〔Delayed〕The original disclosure in Japanese was released on February 13, 2012 at 15:00(GMT+9)Best Bridal Inc.
Consolidated Earnings Report for the Fiscal Year ended December 31, 2011
(Japanese GAAP)
Stock listing: Tokyo Stock Exchange (First Section)
URL: http://www.bestbridal.co.jp/english/
Representative: Masayuki Tsukada, President and CEO
Information contact: Keiji Ishihara, Director
Scheduled dates:
Annual general meeting of shareholders:

Securities code: 2418

Tel: +81­3­5464­0081
March 29, 2012

Filing of statutory year­end financial report:
March 29, 2012
Dividend payout:
March 30, 2012
Supplementary materials to year­end financial results available: Yes
Year­end earnings presentation held: Yes (targeted at institutional investors and analysts)(Amounts rounded down to the nearest million yen)

1. Consolidated Performance for the Fiscal Year ended December 31, 2011
(January 1, 2011 – December 31, 2011)(1) Consolidated Operating Results (percentages indicate year­on­year changes)
Net sales
million yen

Operating income
million yen%

Ordinary income
million yen%%
Year ended
41,741
8.6
6,395(11.4)
6,222
December 31, 2011
Year ended
38,444
18.3
7,221
15.2
6,946
December 31, 2010
Note: Comprehensive income:Year ended December 31, 2011: 2,654 million yen (27.6%)
Year ended December 31, 2010: 3,668 million yen (­)

Net income per shareyen

Diluted net income
per share
yen

Return on equity%

Net income
million yen%(10.4)

2,670(29.2)

12.6

3,774

11.3

Ordinary income
to total assets%

Operating income
to net sales
%

14.1

15.3

17.7

18.8

Year ended
10,909.27­
15.9
December 31, 2011
Year ended
15,418.91­
26.6
December 31, 2010
Reference: Investment gains/losses on equity­method:Year ended December 31, 2011: 36 million yen
Year ended December 31, 2010: 29 million yen(2) Consolidated Financial Position

December 31, 2011

Total assets
million yen
47,382

December 31, 2010
40,891
Reference: Shareholders’ equity: December 31, 2011:
December 31, 2010:

Net assets
million yen
17,825
15,832
17,825 million yen
15,832 million yen

1

Shareholders’ equity ratio%
37.6

Net assets per shareyen
72,817.26

38.7

64,673.25

(3) Consolidated Results of Cash Flows

Year ended
December 31, 2011
Year ended
December 31, 2010

Cash flows fromoperating activities
million yen

Cash flows from investing
activities
million yen

Cash flows fromfinancing activities
million yen

Cash and cash
equivalents at the end of
periodmillion yen

5,190(3,488)388

10,532

6,272(3,888)(1,690)8,473

2. Dividends
Dividend per share
End­Q1yen

End­Q2yen

End­Q3yenYear­end Annual total
yen
yen

Total
dividends
million yen

Dividend
payout ratio%

Year ended
2,500.00­
1,700.00
4,200.00­
620
27.2
December 31, 2010
Year ended­
1,000.00­
1,000.00
2,000.00
December 31, 2011
489
18.3
Year ending­
1,000.00
2,000.00
December 31, 2012­
1,000.00
12.7(Forecast)
Note: Breakdown of year­end dividend for Year ended December 31, 2010: Commemorative dividend of 500.00 yen

Rate of total
dividend to
net assets
%
3.8
2.9

3. Earnings Forecast for the Fiscal Year ending December 31, 2012
(January 1, 2012 – December 31, 2012)(Percentages indicate year­on­year changes)
Net income per
Net sales
million yen%
For the six months ending
June 30, 2012
For the year ending
December 31, 2012

Operating income
million yen%

Ordinary income
million yen%

Net income
million yen
%

share
yen

19,600

5.0

2,300

22.2

2,200

18.8

1,150

108.6

4,697.71

43,100

3.3

7,050

10.2

6,900

10.9

3,850

44.2

15,727.12

4. Other Information(1) Changes affecting the consolidation status of significant subsidiaries during the period: Yes
Newly consolidated: Hospitality Network Corporation,

Newly excluded: Best Hospitality Heart Inc.

(2) Changes in accounting principles, procedures, and method of presentation, etc.
1) Changes in accordance with revisions to accounting standards etc.: Yes
2) Changes other than 1) above: None2(3) Shares issued (common stock)1) Number of shares issued at end of period (including
treasury stock)2) Number of shares held in treasury at end of period

Dec. 31, 2011

Dec. 31, 2010

244,800

244,800­­
Year ended
Year ended
December 31, 2011 December 31, 2010
244,800
244,800

3) Average number of shares outstanding during the period(Reference) Summary of Non­consolidated Business Results

1. Non­consolidated Performance for the Fiscal Year ended December 31, 2011
(January 1, 2011 ­ December 31, 2011)(1) Consolidated Operating Results (percentages indicate year­on­year changes)

Year ended
December 31, 2011
Year ended
December 31, 2010

Year ended
December 31, 2011
Year ended
December 31, 2010

Ordinary income
million yen%

Operating income
million yen%

Net income
million yen%

Net sales
million yen%

35,934

(1.1)

5,200

(10.9)

5,588

(1.0)

2,667

(12.2)

