Summary of Consolidated Financial Results
For the Six Months Ended July 31, 2011
[Japanese Standards] (Consolidated)
September 5, 2011
Company name: Pigeon Corporation (Stock code: 7956)
Listings: First Section, Tokyo Stock Exchange
Website: www.pigeon.co.jp
Representative: Akio Okoshi (President and COO)
Contact: Tsutomu Matsunaga (Managing Officer, Corporate Planning & Administration Division)//Tel: +81-3-3661-4188
Date of release of Business Report: September 14, 2011
Planned Commencement Date of Dividend Payment: October 11, 2011
Supplementary materials for the quarterly financial results: Yes
Investor conference for the quarterly financial results: Yes (For analysts and institutional investors)

1. Consolidated Financial Results (February 1 – July 31, 2011)(1) Performance(¥ millions, rounded down, % figures denote year-on-year change)
Operating Income
Ordinary Income
Net Income

Net Sales
Six Months Ended July 31, 2011

28,432

4.4%

2,087

21.7%

2,064

17.6%

1,214

10.6%

Six Months Ended July 31, 2010

27,236

3.7%

1,715

(20.4)%

1,755(19.5)%

1,098(16.0)%Six Months Ended July 31, 2011

60.69

Diluted Net
Income Per Share(¥)－

Six Months Ended July 31, 2010

54.88

－

Total Assets

Net Assets

Net Income per
Share (¥)

(2) Financial Position
At July 31, 2011

44,207

60.5

Net Assets Per
Share (¥)
1,336.67

62.2

1,325.71

Equity Ratio (%)

27,270At January 31, 2011
42,684
27,044
Reference: Equity: ¥26,752 million (At July 31, 2011); ¥26,533 million (At January 31, 2011)

2. Cash Dividends
Annual Dividends (¥)
1Q

2Q
－
－

Year Ended January 31, 2011
Year Ending January 31, 2012
Year Ending January 31, 2012
(Forecast)

3Q

Year-end

44.00
44.00

Full-year

－

44.00

88.00

－

44.00

88.00

(Note) Changes in dividend forecasts during the quarter under review: None

3. Forecast for the Year Ending January 31, 2012
(February 1, 2011 – January 31, 2012)
Net SalesYear Ending January 31, 2012(% figures denote year-on-year change)

61,100

7.1 %Operating
Income
5,000

10.0%

Ordinary
Income4,950(Note) Changes in projections during the quarter under review: None

11.6%(¥ millions, rounded down)
Net Income per
Net Income
Share (¥)
3,300

12.7%

164.88

4. Other (For details, please see “Other Information” on page 6 of “Appendix.”)(1) Changes in important subsidiaries during the period: No(Note) Whether or not specified subsidiaries were changed resulting in the changes in scope of consolidation
during the period.
(2) Application of simplified methods of accounting and specific accounting methods: Yes(Note) Whether or not the simplified accounting methods or the accounting methods specific for producing
quarterly consolidated financial statements was applied.
(3) Changes in accounting principles, processes, presentation methods, etc.
1) Changes due to revisions to accounting standards, etc.: Yes
2) Changes other than 1): Yes(Note) Whether or not accounting principles, processes and presentation methods associated with producing ofquarterly consolidated financial statements were changed. These are indicated in changes to important
items that form the basis for preparation of quarterly consolidated financial statements.
(4) Number of outstanding shares (ordinary shares)
1) Number of shares outstanding at term-end (including treasury shares)
Six Months ended July 31, 2011: 20,275,581
Year ended January 31, 2011: 20,275,581
2) Number of treasury shares at term-end
Six Months ended July 31, 2011:261,468
Year ended January 31, 2011: 261,343
3) Average number of shares during the period (cumulative figure for consolidated quarterly accounting period)
Six Months ended July 31, 2011: 20,014,170
Six Months ended July 31, 2010: 20,014,613*Indication regarding the situation of quarterly review procedures
Financial results for this second quarter is not the subject of a quarterly review procedure based on the Financial
Instruments and Exchange Act, and at the point in time when these financial results was disclosed, review
procedures for quarterly financial statements based on the Financial Instruments and Exchange Act had not been
completed.
*Cautionary Statement Regarding Performance Forecasts
The forecasts and future projections stated in this report have been prepared on the basis of the information andassumption that shall be reasonable as of the date of announcement of this summary information, and the actual
results could differ significantly from forecast figures depending on a variety of factors.
For details on the conditions that form the assumptions used for earnings forecasts, and notes on using earnings
forecasts, please refer to appendix page 5, “(3) Qualitative Information Regarding Consolidated Performance
Forecasts”.

