Summary of Financial Results
for the Second Quarter of Fiscal Year Ending December 2019
[Japanese Standards] (Consolidated)
September 2, 2019
Name of Listed Company: Pigeon Corporation (Stock code: 7956)
Listing: First Section, Tokyo Stock Exchange
Website: www.pigeon.co.jp
Representative: Norimasa Kitazawa (President and COO)
Contact person: Tsutomu Matsunaga (Managing Officer, Business Strategy Division)/Tel: +81-3-3661-4204
Scheduled Filing Date of Quarterly Report: September 6, 2019
Scheduled Commencement Date of Dividend Payments: October 7, 2019
Preparation of Any Additional Explanatory Materials for Quarterly Financial Results: Yes
Holding of Any Briefing Session for Quarterly Financial Results: Yes (For analysts and institutional investors)

1. Consolidated Business Performance for the First Half of Fiscal YearEnding December 31, 2019 (February 1 to July 31, 2019)(1) Consolidated Operating Results (cumulative)

2Q ended July 31, 2019

(Millions of yen, rounded down, % figures denote year-on-year change)
Net Income
Net Sales
Operating Income
Ordinary Income
Attributable to
Owners of Parent
52,519(0.6)%
9,257(15.1)%
9,608(17.7)%
6,565(19.0)%

2Q ended July 31, 2018
52,847
7.7%
10,90717.3%
11,679(Note) Comprehensive income: 2Q ended July 31, 2019
¥6,393 million (1.4% negative)
2Q ended July 31, 2018
¥6,483 million (0.4%)
Net Income per Share (¥)

24.5%

8,109

24.9%

Diluted Net Income per
Share (¥)

2Q ended July 31, 2019

54.83

－

2Q ended July 31, 2018

67.71

－

(2) Consolidated Financial Position
Total Assets
2Q ended July 31, 2019

Net Assets

88,714

FY ended January 31, 201985,618(Reference) Shareholders’ Equity: 2Q ended July 31, 2019
FY ended January 31, 2019

Equity Ratio (%)

68,681

74.7

66,582¥62,244 million¥64,242 million

75.0

2. Cash Dividends
Annual Dividend (¥)
1Q-end2Q-end3Q-endFY ended January 31, 2019
34.00－
FY ending December 31, 2019
35.00－
FY ending December 31, 2019
(Forecast)(Note) Changes in dividend forecasts from the most recent announcement: None

Year-end

Total

－

34.00

68.00

－

35.00

70.00

3. Consolidated Business Performance Forecasts for the Fiscal Year Ending
December 31, 2019 (February 1, 2019 to December 31, 2019)
Net Sales
Millions of Yen(% figures denote year-on-year change from the previous term)
Net Income
Net Income per
Operating Income
Ordinary Income
Attributable to
Share
Owners of Parent% Millions of Yen% Millions of Yen% Millions of Yen%

Yen

Full year
106,200
20,00020,00014,300119.40－－－－(Notes) 1. Revision of forecasts from the most recent announcement: None
2. Pursuant to the approval of the “partial revision of the Articles of Incorporation” at the 62nd Ordinary General Meetingof Shareholders (fiscal year ended January 31, 2019) on April 25, 2019, the fiscal period has changed from the year
ending January 31 to the year ending December 31, beginning with the 2019 fiscal year. As such, in the fiscal year
ending December 31, 2019 now in progress, the consolidation period in 2019 for the subsidiaries that currently settle
their accounts on January 31 shall be the 11-month period from February 1 to December 31, 2019. Subsequentconsolidation periods shall be from January 1 to December 31 of each year.
For subsidiaries that currently settle their accounts on December 31, or that are doing so temporarily, the consolidation
period shall continue to be the 12-month period from January 1 to December 31.

Notes(1) Changes in major subsidiaries (or changes in specific subsidiaries that affect the scope of consolidation) during theperiod under review: None
New: － (Company name: － ), Excluded: － (Company name: － )(2) Application of any accounting procedures specific to preparation of quarterly consolidated financial statements:
None(3) Changes in accounting policies, changes in accounting-based estimates, and restatements
1) Changes in accounting policies associated with revision of accounting standards: Yes
2) Changes in accounting policies other than the above 1): None
3) Changes in accounting-based estimates: None
4) Restatements: None
(Note) For details, please refer to “(4) Notes on Consolidated Financial Statements (Changes in Accounting Policies)” in “2.
Quarterly Consolidated Financial Statements and Main Notes” on page 11 of the Appendix.