36,335

14.2

5,838

14.9

5,642

14.4

3,039

15.3

Net income per shareyen

Diluted net income per shareyen

10,897.96­

12,414.97­(2) Non­consolidated Financial Position

December 31, 2011

Total assets
million yen
42,420Net assets
million yen
16,043

Shareholders’ equity ratio%
37.8

December 31, 2010
37,361
14,004
Reference: Shareholders’ equity: Dec. 31, 2011: 16,043 million yen

Net assets per shareyen
65,535.97

37.5
57,208.45
Dec. 31, 2010: 14,004 million yen

2. Non­consolidated Earnings Forecast for the Fiscal Year ending December 31, 2012
(January 1, 2012 – December 31, 2012)(Percentages indicate year­on­year changes)%

Ordinary income
million yen%

Net income
million yen%

16,600

3.4

3,000

37.5

2,250

101.0

9,191.18

36,400

1.3

6,400

14.5

4,100

53.7

16,748.37

Net sales
million yen
Six months ending
Jun. 30, 2012
Year ending
December 31, 20123

Net income per shareyen* Audit Status
As of this report publication, an audit of the consolidated year­end financial statements is underway.

*Appropriate Use of Earnings Forecast and Other Important Information• The above forecasts are based on information available as of this report’s publication. Actual results
may differ from forecasts due to changes in the business environment. For the assumptions underlying
the forecasts herein and other notice on the use of earnings forecasts, please refer to "1. Review ofConsolidated Financial Results: (1) Operating Results" on page 5 in the Accompanying Materials.

41. Review of Consolidated Financial Results(1) Operating Results(1) Results for Fiscal 2011
In the fiscal year under review (January 1, 2011 – December 31, 2011), economic
conditions in Japan deteriorated rapidly following the Great East Japan Earthquake on
March 11, 2011. Supported by reconstruction demand, the economy later reboundedand entered a moderate recovery trend. Despite the improvement, the future outlook isclouded by the lingering effects of the earthquake, including restrictions on the electric
power supply and the nuclear power plant accident, along with the debt crisis in Europe
and protracted yen appreciation.
Regarding the bridal market in which the Best Bridal Group operates, the number of
weddings in Japan in 2011 was estimated at 670,000 (compared with 700,214 in 2010;
both figures from the Ministry of Health, Labour and Welfare). Although the declining
birthrate is gradually having a discernable impact, the size of Japan’s wedding market
remains generally firm due to the moderate rise in wedding expenditures.
In this environment, the Best Bridal Group endeavored to increase sales andprofitability by continually creating new value in the guest house and wedding businessthrough high­quality, appealing outlets and value­added services which enable theGroup to accurately respond to the individualization and diversification of customer
needs. The Great East Japan Earthquake severely impacted the Group’s business,
however, as the Sendai office and some offices in the Tokyo metropolitan area
temporarily suspended operations and some customers cancelled or postponed
weddings and receptions.
As a result of the above factors, the Group posted consolidated net sales of ¥41,741
million in the fiscal year, an increase of 8.6% over the previous fiscal year, operating
income of ¥6,395 million, a year­on­year decline of 11.4%, ordinary income of ¥6,222
million, a year­on­year decline of 10.4%, and net income of ¥2,670 million, ayear­on­year decline of 29.2%.
The following are results by business segment.
a. Domestic operations
The addition of Omiya­Rikyu (4 venues) this year and one new outlet opened in theprevious fiscal year, along with the newly consolidated Hospitality Network Corporation,
contributed to higher sales in the domestic business. On an existing­outlet basis,
however, the number of weddings and orders declined due in part to the impact of theGreat East Japan Earthquake.
As a result, net sales in the domestic business totaled ¥38,986 million, and thesegment’s operating income totaled ¥7,317 million.
b. Overseas operations
The number of weddings and orders increased over the previous year as the overallmarket recovered moderately and the Group strengthened its sales foundation. Net
sales declined slightly, however, due to the impact of yen appreciation on wedding
package prices.
Overseas business net sales totaled ¥2,755 million and operating income totaled ¥149
million.
Beginning with the first quarter of the current fiscal year, the Company has adopted an
accounting standard for the disclosure of business segment information and guidance on
the application of the standard.

5(2) Earnings Forecast for Fiscal Year Ending December 31, 2012
Regarding the business environment in which the Best Bridal Group operates,
uncertainty over future trends is expected to remain despite expected economic stimulus
measures in various countries and moderate improvement in corporate earnings.
The Best Bridal Group will actively develop competitive products and strive tocontinually create new value. The Group will also aim to strengthen its
cost­competitiveness and enhance profitability through efficient outlet development andthe cultivation of its human resources.
The order backlog at the end of fiscal 2011 (December 31, 2011) was 6,916, anincrease of 2.7% over the previous year. The following are consolidated andnon­consolidated forecasts for the year ending December 31, 2012.
(million yen)
Consolidated