Table of contents of the appendix
1. Qualitative Information Regarding the Financial Performance for the Current Quarter ................. 2(1) Qualitative Information Regarding Consolidated Business Results ........................................... 2(2) Qualitative Information Regarding Consolidated Financial Position ......................................... 4(3) Qualitative Information Regarding Consolidated Performance Forecasts .................................. 5
2. Other Information ............................................................................................................................ 6(1) Changes in important subsidiaries during the period (changes in specific subsidiaries affecting
the scope of consolidation) ........................................................................................................ .6(2) Overview of simplified accounting method or accounting methods specific to the preparationof quarterly financial statements................................................................................................ .6(3) Changes in accounting principles, processes, presentation methods, etc., related to the
preparation of quarterly consolidated financial statements ........................................................ 6
3. Quarterly Consolidated Financial Statement ................................................................................... 8(1) Quarterly Consolidated Balance Sheets ...................................................................................... 8(2) Quarterly Consolidated Statements of Income .......................................................................... 10(3) Quarterly Consolidated Statements of Cash Flows ................................................................... 11(4) Notes Regarding Going Concern Assumption .......................................................................... 12(5) Segment Information ................................................................................................................. 12(6) Notes Regarding Substantial Changes in Shareholders’ Equity ............................................... 14(7) Important Events that Occurred after the Balance Sheet Date .................................................. 15

1

1. Qualitative Information Regarding the Financial Performance for the Current Quarter(1) Qualitative Information Regarding Consolidated Business Results
Overview of Performance
In the second quarter under review—six months ended July 31, 2011—the Japanese economy at
first showed a tendency towards recovery due to the improvement of corporate profits and theoverseas economy. However, due to the large-scale and widespread damage of the infrastructurecaused by the Great East Japan Earthquake on March 11, many enterprises experienced either asuspension or a sharp decline of production activities, there was a lot of confusion in the supply
chain centering on the areas stricken by the disaster, and there was a severe stagnation in economic
activities. Subsequently, although there was a certain negative impact of the power-saving measuresconducted in the areas in which electricity is provided by Tokyo Electric Power Co., Inc. andTohoku Electric Power Co., Inc., the situation is already on the path of gradual recovery andpersonal consumption has also recovered as compared to the downturn immediately after theearthquake. Due to power outages, water cutoff, and facility damage caused by this earthquake, theGroup at first temporarily suspended or scaled down operations at two distribution sites in Ibaraki
and the production site of its consolidated subsidiary PHP Ibaraki. Since the damage wascomparatively small and limited, the ordinary operation system recovered by late March and afterthat the Group has by and large been conducting business as usual.
Under these circumstances, the Group made a new start in the initial year of the fourth
medium-term business plan “Achieving global business success through company and individualcompetence,” starting February 2011 and ending January 2014. The business policies in themedium-term business plan are as follows:
1) Focus on positive business development in overseas markets, aiming to further grow and expand
as a global company.
2) In our domestic and international operations, we will seek to further strengthen and improve theprofitability of current existing businesses as well as work to achieve solid growth in new anddeveloping businesses.
3) Build a global business management system based on the core components of “Fostering Human
Resources” and “Creating new value based on fundamental research.”
The segments below have been set for this consolidated fiscal year that is the first year of the fourth
medium-term business plan. In the six-month period of the second quarter of consolidated
accounting, starting February 1, 2011 and ending July 31, 2011, the Group implemented activities
steadily in accordance with the segments.
Domestic Baby and Mother Care Business
By establishing and extending the large merchandise business and promoting the category of
women’s care, the Group will improve profitability in the current fields. Furthermore, the Groupwill establish and extend the Mamas & Papas business to launch new business in the IT field.
Child-rearing Support Services
The Group will continue steady business development by enriching the personnel development
system, extending services, and further improving child-rearing quality.
Health Care and Nursing Care Business
The Group will restructure the business operation system and take efficient measures to improve
brand awareness and promote the understanding of merchandise. By cultivating priority
merchandise categories, the Group will improve merchandise competitiveness and aggressively find
new sales channels.
2