(4) Number of outstanding shares (common stock)1) Number of shares outstanding at the period-end (including treasury stock)
2Q ended July 31, 2019: 121,653,486
FY ended January 31, 2019: 121,653,486
2) Amount of treasury stock at the period-end
2Q ended July 31, 2019: 1,926,322
FY ended January 31, 2019: 1,892,704
3) Average number of shares outstanding during the period (quarter accumulation)
2Q ended July 31, 2019: 119,751,859
2Q ended July 31, 2018: 119,761,046(Note) Amount of treasury stock at the period-end includes Company shares held by the board incentive plan (BIP) trust forcompensation of directors (33,600 shares as of 2Q ended July 31, 2019). Company shares held by the BIP trust forcompensation of directors are also included in the treasury stock subtracted in the calculation of the average numberof shares outstanding during the period.

* Summaries of quarterly financial results are exempt from quarterly review by certified public accountants andauditing corporations.
* 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 forecasts
and future projections stated in this report are in no way intended as a promise of achievement as a company.
In addition, the actual results could differ significantly from forecast figures depending on a variety of factors. See
the section “(3) Explanation of Consolidated Performance Forecast and Other Future Predictions” in “1. Qualitative
Information Regarding the Financial Results for the Current Quarter” on page 4 regarding conditions which arepreconditions for business performance forecasts and cautions for using the business performance forecast.

Pigeon Corporation (7956) Summary of Financial Results for the Second Quarter of Fiscal Year Ending December 2019

Table of Contents of the Appendix
1. Qualitative Information Regarding the Financial Results for the Current Quarter.......................... 2(1) Explanation of Business Performance ......................................................................................... 2(2) Explanation of Financial Position ............................................................................................... 3(3) Explanation of Consolidated Performance Forecast and Other Future Predictions .................... 4
2. Quarterly Consolidated Financial Statements and Main Notes ....................................................... 5(1) Quarterly Consolidated Balance Sheets ...................................................................................... 5(2) Quarterly Consolidated Statement of Income and Quarterly Consolidated Statement ofComprehensive Income .............................................................................................................. 7
Quarterly Consolidated Statement of Income(Scope of Consolidation of Second Quarter) .......................................................................... 7
Quarterly Consolidated Statement of Comprehensive Income(Scope of Consolidation of Second Quarter)... .......................................................................... 8(3) Quarterly Consolidated Statements of Cash Flows... .................................................................. 9(4) Notes on Consolidated Financial Statements ............................................................................ 11(Notes Regarding Going Concern Assumptions) ...................................................................... 11(Notes Regarding Substantial Changes in Shareholders’ Equity) ............................................. 11(Changes in Accounting Policies) ............................................................................................. 11(Additional Information) ........................................................................................................... 11(Segment Information) .............................................................................................................. 121

Pigeon Corporation (7956) Summary of Financial Results for the Second Quarter of Fiscal Year Ending December 2019