Non­consolidated

Net sales

43,10036,400Operating income

7,050

5,200

Ordinary income

6,900

6,400

Net income

3,850

4,100

(2) Financial Condition(1) Assets, liabilities, and net assets
Assets at the end of the fiscal year totaled ¥47,382 million, an increase of ¥6,490 million
compared with the end of the previous fiscal year due mainly to increases of ¥2,059 million in
cash and cash equivalents, ¥1,725 million in buildings and structures resulting from capital
investments to improve offices, and increases of ¥1,694 million in lease and guarantee
deposits and ¥1,109 million in goodwill associated with the consolidation of Hospitality Network
Corporation.
Liabilities at the end of the fiscal year totaled ¥29,556 million, an increase of ¥4,496 million
from the end of the previous fiscal year. This is mainly attributable to an increase of ¥2,527
million in long­term debt and bonds as a result of the consolidation of Hospitality Network
Corporation and expenditures to enhance the Omiya office, and an increase of ¥1,060 million
for asset retirement obligations.
Net assets at the end of the fiscal year totaled ¥17,825 million, an increase of ¥1,993
million compared with the end of the previous fiscal year. The increase was due mainly to thebooking of ¥2,670 million in net income, which outweighed ¥660 million in dividends paid fromretained earnings.
(2) Cash flow
Cash and cash equivalents (“cash”) at the end of the fiscal year increased by ¥2,059 million
from the end of the previous fiscal year to ¥10,532 million. Cash flows and factors behindchanges in the cash flows are explained below.
(Operating cash flow)
Cash generated from operating activities during the fiscal year totaled ¥5,190 million, adecrease of 17.3% from the previous fiscal year. The main factors were ¥5,721 million inincome before income taxes, ¥2,538 million in depreciation expenses, and a charge of ¥446
million associated with the adoption of an accounting standard for asset retirement obligations.
Against these amounts were deducted ¥3,055 million in corporate taxes paid and a decline of¥1,574 million in other liabilities.

6

(Investing cash flow)
Cash used in investing activities totaled ¥3,488 million, a decrease of 10.3% from the same
period a year ago. This was mainly the result of outflows of ¥3,092 million for the purchase ofproperty, plant, and equipment, ¥416 million for the purchase of investment securities, and¥233 million in lease and guarantee deposits outweighing an inflow of ¥292 million in proceedsfrom purchase of stocks of subsidiaries resulting in changes in scope of consolidation.
(Financing cash flow)
Cash provided by financing activities in the fiscal year totaled ¥388 million, compared with
¥1,690 million in cash used in the previous year. This was mainly attributable to a net increaseof ¥1,046 million in interest­bearing debt (short­term loans, long­term loans, bonds, leases),
outweighing an outflow of ¥658 million for the payment of dividends.
The following are changes in cash flow indices for consolidated results.
FY2008FY2009FY2010FY2011Equity ratio (%)

29.3

33.4

38.7

37.6

Equity ratio based on market value (%)

33.0

58.6

46.1

36.1

Cash flow to interest­bearing debt (years)

2.9

2.7

2.5

3.5

Interest coverage ratio (times)

16.0

20.7

19.6

14.9

(Notes)Equity ratio: Equity/Total assets
Equity ratio based on market value: Market valuation/Total assets
Cash flow to interest­bearing debt: Interest­bearing debt/Operating cash flow
Interest coverage ratio: Operating cash flow/Interest expenses
1. All indicators are calculated based on consolidated figures.
2. The figure for operating cash flow is taken from the consolidated statements of cash
flows. Interest­bearing debt includes all liabilities recorded on the consolidated balance
sheets on which interest is paid. The figure for interest expenses is taken from theconsolidated statements of cash flows.
(3) Basic Policy on Profit Distribution, Dividends for Fiscal 2011, and Dividend Forecast for
Fiscal 2012
Best Bridal (the Company) considers the return of profits to shareholders to be an
important management issue. The Company uses profits to strengthen the management
base, and returns profits to shareholders in a flexible manner based on the annual
operating results after making a comprehensive analysis of the financial condition andprofit levels, and ensuring ample internal reserves.
With regard to dividends for fiscal 2011, the Company has decided to make a year­end
payment of ¥1,000 per share. The Company made an interim payment of ¥1,000 per
share in August 2011, and therefore the annual dividend is ¥2,000 per share.
The Company plans to make an annual dividend payment of ¥2,000 a share (including
an interim payment of ¥1,000 a share) for the year ending December 31, 2012.
(4) Business and Other Risks
The following is information regarding risk factors to the business operations of the Best
Bridal Group. The information includes items that are not necessarily risk factors, but which
are included proactively from an information disclosure perspective as important to making
investment decisions and understanding the Group’s business activities.
7

Forward­looking statements contained herein are based on the Company’s best
judgment as of the end of fiscal 2011. The Company strives to prevent the emergence ofrisks and respond to risks when they materialize.
(1) Special characteristics of the businessa. Services
The Best Bridal Group aims to provide the latest wedding styles based on services
highly responsive to the interests and tastes of its customers. The Group continually
makes a meticulous analysis of contemporary needs and fashion trends and createshighly sophisticated services based on the accumulated know­how inside the Groupand among partner companies, including dining and other services delivered by chefs
and service staff specially assigned to each facility.
In the event that the Group’s services are unable to respond to current needs andfashion trends, secure partner companies or chefs which meet the requirements of theGroup, or provide sufficient services to customers, the Group’s operating results may beaffected.
b. Human resources
In order to expand its business scope and diversify its business operations, the Groupis actively recruiting recent university graduates as well as establishing training systems
to enhance the abilities of staff in the sales and administrative departments. In the eventthat the Group cannot acquire the number of employees needed to expand its
business, the Group’s competitiveness may decline or the scope of business expansion
may be restricted, and the Group’s operating results may be affected.
(2) Market in which the Group operates
According to statistics from the Ministry of Health, Labour and Welfare, Japan’s
population of marriageable age adults is gradually declining. If the overall size of thebridal market shrinks in the future, the Group’s operating results may be affected.
The Group plans to increase demand for its guest houses and weddings by being
recognized for its new wedding styles and expanding market share as its recognition
rises. In the event that existing hotels or ceremony hall operators become attracted to
the growth of the market and enter the guest house and wedding market with original
services, competition with other companies may arise on account of the new market
entrants, and the Group’s operating results may be affected.
(3) Operating results and financial conditiona. Seasonal changes in operating results
The Group’s net sales increase with the construction of new facilities as well as during
the prime wedding seasons in Japan, which are April–June and October–December(the second and fourth quarters of the fiscal year).
Quarterly results for the fiscal year ended December 31, 2011