Overseas Business
The Group will target aggressive investment in proactive business as a growth driver of the Groupto extend the production system and strengthen the business operation system. In China, tie-ups
with the current agencies will be strengthened and new agencies will be fostered.
Accompanying the launch of the new Changzhou Factory, the Group will strengthen thedevelopment system and in-house production system. In North America and Europe, the Group will
extend the merchandise category centered on the mOmma brand and develop new markets.
As a result, consolidated net sales for the period amounted to ¥28,432 million, up 4.4% from theprevious corresponding period. With respect to earnings, the cost of the sales ratio grew higher thanin the same quarter of the previous year partially because of the new investments in plant andequipment needed to pave the way for the expansion of foreign operations, etc. Because of anincrease in gross profit accompanying an income increase, however, operating income was ¥2,087
million, up 21.7%, and ordinary income was ¥2,064 million, up 17.6% from the previous
corresponding period. Net income for the period was ¥1,214 million, up 10.6% from the previous
corresponding period as ¥130 million was accounted as extraordinary loss mainly for repairing
facilities and discarding merchandise damaged by the Great East Japan Earthquake.
The business report segments are "Domestic Baby and Mother Care Business," "Child-rearing
Support Services," "Health Care and Nursing Care Business," and "Overseas Business." Eachsegment is outlined below. In accordance with "Accounting Standards Regarding the Disclosure of
Segment Information etc.," the segments have been changed from "Baby and Child Care segment","Healthcare segment", and "Other segment") to the above, starting from this consolidated fiscal
year. In the outline for each segment, descriptions on comparisons with the same quarter of theprevious year provide figures calculated by replacing performance in the same quarter of theprevious year.
Domestic Baby and Mother Care Business
Sales in this segment amounted to ¥12,142 million, up 2.0% from the same quarter of the previous
year. Since the increase in gross profit resulting from the increase of income surpassed the increasein the selling expenses that have been required for the active marketing activities accompanying
sales of new products, expansion in the new business areas, etc., segment income amounted to¥1,805 million (up 4.7% from the corresponding period of last year). In terms of new products, theGroup marketed "MOGUTTOYASAI" as single-meal retort-pouched baby foods all enriched withvegetables, "Body Massage Cream" and "Body HIKISHIME Gel" containing hyaluronic acid forskin care during pregnancy and after birth, easy-to-prepare "Range de MUSHI-PAN" baby snacks
by mixing milk or water, "MAGUMAGU Baby", "MAGUMAGU Spout", "SODACHI OUEN
Sandal YOCHIYOCHI-ANYO/TOKOTOKO-ANYO" baby sandals for selection according to thegrowth of your baby in February, and the "MUSHI-KURURIN OHEYANIOKU Type" insect
repellent using natural ingredients in March, and in June newly released an infant seat "SALVAJE "which can be used for children starting right from birth and that offer high safety and amenity.
Regarding the maternity events we are committed to as part of our direct communications
program aimed at strengthening brand loyalty, although under the influence of the Great East Japan
Earthquake we canceled a part of them, in the cumulative consolidated quarterly accounting period
we have held 12 such events, during which a total of about 500 people who are pregnant haveparticipated. Another new venture was to hold "First Steps in Preparing for Pregnancy" classtargeting those beginning preparations for pregnancy. We made good progress in attracting newmembers to “Pigeon Info”—a word-of-mouth community portal that supports women during
pregnancy, in childbirth, and when raising children. In the Internet and home shopping business,order reception and shipping were suspended temporarily under the influence of the Great East
Japan Earthquake but returned to the ordinary sales system from April.
3Child-rearing Support Services
Sales in this segment amounted to ¥2,946 million, up 9.8% from the same quarter of the previous
year. Segment income was ¥59 million, down 7.8% from the same quarter of the previous year.
Some facilities were temporarily closed under the influence of the Great East Japan Earthquake. In
April, however, one authorized nursery school and three nursery facilities within businessestablishments were launched under a new contract of entrustment, and while improving the service
quality, the Group is raising sales steadily.
Health Care and Nursing Care Business
Sales in this segment amounted to ¥3,303 million, up 1.2% from the same quarter of the previous
year. Segment income was ¥234 million, up 649.0% from the same quarter of the previous year, as
selling, general and administrative expenses were suppressed by effective and efficient marketingmeasures suited to the characteristics of the merchandise and sales channels greatly improving the
profitability of the enterprise. As for the Habinurse brand of elder care products, the Group newly
marketed the "HAGUKI NI YASASHII Brush" and "FUSSOIRI HAMIGAKI Gel" oral care series
for the elderly and "YAWARARKAI KAIJO Spoon" nursing-care tableware designed for careproviders and care receivers in February. Regarding the brand "Recoup" for elderly people seeking
good health, the Group marketed an environmentally-friendly, easy-to-use "NUNO Type KYUSYU