1. Qualitative Information Regarding the Financial Results for the Current Quarter(1) Explanation of Business Performance
During the consolidated first six-month period under review, Japan’s economy remained on a
gradual recovery footing overall, as the employment and income environments improved andpersonal consumption recovered despite weaknesses focused on exports. In the global economy,
uncertainty lingered as a result of continuing trade friction between China and the United States andother trends in trade issues as well as currency fluctuations and other matters.
Amid such economic circumstances, the Group developed the Sixth Medium-Term Business Plan(for the period between the fiscal year ended January 2018 and the fiscal year ending December2019), under the slogan of “Building our dreams into the future – by creating a bridge towards the
Global Number One manufacturer of baby products –,” and has made efforts toward our further
growth in the final year of this plan. In addition, we have set the following three basic strategies thatwould help us to expand the Group's business and improve its management quality.
1) Based on the Pigeon Way, create and implement all kinds of measures to achieve the goal of
becoming ‘an indispensable company’ for the society and make our Vision “to be the baby
product manufacturer most trusted by the world’s babies and families, i.e. ‘Global NumberOne’” come true.
2) A further increase in corporate value will be pursued through improvement in profitability andefficiency of the business, and maximization of cash flows. The organizational structure,
management system and governance system will also be put in place and reinforced to ensuresustainable growth from a medium to long-term perspective.
3) During the three years of the Sixth Medium-Term Business Plan, invest management
resources giving priority to the key products and carry out strategic investments, laying solid
foundations for the double-digit growth of Pigeon Group in the future.
During the consolidated first six-month period under review, we implemented a range of strategies
for each of our businesses and functions on the basis of the above business policies. As a result, net
sales amounted to ¥52,519 million (down 0.6% YOY). Regarding earnings, operating income
declined to ¥9,257 million (down 15.1% YOY), impacted by an increase of approximately 0.5
percentage points in the sales cost ratio from the previous term and a rise in selling, general andadministrative expenses. Ordinary income was recorded at ¥9,608 million (down 17.7% YOY), andnet income attributable to owners of parent fell to ¥6,565 million (down 19.0% YOY).
The main exchange rates used in the preparation of this six-month period’s financial statements for
the Company’s overseas consolidated subsidiaries (revenues and expenses) are as follows:
・1US$: 110.05 yen (108.67 yen)
・1 CNY: 16.20 yen (17.08 yen)
Note: Figures in parentheses represent the exchange rate in the same period of the previous fiscal
year.
This report consists of information from six Group reporting segments: the Domestic Baby &Mother Care Business, Child Care Service Business, Health & Elder Care Business, China Business,
Singapore Business and Lansinoh Business.
Business results for each segment are as follows.
Domestic Baby & Mother Care BusinessNet sales in this segment slipped to ¥17,964 million (down 2.5% YOY), against a background of acontinuing softening trend in inbound demand. Segment profit dropped to ¥2,971 million (down
15.4% YOY), as net sales declined, sales cost ratio rose and selling, general and administrative
expenses grew. In operational terms, in May the Group introduced the Palskip, a stroller with three2

Pigeon Corporation (7956) Summary of Financial Results for the Second Quarter of Fiscal Year Ending December 2019

pneumatic tires providing comfortable motion with reduced weight and size and improved ease ofuse. In June the Group launched the Runfee Lino’n RA9L Botanical Zoo, a special-color model
available at a limited group of retailers, which adopts ball bearings in the casters for smoothpushing motion and comfortable ride. Sales of the RA9L are expanding steadily. Moreover, during
the period under review, we have held 16 events with 1,500 participants through our directcommunications programs, such as our “Premama Class” for pregnant women and a breastfeeding
seminar for healthcare professionals. On “Pigeon Info,” a website that supports women during
pregnancy, in childbirth, and in raising children, we are continuing to improve the content so thatusers can use the site in a more convenient manner.
Child Care Service BusinessNet sales in this segment amounted to ¥1,920 million (down 25.1% YOY). Segment profit fell to¥42 million (down 41.9% YOY). The main factor in business-result fluctuation in this segment was
the closure of Japan’s National Hospital Organization (NHO)’s childcare facility managementbusiness as of March 2018. During the consolidated first six-month period under review, we
deployed services at 73 in-company child-care facilities. The Group will continue to develop thisbusiness while striving to effect qualitative improvements in the service content.
Health & Elder Care BusinessNet sales of the segment amounted to ¥3,480 million (down 1.1% YOY), and segment profit
decreased to ¥221 million (down 7.7% YOY). In this segment, the Group worked to circulateawareness of its products and expand sales. For example, in May the Group unveiled a special
website for ProFitCare, a series launched in February with focus on maintaining the sitting postureof users of elder-care facilities, as well as a special website for the Sanitary Care Inspired by
Nursing Series, a skincare product that enable users to maintain physical hygiene when they areunable to bathe. The segment continues to roll out products of superior competitive power and otherinitiatives to improve the quality of nursing-care services.
China BusinessNet sales in this segment amounted to ¥17,672 million (up 1.8% YOY), and segment profit also
increased to ¥6,291 million (up 1.7% YOY). In this segment, the Group made concerted efforts to
expand operations. Sales of not only nursing bottles and nipples but also medicated skincare
products (Peach Leaves) and breast pumps are growing. We will continue to strengthen our efforts
focused on the e-commerce market, which is expected to continue to expand; leverage social media
to invigorate direct communication with consumers; reinforce sales promotions at stores andpromote distribution of new products; and continue to implement offline sales activities at hospitals
and maternity clinics. In these ways we aim to broaden contact points with customers and expand
our operations.
Singapore BusinessNet sales in this segment reached ¥6,079 million (up 2.8% YOY). However, segment profit
declined to ¥1,305 million (down 9.2% YOY), due to a sales cost increase. In ASEAN, the Middle
East and India, we advanced the development and introduction of products targeted for middle-classcustomers in this region while continuing vigorous sales and marketing activities to endeavor toboost our brand presence in these areas.
Lansinoh BusinessNet sales in this segment grew to ¥6,572 million (up 4.1% YOY). However, segment profit declined
to ¥906 million (down 9.9% YOY), due to such factors as the increase in selling, general andadministrative expenses. In North America, sales of breast pumps through DME Channel are
growing, with strengthening and expansion in these operations expected to continue. In the China
market (Lansinoh Laboratories Shanghai) and in Europe, the Group is reinforcing e-commerce,
bolstering marketing activities and strengthening its brands in an effort for further expansion ofoperations.
3