Net sales
Operating
IncomeFirst Quarter

Second Quarter

Third Quarter

Fourth Quarter(year­on­year % change)(year­on­year % change)(year­on­year % change)(year­on­year % change)

million yen
8,124(19.4%)
53(0.8%)

million yen
10,548(25.3%)
1,828(28.6%)

million yen
9,716(23.3%)
1,076(16.8%)

million yen
13,351(32.0%)
3,436(53.8%)

8

b. Heavy reliance on debt
The Best Bridal Group procures loans from financial institutions as investment capitalto build new guesthouses and pay for construction costs, deposits, guarantees andother expenses incurred. Consequently, the ratio of interest­bearing debt to total assets
is high. The balance of interest­bearing debt as of December 31, 2010 was ¥15,773
million, and it rose to ¥18,332 million as of December 31, 2011. The ratio ofinterest­bearing debt to total assets stood at 38.6% as of December 31, 2010, and38.7% as of December 31, 2011, reflecting the Group’s heavy reliance on debt. The
ratio of interest expenses to net sales was 0.8% in the year ended December 31, 2010
and 0.8% in the year ended December 31, 2011.
In the event that the financial situation changes significantly and interest rates rise, theGroup’s operating results may be affected.
Additionally, some of the Group’s loans have financial covenants attached. If a lender
enforces a covenant and demands settlement due to a conflict, the Group may beforced to forfeit profits and repay a loan in full.
c. Overseas conditions
The Best Bridal Group offers overseas wedding services, mainly to Japanesecustomers, in the United States and Indonesia (Bali). As of December 31, 2011, in
Hawaii the Group directly operated four wedding chapels and had exclusive usage
rights to two churches, while in Bali the Group directly operated two wedding chapels.
Wedding plans for each of these markets are sold through four sales salons in Japanand one in Hawaii, making a total of five sales salons. Changes in political or economic
situations in these overseas regions, including acts of war, terrorism, or major natural
disasters, could cause cancellations and may affect the Group’s operating results.
Local companies Best Bridal Hawaii, Inc. and PT. Tirtha Bridal provide wedding
services based on orders from the sales salons and also arrange weddings for local
customers. Additionally, Best Bridal Korea Inc. is constructing guest houses and has
signed lease contracts with Marizin Inc. as part of its plans to enter the Korean bridal
market. In the event that these businesses do not perform according to the Company’s
forecasts, the Group’s operating results may be affected.
d. Foreign exchange rate volatility
The Company has liabilities denominated in foreign currencies, including outstandingloans to subsidiaries. Overseas subsidiaries also have outstanding loans denominatedin foreign currencies. Consequently, significant changes in foreign exchange rates
change may affect the Group’s operating results.
e. Food safety
The Best Bridal Group operates restaurants in its ceremony halls and hotels which
are subject to Food Sanitation Laws. To avoid the possibility of business suspension
due to food poisoning or another hygiene­related issue, the Group appoints sanitary
managers to its outlets and restaurants and continually takes other measures toconsistently maintain the highest levels of food safety and quality. In the event, however,of a major food quality problem which goes beyond the scope of the Group’s measures,
the Group’s operating results may be affected.
(4) Continuity of management personnel
Masayuki Tsukada is the president and CEO of Best Bridal Inc. He performs animportant role in the performance of business activities by making decisions on
management policies and strategy. The Company mitigates management risks throughthe use of management committees, the delegation of management responsibilities, andthe strengthening of human resources in each business area, to ensure that business
operation and performance are not overly reliant on Masayuki Tsukada. If, however, an
unforeseen event precluded Masayuki Tsukada from performing his duties, the9promotion of the Group’s business activities and the Group’s business results may beaffected.
(5) Laws and regulations
In Japan, the Best Bridal Group is subject to various regulations on the construction
and renovation of its guest houses, including the Building Standards Law, the Fire
Services Law, and the Sewerage Law. In addition, the Group is subject to wastewater
emission, noise emission, and other local ordinances pertaining to the building structure
and construction location. When the Group constructs or renovates its facilities, it hires alicensed architect or construction company to verify the structure. Additionally,
verifications are made directly by the Company’s marketing department and the fire
department. Despite these measures, violation of the above regulations could delay
construction plans or interfere with operations, and the Group’s operating results may beaffected.
The Group registers its overseas salons in accordance with the Travel Agency Act(type one business activities). In the event that the Group contravenes this Act and isunable to renew its registration or has its registration revoked, the Group’s operating
results may be affected.
The Group operates its hotels in accordance with the Inns and Hotels Act. In addition,
beauty services offered prior to wedding ceremonies are subject to the Act on Specified
Commercial Transactions.
(6) Capital investment and new construction
a. Current guest houses
Facility nameNihonbashi

