries, Ltd.

Mar. 2000 Executive Officer, Senior General
Manager of Group Management
Strategy Division

5

Oct. 2000

Executive Officer, Senior General
Manager of Strategy Planning
Headquarters

Sep. 2001

Executive Officer, Deputy General
Manager of Shutoken Regional
Headquarters and General
Manager of Tokyo Branch

Naoki Izumiya(August 9, 1948)

Mar. 2003 Director
Mar. 2004 Managing Director
Mar. 2006 Managing Director, Managing
Executive Officer, Senior General
Manager of Liquor Sales &Marketing Headquarters(to the present)
Apr. 1972

Entered Asahi Breweries, Ltd.

Mar. 2000 Executive Officer, Senior General
Manager of Quality Development
Headquarters and Senior General
Manager of Logistics Department
Sep. 2001

6

Kazuo
Motoyama

Executive Officer,
Senior General Manager of SCM
Headquarters

Sep. 2002(March 14, 1950) Sep. 2003

Executive Officer

Oct. 2005

Executive Officer

Executive Officer, Senior General
Manager of Strategy Planning
Headquarters

Mar. 2006 Director, Executive Officer
Mar. 2007 Managing Director, Managing
Executive Officer(to the present)

80Candidate
NumberName(date of birth)

Career summary, positions in the Company, areasof responsibility, and representation of othercompanies and other organizations

Apr. 1975

Entered Asahi Breweries, Ltd.

Sep. 2001

Executive Officer in charge ofManagement Strategy, Personnel
Strategy and Business Planning
Promotion

Number ofshares in the
Company
owned bythe candidate

Specialinterests intheCompany

7,100

---

11,400See
Note 1Mar. 2002 Executive Officer in charge ofManagement Planning, Personnel
Strategy, Business Planning,
Promoting and Public Relations
Sep. 2002
Akiyoshi Koji
7

(November 8,
1951)

Executive Officer in charge ofBeverage Business of Asahi
Breweries, Ltd.

Mar. 2003 Managing Director and Senior
General Manager of Planning
Division, Asahi Soft Drinks Co.,
Ltd.
Mar. 2006 Senior Managing Director andSenior General Manager ofPlanning Division, Asahi Soft
Drinks Co., Ltd.
Mar. 2007 Managing Director, Managing
Executive Officer of Asahi
Breweries, Ltd.
(to the present)
Apr. 1972

Entered Asahi Breweries, Ltd.

Mar. 2004 Executive Officer and Senior
General Manager, Production
Operations Headquarters

8

Shin Iwakami(May 18, 1949)

Oct. 2005

Executive Officer and Senior
General Manager, Production
Headquarters

Mar. 2007

Managing Director, Managing
Executive Officer, Senior General
Manager of Production
Headquarters(to the present)< Representation of other companies andorganizations>
Chairman of the Board of Asahi Breweries
Foundation

81

(New candidates are marked with (*))
Candidate
NumberName(date of birth)

Career summary, positions in the Company, areasof responsibility, and representation of othercompanies and other organizations

Apr. 1952

Entered Asahi Chemical Industry
Co., Ltd.

Jun. 1976

Director

Number ofshares in the
Company
owned bythe candidate

Specialinterests intheCompany

11,000---Nov. 1978 Managing Director
Jun. 1981

9

Nobuo
Yamaguchi(December 23,
1924)

Executive Vice President andRepresentative Director

Mar. 1982 Director of Asahi Breweries, Ltd.
(to the present)
Apr. 1992

Chairman of the Board andRepresentative Director of Asahi
Chemical Industry Co., Ltd. (nowAsahi Kasei Corporation)(to the present)< Representation of other companies andorganizations>
Chairman of the Board and Representative
Director of Asahi Kasei Corporation
Apr. 1974 Joined Asahi Breweries, Ltd.
Mar. 2002 Senior Officer, General Manager
of Technology Department

10

Noriyuki
Karasawa *(October 20,
1951)

Sep. 2002

Senior Officer, President andRepresentative Director of Asahi
Beer Engineering, Ltd.