Pigeon Corporation (7956) Summary of Financial Results for the Second Quarter of Fiscal Year Ending December 2019

Other Businesses
Net sales of the segment amounted to ¥725 million (up 15.4% YOY), while segment profit stood at¥44 million (down 23.6% YOY).
(2) Explanation of Financial Position(Assets)
As of July 31, 2019, our Group recorded total assets of ¥88,714 million, up ¥3,095 million from theprevious consolidated fiscal year ended January 31, 2019. Both current and fixed assets increasedby ¥2,440 million and ¥654 million, respectively.
Current assets increased mainly due to increases in notes and accounts receivable - trade of ¥3,437
million and in merchandise and finished goods of ¥424 million, despite a decrease in cash anddeposits of ¥1,204 million.
Fixed assets increased mainly due to an increase in other tangible fixed assets of ¥384 million.
(Liabilities)
As of July 31, 2019, our Group recorded total liabilities of ¥20,032 million, up ¥996 million fromthe previous consolidated fiscal year ended January 31, 2019. Both current and fixed liabilities
increased by ¥478 million and ¥518 million, respectively.
Current liabilities increased mainly due to increases in notes and accounts payable – trade of ¥1,056
million and in electronically recorded obligations – operating of ¥511 million.
Fixed liabilities increased mainly due to an increase in other fixed liabilities of ¥1,033 million.
(Net Assets)
As of July 31, 2019, our Group recorded total net assets of ¥68,681 million, up ¥2,098 million fromthe previous consolidated fiscal year ended January 31, 2019.
Net assets increased mainly due to an increase in retained earnings of ¥2,494 million, despite adecrease in foreign currency translation adjustment of ¥353 million.
(3) Explanation of Consolidated Performance Forecast and Other Future Predictions
For the Sixth Medium-Term Business Plan (for the period between the fiscal year ended January
2018 and the fiscal year ending December 2019), the Group has adopted the slogan, “Building our
dreams into the future – by creating a bridge towards the Global Number One manufacturer of baby
products –.”We will further develop and enhance our business operating system, while pursuing in the
improvement of management quality and steadily implementing the measures grounded on the
newly formulated strategies for each business segment and the functional strategy that serves as thefoundation thereof.
In this consolidated fiscal year, the final year of our Sixth Medium-Term Business Plan, we will
strive to ensure completion of our plans.
* At the 62nd Ordinary General Meeting of Shareholders (fiscal year ended January 31, 2019),
convened on April 25, 2019, Pigeon changed its fiscal year-end from January 31 to December 31.

4

Pigeon Corporation (7956) Summary of Financial Results for the Second Quarter of Fiscal Year Ending December 2019

2. Quarterly Consolidated Financial Statements and Main Notes(1) Quarterly Consolidated Balance Sheets(Millions of yen)
At January 31, 2019ASSETS
I. Current Assets:
Cash and deposits
Notes and accounts receivable - trade
Merchandise and finished goods
Work in process
Raw materials and supplies
Other current assets
Allowance for doubtful accounts
Total Current Assets
II. Fixed Assets:
1. Tangible Fixed Assets:
Buildings and structures, net
Land
Other tangible fixed assets, net
Total Tangible Fixed Assets
2. Intangible Fixed Assets:
Goodwill
Other intangible fixed assets
Total Intangible Fixed Assets
3. Investments and Other Assets:
Other
Allowance for doubtful accounts
Total Investments and Other Assets
Total Fixed Assets
Total Assets
LIABILITIES
I. Current Liabilities:
Notes and accounts payable - trade
Electronically recorded obligations - operating
Income taxes payable
Accrued bonuses to employees
Provision for sales returns
Provision for loss on litigation
Other current liabilities
Total Current Liabilities
II. Fixed Liabilities:
Net defined benefit liability
Provision for share-based remuneration
Provision for directors and corporate
auditors’ retirement benefits
Other fixed liabilities
Total Fixed Liabilities
Total Liabilities