Shirogane

No. of guest houses

1

2

Shinsaibashi

Marunouchi Yagoto Kamogawa Chiba Akasaka

Facility nameYokohama Osaka Sendai Hoshigaoka

4

5

3

2

Shinurayasu Omiya Aoyama Ichigaya

5
Odaiba8
NagoyaMinato*No. of guest houses
2
1
4
3
2
1
1
3
*In March 2011, the Noseki outlet’s name was changed to Nagoya Minato

3
Iseyama7

The Best Bridal Group was operating 19 outlets (58 guest houses) in Japan as ofDecember 31, 2011. All of the facilities were planned internally by the Company’s
design and construction department.
In the future, the Group will continue to launch new guest houses, mainly in the Tokyo
metropolitan, Kansai, and Chukyo regions, after meticulous market analysis, facility
planning, and site selection.
The Group renovates existing guest houses on a three­year renewal cycle as it seeks
to sustain a stable customer acquisition rate by maintaining the facilities’ newness andhigh­quality design.
In the event, however, that the Group is unable to acquire real estate (primarily land)
suitable for facilities construction or employ necessary operations staff, or fail to receive
customer support for new or existing facilities, the Group’s operating results may beaffected.
Additionally, in the event that the Group recognizes an impairment stemming from asignificant decline in the real prices of the Group’s property caused by changes inmarket trends or the business environment, the Group’s operating results and financial
condition may be affected.
b. Outlet development
The Group typically signs lease contracts to secure sites needed for its directly
operated outlets and pays deposits and guarantees as well as upfront interior andexterior design expenses. Human resources, rental and other running costs are
101incurred after outlet opening. The payment of deposits and guarantees as well as
related upfront expenses increases with each new outlet. The Group may be required to
pay a penalty in the event that it closes an outlet prior to the planned period of operation.
Additionally, the Group may be unable to recover a portion or all of its deposits andguarantees in the event that a lessor goes bankrupt.
With regard to securing sites for future outlets, in order to raise the assurance of outlet
planning and promote guest house construction, the Group will maintain a policy ofusing land acquisition and securitization as an option to leasing. The Group will continue
to prioritize management efficiency and avoid the deterioration of its financial conditionin planning new outlets, but the acquisition of land may affect the financial condition.
As an original outlet design, the Group also maintains large­scale sites containing
multiple guest houses. The construction of multiple guest houses within a single siteenables the Group to better serve the diverse needs and tastes of customers by offering
an array of concepts to a large number of occupants. The Group’s policy is to continue
to focus on the development of large­scale outlets. However, the development oflarge­scale outlets requires suitable sites which the group may not be able to secure. If,
as a consequence, the Group is unable to carry out its development plans, the Group’s
operating results may be affected.
c. Special­purpose company
The Best Bridal Group utilizes the Shirogane office as a special­purpose company(Shirogane SPC Co., Ltd.). The Company invests in an anonymous partnership inconnection with the SPC and has used the “Practical Solution on Application of Control
Criteria and Influence Criteria to Investment Associations” (ASBJ Practical Issues Task
Force No. 20, September 8, 2006) to determine whether or not the Company has
control and influence over the SPC. The executive authority for the anonymous
partnership is the SPC, and the Company does not have any direct voting rights orother authority which would give it control over the SPC. Since it is clear that theCompany cannot make decisions over financial, operating, or business policies, theanonymous partnership operated by Shirogane SPC Co., Ltd. does not qualify as a
subsidiary and is excluded from the consolidated results.
The Company recognizes the issues surrounding special purpose companies, whichhave been the subject of international debate. Namely, in recent years transactions
involving special purpose companies have surged and become more complex anddiversified, raising concerns that the Company could cause interested parties to makeincorrect judgments regarding business combinations. In the event that the Company’s
scope of consolidation changes in the future based on the announcement of new
accounting standards or practical solutions, the Group’s operating results and financial
condition may be affected.
The anonymous partnership operated by Shirogane SPC Co., Ltd. had trust
beneficiary rights of ¥2,799 million as of December 31, 2011, and loans from financial
institutions totaling ¥2,304 million.
(7) Management of customer information
The Best Bridal Group gathers the personal information of many customers through its
order receipt activities. The Group takes measures to maintain the confidentiality of thispersonal information and mitigate the risk of information leaks, including storing theinformation in locked cabinets and using passwords to secure electronic information. If,
however, an unforeseen incident caused the leakage of personal information, society’s
trust in the Group would decline, and the Group’s operating results may be affected.