Oct. 2005

Senior Officer, Senior Deputy
General Manager of Production
Headquarters and General
Manager of Technology
Department

Mar. 2006 Executive Officer, Senior Deputy
General Manager of Production
Headquarters and General
Manager of Technology
Department(to present)

82

8,200

---

(New candidates are marked with (*))
Candidate
NumberName(date of birth)

Career summary, positions in the Company, areasof responsibility, and representation of othercompanies and other organizations

Jul. 1969

Joined staff of Prime Minister’s
OfficeOct. 1985

Councillor, Cabinet Secretariat

Jul. 1994

Director, Gender Equality Office,Prime Minister’s Office

Number ofshares in the
Company
owned bythe candidate

Specialinterests intheCompany------

Apr. 1995 Vice-Governor, Saitama Prefecture

11Jun. 1998

Consul General, Brisbane, Australia

Jan. 2001

Director General, Gender Equity
Bureau, Cabinet Office

Mariko Bando *(August 17, 1946) Oct. 2003

Director, Showa Women’s
University(to the present)

Apr. 2004 Director, The Institute of Women’s
Culture, Showa Women’s
University(to the present)
Apr. 2007 President, Showa Women’s
University(to the present)
Notes:
1. Candidates’ special interests in the Company:(1) The Company has made donations to the Asahi Beer Arts Foundation, the Board of Directors ofwhich Kouichi Ikeda is Chairman. The Company also receives rent from the foundation for thefacilities of the Asahi Beer Oyamazaki Villa Museum, which is operated by the foundation.
(2) The Company has a stake in AI Beverages Holding Co., Ltd., for which Masahiko Osawa is servingas President and Representative Director. The Company guarantees the bank loans of that company.
(3) The Company has made donations to the Asahi Breweries Foundation, the Board of Directors ofwhich Shin Iwakami is Chairman.
2. Nobuo Yamaguchi and Mariko Bando are both candidates for Outside Directors as defined in Item 15,
Article 2 of the Corporation Law.
3. The following are items required to be noted about candidates for Outside Directors.
(1) Reasons for recommending them as candidates for Outside Directors
A. Nobuo Yamaguchi would bring a wealth of company management experience and insight into a
broad range of issues to the management of the Company. We thus recommend his election to
the Board as an Outside Director.
B. In addition to her diverse experience in public administration, Mariko Bando has a wide range
of knowledge as an educator. To provide the Company with the benefit of this experience andknowledge, we recommend her election to the board as an Outside Director.
Although Mariko Bando has not been involved in company management, other than as an
outside director, the Board has concluded that she will be able to perform her duties as Outside
Director of the Company based on her appointments and successes in the prominent positions
noted above.

83

(2) In case of the candidates’ service over the past five years as outside directors or outside statutory
auditors of other companies, records of inappropriate actions by these companies during thecandidates’ terms of office therein, steps taken by the candidates to prevent such inappropriate
actions, or responses taken by the candidates to deal with such actions after their occurrence
A. Nobuo Yamaguchi has been concurrently serving as an outside statutory auditor of The Yomiuri
Shimbun Holdings, which since the 1950s owned shares in a number of television stationcompanies through third-party accounts. This was in violation of regulations (ordinances of the
Ministry of Internal Affairs and Communications) limiting the holdings of such shares, whichwere adopted for the purpose of eliminating an excessive concentration of ownership in themass media. The violation was discovered in November 2004 and rectified in March 2005.
Nobuo Yamaguchi was not involved in any of the actions leading to this violation. With respect
to actions taken by the candidate since the issue was uncovered, Nobuo Yamaguchi offeredproposals designed to prevent the reoccurrence of such violations to the board, based oninternal and external investigative reports.
B. Asahi Mutual Life Insurance Co., where Mariko Bando also serves as outside director, wasordered by the Financial Services Agency on February 1, 2007 to review its payments of
insurance claims and benefits for possible irregularities. In response, Asahi Mutual Life
reviewed its record of payments of insurance claims and benefits for a five-year period (fromfiscal 2001 to fiscal 2005). In April 2007, Asahi Mutual Life ascertained that in a certain
number of cases it had paid out insufficient amounts. Although Mariko Bando was not involvedin the cases in question, she has fulfilled her responsibilities by speaking out in favor ofmeasures to prevent the reoccurrence of such problems. As of September 2007, Asahi MutualLife had completed its analysis of the amount of additional payments it will be required tomake.
(3) Number of years of service as Outside Director
At the close of this Annual Shareholders’ Meeting, Nobuo Yamaguchi will have served as an
Outside Director for 26 years.
(4) Regarding agreements limiting the liability of Outside Directors
To enable him to contribute fully in his role as Outside Director, the Company has entered into anagreement with Nobuo Yamaguchi that limits his liability for damages. Under the terms of thisagreement, Mr. Yamaguchi’s liability is limited to ¥20 million or to the minimum limited amountstipulated by the provisions of Paragraph 1, Article 423 of the Corporation Law, whichever ishigher. If this agenda item is approved as submitted, the agreement with Mr. Yamaguchi will be
continued, and the Company will also enter into a similar agreement with Mariko Bando that
limits her liability in the same manner.