Pad" for attachment on regular underwear in the same month. In the future, the Group will extend
business by marketing merchandise through intensive research on priority categories andimplementing efficient measures.
Overseas Business
Sales in this segment amounted to ¥9,534 million, up 7.7% from the same quarter of the previous
year. Selling, general and administrative expenses increased due to various measures associatedwith aggressive business development, but due to an increase in the amount of gross profit resulting
from an increase of income and other factors, segment income was ¥1,559 million, up 4.6% fromthe same quarter of the previous year. In China, the distribution system has been improved andrestructured to a stable level. The sale of various products including newly released ones is also
progressing steadily. On the basis of local currency, net sales are greatly exceeding over the samequarter of the previous year. To strengthen the merchandise supply system, Pigeon Industries(Changzhou) Co., Ltd., located in Changzhou, Jiangsu Province started operations in January of thisyear. As the second production site in China, this consolidated subsidiary is working steadily,
gradually expanding the quantity of output and the number of products handled. In India, a
distribution system is being constructed, the sales network is being extended, and Pigeon Corner isbeing set up as dedicated sales floors, thanks to the activities of the consolidated subsidiary
PIGEON INDIA PVT. LTD. In Malaysia, where the consolidated subsidiary PIGEON
SINGAPORE PTE.LTD. acquired the shares of a local sales agency in January (company renamed
to PIGEON MALAYSIA (TRADING) SDN.BHD. after stock acquisition), we are steadily going
forward with our business on the basis of a newly adopted system striving to extend business whileremaining especially committed to branding activities. In North America and Europe, theconsolidated subsidiary LANSINOH LABORATORIES,INC. is carrying out sales activities
steadily. Including the mOmma business that was acquired by the subsidiary last December, theGroup will further promote business aggressively.
OthersSales in this segment amounted to ¥505 million, down 4.4% from the same quarter of the previous
year, due to a decline of OEM merchandise orders. Segment income was ¥57 million, also down
21.8% from the same quarter of the previous year.
(2) Qualitative Information Regarding Consolidated Financial Position41) Assets
As of July 31, 2011, Pigeon had consolidated total assets of ¥44,207 million, up ¥1,522 million
from a year earlier. Within this amount, total current assets increased ¥1,638 million, and total fixed
assets decreased ¥115 million.
The major factors boosting current assets were a ¥741 million increase in notes and accounts
receivable and a ¥879 million increase in goods and products.
The main reasons for the decline in fixed assets were depreciation and amortization of
goodwill.
2) Liabilities
Total liabilities as of July 31, 2011 stood at ¥16,937 million, up ¥1,296 million from the previous
fiscal year-end. Current liabilities increased ¥1,220 million, and long-term liabilities increased by¥76 million.
Main factor boosting current liabilities was a ¥823 million increase in notes and accounts
payable.
Main factor boosting long-term liabilities was a ¥52 million increase in long-term borrowings.
3) Net Assets
At July 31, 2011, consolidated net assets amounted to ¥27,270 million, up ¥226 million fromJanuary 31.
(3) Qualitative Information Regarding Consolidated Performance Forecasts
In the fourth medium-term business plan “Achieving global business success through company andindividual competence,” the Group aims to improve profitability in the current business fields andincrease new merchandise fields and sales channels by enriching the merchandising categories for
Domestic Baby and Mother Care Business in Japan, extending new business in IT home shopping,deeply cultivating priority merchandise categories in the Health Care and Nursing Care Business,and finding new sales channels. Regarding Overseas Business, the Group aims to deeply cultivate
current markets and implement business expansion in China and North America by enriching
merchandise categories while extending the production system and strengthening the business
operation system by aggressive business investment. In India, the Middle and Near East, Korea, andSouth and Central America, the Group aims to promote aggressive market development. Regarding
this consolidated fiscal year as the first year of the fourth medium-term business plan, the basic
policies below are set. With an eye on the influence the Great East Japan Earthquake on thedomestic economy and the performance of the Group, we will do our utmost to achieve the plan
securely.
Basic Policies
1. To realize the objectives of our fourth medium-term business plan, we will put together strategies
for each business and functional strategies that serve as the basis for such businesses into a specific
enforcement plan, which we will steadily implement.
2. By effectively utilizing production facilities and capacity within the Group, we will improve ourcost of sales situation and enhance profitability.
3. Seeking “Achieving global business success through company and individual competence,” wewill focus on nurturing human resources, while formulating medium-term strategies of eachbusiness and building organizational frameworks according to our growth potential.
The prospects of the Group throughout the term remain unchanged from the performance
predictions announced on March 7, 2011.