11

3. Management Policy(1) Basic management policy
Through its global bridal business, Best Bridal works to bring people together and bindtheir hearts, while pursuing high added value and striving to be a company abounding increativity. Based on this corporate philosophy, the Company has provided high­quality
services and facilities with high added value by accurately understanding theever­changing needs of customers. Going forward, the Company will continue to pursue
the creation of new value in the bridal market, seeking to achieve sustainable growth for
the Best Bridal Group and enhancing corporate value.
The Group has five basic strategies to accomplish its basic management policy.
1. Outlet development strategy: Develop guest houses, primarily in the Tokyo
metropolitan, Kansai, and Chukyo regions, which are geared towards the uniquecharacteristics of each market.
2. Product development capabilities: Develop competitive products with high added
value, aiming to provide customers with highly satisfying products and services.
3. Proposal and sales capabilities: Accurately understand the needs—the “dreams”—of
customers and enhance proposal and sales capabilities to realize these dreams.
4. Enhanced profitability: Rationalize management and enhance the efficiency ofbusiness operations in order to achieve high profitability.
5. Fund procurement: Procure funding with a priority on funding costs and with a view tomaintaining a sound financial condition, enhancing capital efficiency, and carefully
considering stock price dilution.
(2) Management goals and indicators
The Best Bridal Group aims to remain a corporate entity capable of stable andcontinuous growth. To enhance corporate value, the Group will strive to strengthen its
financial condition while increasing its equity ratio, an important index measuring
improvement in comprehensive profitability.
(3) Medium­ to long­term management strategy(1) Product strategy
Based on meticulous analysis of contemporary needs and fashion trends, the Company
provides guest houses and wedding services which embody the desires of bridal couples.
In the Company’s guest house and wedding services, the bridal couples become thelords of the manor, acting as party hosts to their many guests. Bridal customers have theirown personal dreams and hopes, and the Company establishes a structure to provide
sophisticated services highly responsive to the interests and tastes of its customers by
combining the accumulated know­how inside the Company with its many partnercompanies. Additionally, in the dining and other service areas, the Company appoints
chefs and other specialized staff to each outlet in order to maintain the highest levels ofservice quality.
(2) Outlet development strategy
The Company aims to create high­quality, authentic facilities. The domestic network
comprises 19 facilities. The continued growth of the Company depends on efficient facility
development based on meticulous marketing analysis, facility planning, and site selection.
The Company is focusing its outlet development on the Tokyo metropolitan, Kansai, andChukyo regions, which offer strong future growth potential. Existing guest houses arerenovated on a three­year renewal cycle in order to sustain a stable customer acquisition
rate by maintaining the facilities’ newness and high­quality design.
(3) Sales strategy
The Company does not conduct door­to­door selling, but rather uses its sales staff toprovide face­to­face sales to customers visiting facilities.
12

Sales staff greet customers visiting guest houses and sales salons and provide themwith a tour of the facilities in addition to using pamphlets and sales materials. Having
customers actually experience the attraction of the facilities first­hand leads to positive
sales results. In proposing new wedding styles, sales personnel utilize their know­how
and experience to earn customers’ trust and satisfaction and successfully complete sales.
The Company will establish a training system to enhance the proposal capabilities of staff
and nurture employees with even higher skills.
For marketing and advertising, the Company relies heavily on paid advertisements in
wedding magazines and other print media. To beat the competition in winning orders, it iscritical to create more appealing advertisements. The Company aims to create highly
appealing advertisements by featuring photographs that maximize the attractions of theguest house design and service content. The Company also actively solicits customers
over the Internet through its websites featuring the guest houses and service offerings.
Sales success rates and other sales results from each guest house are compiled andanalyzed weekly. Domestic business managers consult with managers and staff at guest
houses which show signs of declining success rates, and provide them with guidance on
how to improve success rates.
For overseas wedding services, the Company is strengthening the overseas wedding
salons in Japan (four outlets) and sales channels in order to enhance the ability of salonsto draw customers and achieve high success rates.
(4) Issues to Address
Regarding the economic environment in which the Best Bridal Group operates,
uncertainty over future economic trends is projected to remain despite expectedeconomic stimulus measures in various countries and moderate improvement incorporate earnings.
In this environment, it is necessary for the Best Bridal Group to accurately understandthe increasingly individualized and diversified needs of customers, and based on that
understanding, offer highly competitive and attractive guest houses as well as create andprovide services with high added value.
In addition, as the Group responds to business environment changes and bridal
market diversification, it must also strengthen its financial condition, secure and foster
talented human resources, bolster the risk management structure for the entire Group,and establish a more sound and efficient management structure in order to raise
corporate value.
(1) Guest house development
The Company operates 19 outlets in Japan. Since the development of highly competitive
guest houses is a core competency, the Company plans to diversify its outlet
development strategy plans and promote more efficient development.
(2) Securing and fostering human resources
The Company considers the strengthening of its wedding presentation capabilities to bean effective way to bolster customer service and differentiate its services fromcompetitors. To this end, the Company will continue to create systems to raise themotivation of its employees while building a structure to support the medium­ to long­term
nurturing of employees.