5

At July 31, 201930,94915,004
7,360
405
2,839
1,840
(197)
58,201

29,74518,442
7,784
420
2,804
1,637
(192)
60,642

6,689
5,577
8,859
21,127

7,214
5,587
9,243
22,045

1,000
3,223
4,223

915
3,118
4,034

2,071
(5)
2,066
27,41785,618

1,996
(4)
1,991
28,071
88,714

4,567
1,960
1,951
972
32
－
6,138
15,623

5,624
2,471
1,569
1,022
35
7
5,369
16,101

309
－

363
30

599

－

2,503
3,412
19,036

3,537
3,931
20,032

Pigeon Corporation (7956) Summary of Financial Results for the Second Quarter of Fiscal Year Ending December 2019

(Millions of yen)
At January 31, 2019

At July 31, 2019

NET ASSETS
I. Shareholders’ Equity:
Capital stock

5,199

5,199

Capital surplus

5,179

5,179

Retained earnings

55,70458,198Treasury stock(951)(1,088)

Total Shareholders’ Equity

65,131

67,48821

19

Foreign currency translation adjustment(910)(1,264)

Total Accumulated Other Comprehensive Income(888)(1,244)

III. Non-controlling Interests

2,339

2,437

Total Net Assets

66,582

68,681

Total Liabilities and Net Assets

85,61888,714

II. Accumulated Other Comprehensive Income:
Valuation difference on available-for-sale securities

6Pigeon Corporation (7956) Summary of Financial Results for the Second Quarter of Fiscal Year Ending December 2019(2) Quarterly Consolidated Statement of Income and Quarterly Consolidated Statement ofComprehensive Income
Quarterly Consolidated Statement of Income(Scope of Consolidation of Second Quarter)(Millions of yen)

I. Net Sales
II. Cost of Sales
Gross profit
Reversal of provision for sales returns
Provision for sales returns
Adjusted gross profit
III. Selling, General and Administrative Expenses
Operating Income
IV. Non-operating Income:Interest income
Foreign exchange gains
Subsidy income
Other non-operating income
Total Non-operating Income
V. Non-operating Expenses:
Interest expenses
Sales discounts
Foreign exchange losses
Other non-operating expenses
Total Non-operating Expenses
Ordinary Income
VI. Extraordinary Income:Gain on sales of fixed assets
Gain on sales of investment securities
Total Extraordinary Income
VII. Extraordinary Loss:
Loss on sales of fixed assets
Loss on disposal of fixed assets
Total Extraordinary Loss
Income before Income Taxes
Income taxes - current
Income taxes - deferred
Total Corporate Income Tax
Net Income
Net Income Attributable to Non-controlling Interests
Net Income Attributable to Owners of Parent

7

Six months ended
July 31, 2018
52,84725,745
27,10129
66
27,063
16,156
10,907Six months ended
July 31, 201952,51925,881
26,63830
36
26,632
17,375
9,257

131
145
665
79
1,020

83
－
753
113
950

1
220
－
27
248
11,679

8
236
327
26
599
9,608

5
108
113

4
113
118

0
9
9
11,783
3,450
7
3,457
8,325

8
42
50
9,675
3,069
(93)
2,976
6,699

216

134

8,109

6,565

Pigeon Corporation (7956) Summary of Financial Results for the Second Quarter of Fiscal Year Ending December 2019

Quarterly Consolidated Statement of Comprehensive Income(Scope of Consolidation of Second Quarter)(Millions of yen)

Net Income
Other Comprehensive Income
Valuation difference on available-for-sale securities
Foreign currency translation adjustment
Total Other Comprehensive Income
Quarterly Comprehensive Income(Break down)
Quarterly comprehensive income on parent
company
Quarterly comprehensive income on
non-controlling interests

8

Six months ended
July 31, 2018
8,325

Six months ended
July 31, 2019
6,699

(1)
(1,839)(1,841)
6,483

(2)
(303)
(305)
6,393

6,368

6,210

115

183

Pigeon Corporation (7956) Summary of Financial Results for the Second Quarter of Fiscal Year Ending December 2019(3) Quarterly Consolidated Statements of Cash Flows(Millions of yen)