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Item 4: Election of one (1) Statutory Auditor
At the close of this Annual Shareholders’ Meeting, the term of office will expire for Statutory
Auditor Sugao Nishikawa.
We would therefore like shareholders to elect one (1) Statutory Auditor.
The candidate is introduced below.
For the avoidance of doubt, the Company has obtained the prior concurrence of the Board of
Statutory Auditors for the submission of this proposal.
(A new candidate is marked with (*))
Name(date of birth)

Career summary, positions in the Company, areasof responsibility, and representation of othercompanies and organizations

Number ofshares in the
Company
owned bythe candidate

Specialinterests intheCompany

Apr. 1969 Entered Asahi Breweries, Ltd.
Sep. 2001 Executive Officer,
Senior General Manager of
Production Headquarters
Yoshifumi
Nishino*(March 4, 1947)

Mar. 2003 Managing Executive Officer,
Senior General Manager of
Production Headquarters
Mar. 2004 Managing Director
Mar. 2006 Managing Director, Managing
Executive Officer
Mar. 2007 Senior Managing Director, Senior
Managing Executive Officer(to the present)

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16,366---

Reminder to Shareholders Concerning Online Voting* The online voting site and Help Desk information are available only in Japanese.

Dear Shareholder,
Please check the points listed below when exercising your voting rights via the Internet.
1. Online voting is available only by accessing the website noted below. This site is alsoavailable through the Internet via cellular phone.
Online voting site: http://www.webdk.net* If your cellular phone is equipped with a barcode reader, you
may use the two-dimensional code at right in order to accessthe online voting site. For more detailed information on thatprocedure, please refer to your phone’s user manual.
2. When voting online, enter the voting code and password indicated on the enclosed voting
form. Then indicate your consent/dissent concerning for each item by following the
instructions displayed on the screen.
3. Online votes will be accepted until the day immediately prior to the date of the Annual
Shareholders’ Meeting (deadline for online voting: 5:30 p.m., March 25, 2008, JST).
However, voting in advance will be highly appreciated for our convenience in vote counting.
4. In the event that a vote is exercised in duplicate via online and via the enclosed voting form,
only the online vote shall be counted.
5. In the event that more than one online vote is exercised (including votes via PC and via
cellular phone), only the most recent vote shall be counted.
6. Any costs related to connecting to a shareholder’s Internet provider, as well as
communication charges (including telephone charges) for accessing the online voting site,
shall be borne by the shareholder.
7. Shareholders who wish to receive notices of shareholders’ meetings by e-mail beginning with
the next meeting may so register on the online voting site.
System Requirements for Online Voting
The following system environments are required for accessing the online voting site.
(1) Internet access(2) When voting via PC, Microsoft® Internet Explorer version 5.5 SP2 or newer, or Netscape®
version 6.2 or newer browser software and compatible hardware.
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(3) When voting via cellular phone, a 128-bit SSL communication (encrypted communication)compatible model. (For security purposes, only 128-bit SSL communication compatible
cellular phones can access to the online voting system. Other models are not compatible withthis system.)(Microsoft is a registered trademark of Microsoft Corporation in the United States and othercountries. Netscape is a registered trademark of Netscape Communications Corporation in the
United States and other countries.)

Inquiries for Online Voting
Please contact the following Help Desk for inquiries about online voting.
Agent for Shareholder Registry Management:
The Sumitomo Trust & Banking Co., Ltd.
Stock Transfer Agency Department (Help Desk)
Phone (toll-free within Japan): 0120-186-417 (24 hours/day)
Requesting change-of-address forms should call 0120-175-417 (toll-free phone within Japan, 24
hours/day). For other inquiries, please contact: The Sumitomo Trust & Banking Co., Ltd., Stock
Transfer Agency Department at 0120-176-417 (toll-free phone within Japan, 9:00 a.m. to 5:00
p.m.).

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