134. Consolidated Financial Statements(1) Consolidated Balance Sheets
December 31, 2010
Amount(millions of yen)
December 31, 2011
Amount

8,581
317
92
384
403
680
(12)

10,640
273
47
312
368
722
(32)

10,44812,332

Fixed assets
Tangible assets
Buildings and structures
Accumulated depreciation
Buildings and structures, net

23,352(8,210)15,141

27,148(10,281)
16,867Land
Construction in progress
Other
Accumulated depreciation

4,563
337
2,958
(2,069)

4,560
16
3,372
(2,457)

Other, net
Total fixed assets

889
20,932914
22,358Intangible assets
Goodwill
Other
Total intangible assets

－
175
175

1,124
245
1,370

1,819
4,011
1,662
1,827

2,143
5,705
1,733
1,696

Total investments and other assets
Total fixed assets
Deferred assets
Bond issuance costs
Total deferred assets

9,320
30,42911,27835,007

14
14

42
42

Total assets

40,891

47,382

AssetsCurrent assets
Cash and deposits
Accounts receivable ­ trade
Merchandise
Raw materials and supplies
Deferred tax assets
Other
Allowance for doubtful receivables
Total current assets

Investments and other assets
Investment securities
Lease and guarantee deposits
Deferred tax assets
Other

14

Liabilities
Current liabilities
Accounts payable ­ trade
Current portion of long­term debt
Current portion of bonds
Income taxes payable
Advances received
Provision for loss on cancellation of rental contract
Provision for shop closing expenses
Other
Total current liabilities

December 31, 2010
Amount(millions of yen)
December 31, 2011
Amount

1,733

1,966

2,789

3,408

356

640

2,164

2,226

1,196

1,288

52

52

9

－

1,803

2,304

10,105

11,886

Fixed liabilities
Bonds
Long­term debt
Provision for employees’ retirement benefits
Provision for directors’ retirement benefits
Provision for loss on cancellation of rental contract
Asset retirement obligations
Other
Total fixed liabilities

1,693

1,623

14,954

17,669Total liabilities

25,05929,556472

472

Net assets
Shareholders’ equity
Capital stock
Capital surplus
Retained earnings
Total shareholders’ equity
Accumulated other comprehensive income
Net unrealized gain on available­for­sale securities
Deferred gain (loss) on derivatives under hedge
accounting
Foreign currency translation adjustments
Total accumulated other comprehensive income
Total net assets
Total liabilities and net assets

15

984

2,202

11,643

12,049

83

218

344

374

205

152

－

1,048

634

634

14,93916,94916,046

18,056

(4)

(31)

(60)

(8)

(149)

(190)

(214)

(230)

15,832

17,82540,891

47,382

(2) Consolidated Statements of Income

Year ended
December 31, 2010

(millions of yen)
Year ended
December 31, 2011

AmountAmountNet sales
Cost of sales

38,444

41,741

24,29527,496Gross profit

14,14814,245

Selling, general and administrative expenses
Operating incomeNon­operating income
Interest income
Gain on investments in silent partnership
Equity in earnings of affiliates
Subsidy income
Other

6,926

7,850

7,221

6,395

55

46

122

125

29

36

－

51

44

63

251

323

316

352

3

8

198

101

8

33

527

496

Ordinary income
Extraordinary income
Gain on sales of fixed assets
Gain on sales of business
Reversal of provision for employees’ retirement benefits
Reversal of provision for shop closing expenses
Total extraordinary income
Extraordinary loss
Loss on disposal of fixed assets
Loss on shop closing
Provision for loss on shop closing
Loss on sales of fixed assets
Effect of adoption of new accounting standards for asset
retirement obligations
Loss on phased acquisition
Impairment loss
Total extraordinary loss
Income before income taxes and minority interests
Income taxes—current

6,946

6,222

0

3

­

47

­

11

­

3

0

66

71

23

11

­

Income taxes—deferred

Total non­operating incomeNon­operating expenses
Interest expenses
Amortization of bond issuance costs
Foreign exchange loss
Other
Total non­operating expenses

16

9

­

0

0

­

446

­

96

70

­

162

566

6,784

5,721

3,419

3,108

(384)

(57)

Total income taxes
Income before minority interests
Minority interests in net earnings (loss)
Net income

17

3,034

3,051

­

2,670

(25)

­

3,774

2,670

Consolidated Statements of Comprehensive Income

Income before minority interests
Other comprehensive income
Net unrealized gain on available­for­sale securities
Deferred gain (loss) on derivatives under hedge
accounting
Foreign currency translation adjustments
Share of other comprehensive income of affiliates
accounted for under the equity method
Total other comprehensive income
Comprehensive income(Breakdown)Comprehensive income attributable to owners of theparentComprehensive income attributable to minority
interests

18

Year ended
December 31, 2010

(millions of yen)
Year ended
December 31, 2011

AmountAmount
­

2,670

­

(26)

­

51

­

(32)

­

(8)

­

(15)

­

2,654

­

2,654

­

­

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

Year ended
Year ended December
December 31, 201031, 2011
AmountAmountShareholders’ equity
Capital stock
Balance at end of previous term
Balance at end of term

472
472

472
472

Capital surplus
Balance at end of previous term
Balance at end of term

634
634

634
634

11,573

14,939

(408)
3,774
3,366
14,939

(660)
2,670
2,009
16,94912,67916,046

(408)
3,774
3,366
16,046

(660)
2,670
2,009
18,056

­

(4)

(4)
(4)
(4)

(26)
(26)
(31)

Balance at end of previous term
Changes during term
Net changes in items other than shareholder's equity
Total changes during term

(55)

(60)

(5)
(5)

51
51

Balance at end of term

(60)

(8)

(78)

(149)

(70)

(41)

Retained earnings
Balance at end of previous term
Changes during term
Cash dividends
Net income
Total changes during term
Balance at end of term
Total shareholders’ equity
Balance at end of previous term
Changes during term
Cash dividends
Net income
Total changes during term
Balance at end of term
Accumulated other comprehensive income
Net unrealized gain on available­for­sale securities
Balance at end of previous term
Changes during term
Net changes in items other than shareholder's equity
Total changes during term
Balance at end of term