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 net defined benefit liability
Increase (decrease) in provision for directors andcorporate auditors' retirement benefits
Interest and dividend income
Interest expenses
Loss (gain) on sales of fixed assets
Loss on disposal of fixed assets
Loss (gain) on sales of investment securities
Decrease (increase) in notes and accounts receivable trade
Decrease (increase) in inventories
Increase (decrease) in notes and accounts payable - trade
Increase (decrease) in accounts payable
Increase (decrease) in accrued consumption taxes
Decrease (increase) in claims provable inbankruptcy/rehabilitation
Other
SubtotalInterest and dividend income received
Interest expenses paid
Income taxes paid
Net Cash Provided by (Used in) Operating Activities
II. Cash Flows from Investing Activities
Purchase of tangible fixed assets
Proceeds from sales of tangible fixed assets
Purchase of intangible fixed assets
Purchase of investment securities
Proceeds from sales of investment securities
Purchase of insurance funds
Proceeds from maturity of insurance funds
Payments of loans receivableCollection of loans receivable
Payments for lease deposits
Purchase of shares of subsidiaries resulting in change inscope of consolidation
Collection of lease deposits
Other
Net Cash Provided by (Used in) Investing Activities

9

Six months ended
July 31, 2018

Six months ended
July 31, 201911,783
1,298
85
(69)
(98)
16

9,675
1,853
112
(0)
20
48

62

(599)

(132)
1
(4)
9
(108)

(98)
25
3
42
(113)

(2,002)(3,842)(1,628)
1,071
(15)
(760)

(566)
1,755
(224)
(382)

－

1

(1,555)
7,950
135
(1)
(3,742)
4,342

810
8,520
87
(8)
(3,268)5,331(1,876)
61
(963)
(0)
204
(0)
－
(1)
4
(23)

(1,893)
35
(401)
(0)
209
(0)
12
(0)
0
(5)

－

(29)

92
(16)
(2,519)4(77)(2,147)

Pigeon Corporation (7956) Summary of Financial Results for the Second Quarter of Fiscal Year Ending December 2019

(Millions of yen)

III. Cash Flows from Financing Activities
Payment of cash dividends
Dividends paid to non-controlling interests
Purchase of treasury stock
Net Cash Provided by (Used in) Financing Activities
IV. Effect of Exchange Rate Change on Cash and Cash
Equivalents
V. Net Increase (Decrease) in Cash and Cash Equivalents
VI. Cash and Cash Equivalents at Beginning of Period
VIII. Cash and Cash Equivalents at End of Period10

Six months ended
July 31, 2018

Six months ended
July 31, 2019

(4,188)(68)(1)(4,258)(4,072)(86)(136)(4,295)

(635)

(93)

(3,071)
31,34628,275(1,204)30,94929,745

Pigeon Corporation (7956) Summary of Financial Results for the Second Quarter of Fiscal Year Ending December 2019(4) Notes on Consolidated Financial Statements(Notes Regarding Going Concern Assumptions)Not applicable.
(Notes Regarding Substantial Changes in Shareholders’ Equity)
Not applicable.
(Changes in Accounting Policies)(Application of IFRS 16, “Leases”)
From the beginning of the consolidated first quarter of this fiscal year, the Pigeon Group applies
IFRS 16, “Leases,” the new lease accounting standard published by the International AccountingStandards Board (IASB). This accounting change does not apply to Pigeon Corporation and its
subsidiaries in Japan, which apply Japanese accounting standards, or to Pigeon subsidiaries in the
United States, which apply US accounting standards. With this accounting change, in principle
lessees recognize assets and liabilities with respect to all leases.
Effects of this accounting change on the financial condition and business results of the Group are
negligible.
(Additional Information)(Application of the Partial Revision of Accounting Standards Regarding Tax-effect Accounting,etc.)
From the beginning of the consolidated first quarter of this fiscal year, the Pigeon Group applies thePartial Revision of Accounting Standards Regarding Tax-effect Accounting, etc. (Corporate
Accounting Standard No. 28, February 16, 2018). Under this partial revision, Deferred Tax Assets
are appropriated under Investments and Other Assets and Deferred Tax Liabilities are appropriatedunder Fixed Liabilities.
(BIP Trust System for Compensation of Directors)
Pursuant to a resolution of the 62nd Ordinary General Meeting of Shareholders (fiscal year ended
January 31, 2019), convened on April 25, 2019, Pigeon introduced a performance share plan for
directors (not including outside directors). The purpose of this system is to clarify the relationshipbetween directors’ compensation and the Group’s business results and shareholder value and toenhance awareness of contributions to the improvement of the business results of the Group and the
expansion of its enterprise value over the medium-to-long term.
(1) Overview of the BIP trust system for compensation of directors
This plan adopts a framework called the board incentive plan (BIP) trust for compensation of
directors. Similar to systems in North America and Europe such as performance shares, which
tie compensation to business results, and restricted stock, which compensates directors withshares whose transfer is restricted, the system provides directors with Company shares, ortheir equivalent value at conversion, tied to the director’s rank and the Company’s degree ofattainment of business-result targets. In principle the compensation is transferred or paid to
directors upon retirement.
(2) Company shares remaining in the trust
Company shares remaining in the trust are appropriated as treasury stock in net assets, basedon the book value of the trust (not including the amounts of incidental expenses). The bookvalue of the treasury stock in question as of the end of the second quarter of the fiscal year
under review is ¥136 million and the number of shares is 33,600 shares.