5

2. Other Information(1) Changes in important subsidiaries during the period (changes in specific subsidiaries
affecting the scope of consolidation)
Not applicable.
(2) Overview of simplified accounting method or accounting methods specific to the
preparation of quarterly financial statements
1) Simplified Accounting Method- Calculation of estimated bad debt losses on general receivables
For the end of the quarter under review, the Company has used the estimated bad debt loss ratio thatwas used for the end of the previous fiscal year, recognizing that no significant changes have arisen
since that time.
- Valuation of inventory assets
The value of inventories at the end of the quarter under review is calculated using a rational method,
based on physical inventories at the end of the previous fiscal year, rather than physical inventories
at the end of the quarter under review. The Company has reduced the book price of certain
inventory assets that were clearly deemed to be declining in profitability, after estimating the net
selling value of such assets.
- Method of calculating depreciation of fixed assets
For fixed assets that are depreciated using the declining-balance method, the depreciation expense
is computed by the proportional distribution of the depreciation expense for the fiscal year.
- Determining recoverability of deferred tax assets
In judging the recoverability of deferred tax assets, the Corporation employs a method using future
performance forecasts using results from the previous fiscal year, as well as tax planning, having
confirmed that that no significant changes in the operating environment or temporary differences
have occurred since the end of the previous fiscal year.
2) Special accounting treatment applied in preparation of quarterly financial statements
Not applicable.
(3) Changes in accounting principles, processes, presentation methods, etc., related to the
preparation of quarterly consolidated financial statements
1) Changes of matters pertaining to the scope of consolidation- Change in scope of consolidation
From the first quarter of this consolidated accounting period, PIGEON MALAYSIA(TRADING) SDN.BHD., is included in the scope of consolidation by stock acquisition.
- Number of consolidated subsidiaries after change: 172) Changes of matters pertaining to accounting standards- Application of "Accounting Standards Regarding the Equity Method" and "Temporary Treatment
Regarding the Accounting of Affiliates Subject to the Equity Method"
From the first quarter of this consolidated fiscal year, "Accounting Standards Regarding theEquity Method" (ASBJ No. 16, March 10, 2008) and "Temporary Treatment Regarding the
Accounting of Affiliates Subject to the Equity Method" (Practical Solutions Report No. 24,
March 10, 2008) have been applied.
This affected ordinary income or income before income taxes and minority interests only
slightly.
- Application of "Accounting Standards Regarding Asset Retirement Obligations"
From the first quarter of this consolidated fiscal year, "Accounting Standards Regarding Asset
Retirement Obligations" (ASBJ No. 18, March 31, 2008), and "Application Guidelines for
Accounting Standards Regarding Asset Retirement Obligations" (ASBJ Guideline No. 21, March
6

31, 2008) have been applied.
This affected ordinary income or income before income taxes and minority interests only
slightly.
- Application of ""Accounting Standards for Business Combinations"
From the first quarter of this consolidated fiscal year, "Accounting Standards for Business
Combinations" (ASBJ No. 21, December 26, 2008), "Accounting Standards for Consolidated
Financial Statements"(ASBJ No. 22, December 26, 2008), "Partial Revision of AccountingStandards Regarding Research and Development Costs" (ASBJ No. 23, December 26, 2008),"Accounting Standards for Business Divestitures" (ASBJ No. 7, December 26, 2008),"Accounting Standards Regarding the Equity Method" (ASBJ No. 16 announced on December
26, 2008), and "Application Guidelines for Accounting Standards Regarding Business
Combinations and Accounting Standards Regarding Business Divestitures" (ASBJ Guideline No.
10, December 26, 2008) have been applied.
3) Changes in Description Method(Quarterly consolidated financial statements)- In the second quarter of this consolidated fiscal year, this has been presented by the account of"Income before minority interest" because of the "Cabinet Order for Partial Revision of theOrdinance on Terminology, Forms, and Preparation Methods of Financial Statements, etc."(Cabinet Order No. 5, March 24, 2009) based on the "Accounting Standards for Consolidated
Financial Statements" (ASBJ No. 22 dated December 26, 2008)."- Since "refund of consumption tax" which had been recorded separately for the previous second
cumulative consolidated quarterly accounting period was 20/100 or less of the total amount ofother income, it was decided to list it under "other" heading among other income. The amount of"refund of consumption tax" listed under "other" heading among other income of this second
cumulative consolidated quarterly accounting period was ¥32,191 million.
- Since "rental income" which had been recorded separately for the previous second cumulative
consolidated quarterly accounting period was 20/100 or less of the total amount of other income,it was decided to list it under "other" heading among other income. The amount of "rental
income" listed under "other" heading among other income of this second cumulative
consolidated quarterly accounting period was ¥16,464 million.
- Since the degree of importance of "rental income-related costs "which had been recorded
separately for the previous second cumulative consolidated quarterly accounting period became
low, it was decided to list it under "other" heading among other income. The amount of "rental
income-related costs" listed under "other" heading among other income of this second
cumulative consolidated quarterly accounting period was ¥12,973 million.

7

3. Quarterly Consolidated Financial Statement(1) Quarterly Consolidated Balance Sheets(Thousands of yen)
At July 31, 2011

At January 31, 2011ASSETS
I. Current Assets:
Cash and time deposit

6,895,787

6,827,706

Notes and accounts receivable

10,615,441

9,874,273

Goods and products

5,429,794

4,549,808

Goods in process

74,131

54,401

Raw material and inventory goods

1,426,357

1,194,021

Other current assets

1,482,956

1,776,585

Allowance for doubtful accounts(122,970)(113,948)

Total Current Assets

25,801,498

24,162,848

Buildings and structures-net

5,253,398

5,350,520

Land

6,002,854

6,012,825

Other tangible fixed assets-net

4,013,787

4,045,967

Total Tangible Fixed Assets

15,270,040

15,409,313

Goodwill

585,111599,728

Other intangible fixed assets

544,287

588,350

Total Intangible Fixed Assets

1,129,398

1,188,079

Other

2,083,933

2,001,729

Allowance for doubtful accounts(77,235)(77,222)