Deferred gain (loss) on derivatives under hedge accounting

Foreign currency translation adjustments
Balance at end of previous term
Changes during term
Net changes in items other than shareholder's equity

19Total changes during term
Balance at end of term
Total accumulated other comprehensive income
Balance at end of previous term
Changes during term
Net changes in items other than shareholder's equity
Total changes during term
Balance at end of term
Total net assets
Balance at end of previous term
Changes during term
Cash dividends
Net income
Net changes in items other than shareholder's equity
Total changes during term
Balance at end of term

20

(70)
(149)

(41)
(190)

(133)

(214)

(80)
(80)
(214)

(15)
(15)
(230)

12,546

15,832

(408)
3,774
(80)
3,285
15,832

(660)
2,670
(15)
1,993
17,825

(4) Consolidated Statements of Cash flows(millions of yen)

Year ended
Year ended December
December 31, 201031, 2011
AmountCash flows from operating activities
Income before income taxes and minority interests
Depreciation and amortization
Effect of adoption of new accounting standards for asset
retirement obligations
Amortization of goodwill
Amortization of bond issuance costs
Loss on disposal of tangible assets
Loss on disposal of intangible assets(Gain) loss on sales of fixed assets(Gain) loss on investments in silent partnership
Equity in (earnings) losses of affiliates
Foreign exchange (gain) loss
Impairment loss

(Gain) loss on phased acquisition(Gain) loss on sales of business
Increase (decrease) in provision for shop closing expenses
Increase (decrease) in allowance for doubtful receivables
Increase (decrease) in provision for employees’ retirement
benefits
Increase (decrease) in provision for directors’ retirement
benefits
Increase (decrease) in provision for loss on cancellation ofrental contract
Interest and dividend income
Interest expenses(Increase) decrease in notes and accounts receivable ­trade(Increase) decrease in inventories
Increase (decrease) in notes and accounts payable ­ trade
Increase (decrease) in advances received
Increase (decrease) in other liabilities
Other­ net
Sub totalInterest and dividends received
Interest paid
Income taxes paid
Net cash provided by (used in) operating activities
Cash flows from investing activities
Purchase of tangible assets
Purchase of intangible assets
Acquisition of affiliate’s shares
Purchase of investment securities
21

Amount
6,784
2,310

5,721
2,538

­

446

­
3
69
2
(0)
(122)
(29)
130
70
­
­
9
(2)

93
8
23
­
(3)
(125)
(36)
56
­
96
(47)
(9)
14

20

(30)

142

29

(52)

(52)

(56)

(55)

316

352

(249)

24

(79)
252
(254)

154
124
30

427

(1,574)

101

778

9,795
32
(320)
(3,234)
6,272

8,560
31
(347)
(3,055)
5,190(2,441)
(8)
(200)
(600)

(3,092)
(130)
­
(416)

Proceeds from sales of investment securities
Proceeds from purchase of stocks of subsidiaries resulting
in changes in scope of consolidation
Loans receivableCollection of loans receivable
Lease and guarantee deposits
Collection of lease and guarantee deposits
Other­ net
Net cash provided by (used in) investing activities
Cash flows from financing activities
Net increase (decrease) in short­term debt
Proceeds from long­term debt
Repayments of long­term debt
Proceeds from issuance of bonds
Payments for redemption of bonds
Payments received from minority shareholders
Dividends paid to shareholders
Other – net
Net cash provided by (used in) financing activities
Foreign currency translation adjustments on cash and cash
equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents, beginning of period
Cash and cash equivalents, end of period

22

­

126

­

292

(245)
263
(696)
39
(0)
(3,888)

(164)
54
(233)
92
(16)
(3,488)

(300)
1,396
(2,468)
490
(426)
25
(407)
­
(1,690)

(494)
4,120
(4,034)
1,963
(498)
­
(658)
(10)
388

(44)

(31)

647
7,825
8,473

2,059
8,473
10,532

6. Other(1) Changes in Officers
Not applicable2) Weddings held, orders received, and sales volume
Effective from the fiscal year ended December 31, 2011, Best Bridal has realigned its business segments. The
operating results for the fiscal year ended December 31, 2010 have been recalculated to reflect thesegmentation used for the fiscal year ended December 31, 2011.
1) Number of weddings held

Segment

Year ended December 31, 2010

Year ended December 31, 2011

Number of weddings held (cases)

Number of weddings held (cases)

Domestic operations

8,157

8,478

Overseas operations

2,594

2,768

10,751

11,246Total
2) Orders received

Year ended December 31, 2010

Year ended December 31, 2011

Orders received

Order backlog

Orders received

Order backlog

Domestic operations(cases)8,268(cases)5,344(cases)8,596(cases)5,462Overseas operations

2,801

1,392

2,830

1,454

11,0696,736

11,426

6,916

Segment

Total3) Sales volume

Segment

Year ended December 31, 2010

Year ended December 31, 2011

AmountAmountDomestic operations

35,641

38,986

Overseas operations

2,802

2,755

38,444

41,741

Total

Notes: 1. inter segment transactions have been eliminated from the amounts shown above.
2. The above amounts do not include consumption tax.

23