11

Pigeon Corporation (7956) Summary of Financial Results for the Second Quarter of Fiscal Year Ending December 2019

(Segment Information)
Six months ended July 31, 2018
Information Regarding Net Sales and Profit (Loss) in Each Reporting Segment(Millions of yen)
Reporting Segment
Domestic
Baby &
MotherCare
Business
Net sales
Net sales toexternalcustomers
Internal sales
or exchange
betweensegments
Total
Segment profit

Child Care Health &Service Elder Care
Business
Business

China
Business

Singapore
Business

LansinohBusiness

Subtotal

Other
Businesses(Note 1)

Total

AmountAccounted
on Quarterly
Adjustments
Consolidated(Note 2)
Statement of
Income(Note 3)

18,428

2,563

3,519

17,289

4,100

6,316

52,218628

52,847－

52,847

－

－

－

75

1,814

－

1,889

－

1,889

(1,889)－18,428

2,563

3,519

17,364

5,915

6,316

54,108628

54,736(1,889)52,847

3,516

74

240

6,183

1,437

1,005

12,45557

12,513(1,606)

10,907(Notes)1. The “Other Businesses” classification refers to businesses not included in the reporting segments, and consists of ourGroup’s manufacturing subsidiaries, but also of those manufacturing and selling products to companies outside our Group.
2. The negative amount of ¥1,606 million from adjustments in segment profit includes negative ¥20 million in eliminationof intersegment transactions, and negative ¥1,626 million in non-allocable operating expenses. Non-allocable operating
expenses are administrative costs of our Group.
3. Segment profits are adjusted to operating income in the quarterly consolidated statement of income.

Six months ended July 31, 2019
Information Regarding Net Sales and Profit (Loss) in Each Reporting Segment(Millions of yen)
Reporting Segment
Domestic
Baby &
MotherCare
Business
Net sales
Net sales toexternalcustomers
Internal sales
or exchange
betweensegments
Total
Segment profit

Child Care Health &Service Elder Care
Business
Business

China
Business

Singapore
Business

LansinohBusiness

Subtotal

Other
Businesses(Note 1)

Total

AmountAccounted
on Quarterly
Adjustments
Consolidated(Note 2)
Statement of
Income(Note 3)

17,964

1,920

3,480

17,616

4,267

6,544

51,793725

52,519－52,519

－

－

－

55

1,811

28

1,895

－

1,895

(1,895)－

17,964

1,920

3,480

17,672

6,079

6,572

53,689725

54,414(1,895)52,519

2,971

42

221

6,291

1,305

906

11,73844

11,783(2,525)

9,257(Notes)1. The “Other Businesses” classification refers to businesses not included in the reporting segments, and consists of ourGroup’s manufacturing subsidiaries, but also of those manufacturing and selling products to companies outside our Group.
2. The negative amount of ¥2,525 million from adjustments in segment profit includes negative ¥76 million in eliminationof intersegment transactions, and negative ¥2,448 million in non-allocable operating expenses. Non-allocable operating
expenses are administrative costs of our Group.
3. Segment profits are adjusted to operating income in the quarterly consolidated statement of income.

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