Total Investments and Other Assets

2,006,697

1,924,506

Total Fixed Assets

18,406,136

18,521,899

Total Assets

44,207,634

42,684,748

II. Fixed Assets:
1. Tangible Fixed Assets:

2. Intangible Fixed Assets:

3. Investments and Other Assets:8

(Thousands of yen)
At July 31, 2011

At January 31, 2011

LIABILITIES
I. Current Liabilities:
Notes and accounts payable

4,808,208

3,984,705

Short-term borrowings

2,184,760

2,258,000

Current portion of long-term loans payable

1,024,460

1,000,000

Income taxes payable

407,020561,952

Accrued bonuses to employees

630,333

537,505

Returned goods adjustment reserve

55,02846,084

Other current liabilities

4,338,096

3,838,892

Total Current Liabilities

13,447,908

12,227,140

1,667,382

1,615,000

250,800

243,710

II. Long-Term Liabilities:
Long-term borrowings
Employees’ retirement benefits
Retirement benefits for directors andcorporate auditors
Other long-term liabilities

341,908

322,447

1,229,480

1,232,411

Total Long-Term Liabilities

3,489,572

3,413,570

Total Liabilities

16,937,481

15,640,710

Capital stock

5,199,597

5,199,597

Additional paid-in capital

5,180,246

5,180,246

Retained earnings

18,785,412

18,451,368

Treasury stock(448,006)(447,673)

Total Shareholders’ Equity

28,717,250

28,383,538

21,011

11,237(1,985,860)(1,861,586)(1,964,848)(1,850,348)

III. Minority Interests

517,752

510,847

Total Net Assets

27,270,153

27,044,037

Total Liabilities, Minority Interests and Net Assets

44,207,634

42,684,748

NET ASSETS
I. Shareholders’ Equity:

II. Valuation and Translation Adjustments:
Net unrealized gains on securities
Foreign currency translation adjustment
Total Valuation and Translation Adjustments9(2) Quarterly Consolidated Statements of Income

I. Net Sales
II. Cost of Sales
Gross profit
Reversal of reserve for returned products
Transfer to reserve for returned products
Adjusted gross profit
III. Selling, General and Administrative Expenses
Operating Income
IV. Other Income:Interest income
Rental income
Equity in earnings of non consolidated subsidiaries
and affiliates
Refund of consumption tax
Other
Total Other Income
V. Other Expenses:
Interest expense
Sales discounts
Rental income-related costs
Other
Total Other Expenses
Ordinary Income
VI. Extraordinary Income:Gain on sales of property
Reversal of allowance for doubtful accounts
Other
Total Extraordinary Income
VII. Extraordinary Loss:
Loss on sales of property
Loss on disposal of property
Loss on liquidation of subsidiaries and affiliates
Loss on disaster
Other
Total Extraordinary Loss
Income before Income Taxes
Income Taxes
Adjustment for Corporate Tax
Total Corporate Income Tax
Income before minority interests
Less: Minority Interest in Net Income ofConsolidated Subsidiaries
Net Income

10

Six months ended
July 31, 2010
27,236,867
16,068,686
11,168,180
62,81870,231
11,160,767
9,444,891
1,715,876(Thousands of yen)Six months ended
July 31, 2011
28,432,872
16,871,249
11,561,622
46,12355,21011,552,535
9,464,858
2,087,677

14,94758,733

16,315－42,77932,15852,092
68,966
237,518－
125,124
173,598

25,014106,255
34,08732,397
197,754
1,755,640

33,392
108,815－54,070196,278
2,064,997

520
－
544
1,065

2,219
1,856
－
4,075

433
7,192
71,769－12,94992,344
1,664,361
595,884(79,152)
516,732

23
11,948－113,986
4,692
130,651
1,938,421
635,775
26,246
662,021－

1,276,399

49,111

61,7291,098,518

1,214,670

(3) Quarterly Consolidated Statements of Cash FlowsSix months ended
July 31, 2010
I. Cash Flows from Operating Activities:
Income before income taxes
Depreciation
Amortization of goodwill
Increase (decrease) in allowance for doubtful accounts
Increase (decrease) in accrued bonuses to employees
Increase (decrease) in employees’ retirement benefits
Increase (decrease) in directors’ retirement benefits
Interest and dividend income
Equity in (gains) losses of non consolidated subsidiaries andaffiliates
Interest expense
Loss (gain) on sale of fixed assets
Loss on disposal of fixed assets
Loss (gain) on liquidation of subsidiaries and affiliates
Decrease (increase) in trade receivables
Decrease (increase) in inventories
Increase (decrease) in trade payables
Increase (decrease) in account payable
Increase (decrease) in consumption tax payable
Decrease (increase) in bankruptcy claims
Other
SubtotalInterest and dividends received
Interest paid
Income taxes paid
Net Cash Provided by Operating Activities
II. Cash Flows from Investing Activities:
Acquisition of property, plant and equipment
Proceeds from sales of property, plant and equipment
Acquisition of intangible assets
Purchase of insurance funds
Proceeds from purchase of investments in subsidiaries resulting
in change in scope of consolidation
Loans advanced
Collection of loan receivables
Payment for lease deposits
Proceeds from recovery of lease deposits
Other
Net Cash Used in Investing Activities
III. Cash Flows from Financing Activities:
Proceeds from short-term debt
Repayment of short-term debt
Proceeds from long-term loans payable
Repayment of long-term debt
Payment of cash dividends
Payment of cash dividends to minority shareholders
Acquisition of treasury stock
Other
Net Cash Used in Financing Activities
IV. Effect of Exchange Rate Changes on Cash and Cash
Equivalents
V. Net Change in Cash and Cash Equivalents
VI. Cash and Cash Equivalents at Beginning of the Period
VII. Cash and Cash Equivalents at End of the Period

11(Thousands of yen)Six months ended
July 31, 2011

1,664,361
804,204
158,269
23,33341,86815,014
13,512(16,363)

1,938,421
833,934
149,917
9,227
92,6986,825
19,461(17,642)(42,779)(32,158)

25,014(87)
7,192
71,769(1,274,477)(779,172)
405,761435,327(1,201)
568(252,263)
1,299,854
16,410(25,980)(843,321)
446,962

33,392(2,195)
11,948－(546,669)(931,130)718,584
439,669
32,6242(73,977)
2,682,936
17,439(31,054)(800,111)
1,869,209(1,015,924)
11,215(69,630)(2,680)(749,587)
5,533(45,476)(2,694)－56,475(1,534)
1,576(8,929)17,069(7,041)(1,075,879)(1,267)
14,766(18,909)
9,355(20,133)(751,938)

1,731,773(1,201,890)－(107,040)(639,382)(44,733)(350)(2,400)(264,023)

4,184,486(4,363,457)
75,320(13,756)(878,995)(39,212)(332)(5,708)(1,041,655)(105,152)(7,534)(998,092)
6,905,541
5,907,449

68,081
6,827,706
6,895,787

(4) Notes Regarding Going Concern Assumptions
Not applicable.
(5) Segment Information
Performance by Business Segment
Six Months Ended July 31, 2010(¥ thousands)
Baby andchild care

Healthcare

OthersTotal

Eliminations
or corporate

Consolidated

Sales
22,099,925

3,247,094

1,889,846

27,236,867－

27,236,867

－

－

－

－

(－)

－

22,099,925

3,247,094

1,889,846

27,236,867(－)

27,236,867

Operating income
2,996,359
58,156279,301
3,333,817
Notes:
1. The Company’s business is segmented for internal control purposes.
2. Main products/services of each segment are shown below.
Segment
Main products/services(1,617,941)

1,715,876(1) Sales to outside customers(2) Intersegment sales
Total

Baby and child care

Breastfeeding and weaning products, skincare products, child-rearing support services, other

Healthcare

Elder care products, elder care services, other

Others

Women’s care products (supplements, maternity products, etc.), wet tissues, other

Performance by Geographic Region
Six Months Ended July 31, 2010(¥ thousands)
Eliminations orConsolidated
corporate

Japan

Asia

OthersTotal

19,649,201

5,129,075

2,458,590

27,236,867－(2) Inter-segment sales

1,102,835

1,178,217－

2,281,052(2,281,052)

－

Total

20,752,036

6,307,292

2,458,590

29,517,919(2,281,052)

27,236,867

Sales(1) Sales to outside customers

27,236,867

Operating income
2,457,160
720,397
203,235
3,380,793(1,664,917)
1,715,876
Notes:
1. Segmentation of countries and regions is based on geographic proximity.
2. Major countries and regions are as follows:(1) Asia: Singapore, Thailand, China, India(2) Other: United States, etc.
3. Geographical Segment Name Change
In conjunction with the establishment in November 2009 of consolidated subsidiary Pigeon India Pvt. Ltd., the Group haschanged the name of the “East Asia” geographical segment to “Asia.”

12

Oversea Sales
Six Months Ended July 31, 2010(¥ thousand)
Asia

Overseas sales
Consolidated net sales

North America

Middle East

Other

Total

5,426,862

1,957,926

672,490

768,472

8,825,751

－

－

－

－

27,236,867

Share of overseas sales in
19.9
7.2
2.5
2.8
32.4
consolidated net sales (%)
Notes:
1. Segmentation of countries and regions is based on geographic proximity.
2. Major countries and regions are as follows:(1) Asia: China, Singapore, South Korea, etc.
(2) North America: United States, Canada, etc.
(3) Middle East: United Arab Emirates, etc.
(4) Other: United Kingdom, Panama, South Africa, etc.
3. Overseas sales refer to sales in countries or regions outside of Japan reported by the Company and its consolidated subsidiaries.
4. Overseas sales Segment Name Change
In conjunction with the establishment in November 2009 of consolidated subsidiary Pigeon India Pvt. Ltd., the Group haschanged the name of the “East Asia” geographical segment to “Asia.”

13

Segment Information
1. Outline of Report Segments
The report segments are units of organization of the Group for which financial information is separately available and reviewed
periodically by the Board of Directors to determine the distribution of managerial resources and to evaluate performance.
The Group mainly sells baby-care products separately in and outside Japan and is engaged in sales and service related tohealth & elder care, service related to the support of nursing, and product and other services by business activities throughlocalized business div.
Therefore, the Group consists of segments by products and services based on business div. and by area. The report
segments are four: "Domestic Baby and Mother Care Business," "Child-rearing Support Services," "Health Care and Nursing
Care Business," and "Overseas Business."
The report segments of the Group are as follows:
1) Domestic Baby and Mother Care Business
In Japan, we mainly manufacture and sell baby-care products and products for women's use.
(Main products) Breastfeeding and weaning products, skincare products, wet tissues, baby foods, baby products for outsideuse, women's care products (supplements, maternity products), and others.
2) Child-rearing Support Services
In Japan, we provide child-rearing support services.
(Main services) Management of own or entrusted nursery facilities, management of nursery schools, provision ofbaby-sitting services, and others.
3) Health Care and Nursing Care Business
In Japan, we manufacture and sell healthcare products and elder care products and provide care services.
(Main products) Products for urination, skincare products, wet tissues, wheelchairs, products for care facilities, elder careservices, and others.
4) Overseas BusinessIn the world, we mainly manufacture and sell baby-care products and products for women's use.
2. Information Regarding Net Sales and Profit & Loss in Each Report Segment

Six Months Ended July 31, 2011(¥ thousand)Report Segment

HealthDomestic
Child-rearing Care andBaby andSupportNursingMother Care
Services
Care
Business
Business
Sales
Sales tooutsidecustomers
Total

Overseas
Business

Sub Total

Other(Note) 1

Total

AmountAccounted on
Adjustment Quarterly
Consolidateds(Note) 2 Statements ofIncome(Note)3

12,142,701

2,946,049 3,303,888

9,534,841 27,927,480

505,391 28,432,872－

28,432,872

12,142,701

2,946,049 3,303,888

9,534,841 27,927,480

505,391 28,432,872－

28,432,872

Segment income
1,805,060
59,017
234,417 1,559,834 3,658,330
57,892 3,716,222 (1,628,545)
2,087,677
Notes:
1. "Other" means a segment not in the report segments and mainly includes manufacture and sale by our production subsidiaries
outside the Group.
2. Operating income adjustments are all selling costs that cannot be allocated. Main adjustments are costs in the management
division and the research and development division of the Group
3. Operating income is adjusted with that in Quarterly Consolidated Statements of Income.
(Additional Information)
From the first quarter of this consolidated fiscal year, "Accounting Standards Regarding the Disclosure of Segment Informationetc." (ASBJ No. 17, March 27, 2009), and "Application Guidelines for Accounting Standards Regarding the Disclosure of
Segment Information, etc." (ASBJ Guideline No. 20, March 21, 2008) have been applied.

(6) Notes Regarding Substantial Changes in Shareholders’ Equity
Not applicable.

14(7) Important Events that Occurred after the Balance Sheet Date
(Acquisition of a company, etc. by stock purchase)
During the board meeting held on July 11, 2011, our company decided to have a consolidated
subsidiary of our company, LANSINOH LABORATORIES, INC. acquire shares of HealthQuest
Ltd. which sells organic and natural skin care products mainly in Europe and concluded the stock
purchase contract as of July 20, 2011.
(1) Purpose of stock acquisition
The purpose is to promote expansion of the categories of the products handled and market
channels.
(2) Name of the other party the shares are acquired fromAll the shareholders of HealthQuest Ltd.
(3) Profile of the company being purchased
1) Trade name: HealthQuest Ltd.
2) Location: Great Britain
3) Business activity: manufacture and sales of skin care products4) Capital: 4￡5) Net sales: 1,110,000￡ (2010 fiscal year)
6) Working force: 57) Date of stock acquisition: July 20, 20118) Acquisition cost: 2,750,000￡
9) Equity percentage after acquisition: LANSINOH LABORATORIES, INC. 100%
10) Funds used for purchase: funds on hand
As of August 31, 2011, LANSINOH LABORATORIES, INC. absorbed HealthQuest Ltd. with theformer being the surviving company.

15