Summary of Financial Results
for the Fiscal Year Ended January 31, 2015
[Japanese Standards] (Consolidated)
March 2, 2015
Name of Listed Company: Pigeon Corporation (Stock code: 7956)
Listings: First Section, Tokyo Stock Exchange
Website: www.pigeon.co.jp
Representative: Shigeru Yamashita (President and COO)
Contact person: Tsutomu Matsunaga (Managing Officer, Corporate Planning & Administration Division)/Tel: +81-3-3661-4188
Scheduled Date of Annual General Shareholders’ Meeting: April 28, 2015
Scheduled Commencement Date of Dividend Payments: April 30, 2015
Scheduled Filling Date of Business Report: April 30, 2015
Preparation of Any Additional Explanatory Materials for Financial Results: None
Holding of Any Briefing Session for Financial Results: Yes (For analysts and institutional investors)

1. Consolidated Business Performance for the Fiscal Year Ended January 31,2015 (February 1, 2014 to January 31, 2015)(1) Consolidated operating results(Millions of yen, rounded down, % figures denote year-on-year change)
Operating Income
Ordinary Income
Net Income

Net Sales
FY ended January 31, 2015

84,113

8.6%

12,780FY ended January 31, 2014

77,46519.0%

10,365(Note) Comprehensive income:FY ended January 31, 2015
FY ended January 31, 201423.3%

13,299

20.9%

8,451

21.0%

46.3%

11,002

48.9%

6,985

52.7%

¥11,849 million (12.8%)¥10,505 million (68.7%)

Net Income
per Share (¥)

Diluted Net
Income Per Share
(¥)

Return on
Equity (%)

Total Assets/
Ordinary Income(%)

FY ended January 31, 2015

211.65

－

19.8

20.4

15.2

FY ended January 31, 2014174.53

－

19.7

20.7

13.4

OperatingMargin (%)(Reference) Equity in earnings of affiliates:

FY ended January 31, 2015 ¥23 million
FY ended January 31, 2014 ¥58 million(Note) Our Group carried out a 2-for-1 stock split with respect to its common stock, effective as of August 1, 2013. The figures fornet income per share are calculated on the assumption that this stock split had been conducted at the beginning of the fiscal year
ended January 31, 2014.

(2) Consolidated Financial Position
Total Assets

Net Assets

Equity Ratio (%)

Net Assets
Per Share (¥)

FY ended January 31, 2015

72,36747,29763.8

1,156.39

FY ended January 31, 2014

57,95539,981

67.5

977.50(Reference) Shareholders’ Equity:

FY ended January 31, 2015 ¥46,164 million
FY ended January 31, 2014 ¥39,124 million(Note) Our Group carried out a 2-for-1 stock split with respect to its common stock, effective as of August 1, 2013. The figures for
net assets per share are calculated on the assumption that this stock split had been conducted at the beginning of the fiscal year
ended January 31, 2014.

(3) Cash Flows
Cash and Cash
Equivalents
at Year-End

Cash Flows From
Operating Activities

Cash Flows From
Investing Activities

Cash Flows From
Financing Activities

FY ended January 31, 2015

10,135(3,134)(150)

21,590FY ended January 31, 2014

7,930

(3,794)(3,163)

13,102

2. Cash Dividends
Annual Dividends (¥)
3Q-end Year-end

Total

Total
Dividends
Paid (fullyear) (¥ mil)Consolidated
Payout Ratio(cons.) (%)

Dividends on
Consolidated
Net Assets(cons.) (%)

1Q-end2Q-endFY ended January 31, 2014

－

66.00

－

55.00

－

3,522

50.4

10.0

FY ended January 31, 2015

－

45.00

－

60.00

105.00

4,191

49.6

9.8

FY ending January 31, 2016
54.00
54.00
108.0048.4－－(Forecast)(Note) Our Group carried out a 2-for-1 stock split with respect to its common stock, effective as of August 1, 2013.

3. Consolidated Business Performance Forecasts for the Fiscal Year Ending
January 31, 2016 (February 1, 2015 to January 31, 2016)
Net Sales
Millions of Yen

Full year

92,000Operating Income% Millions of Yen

9.4%

13,900(% figures denote year-on-year change from the previous term)
Net Income per
Ordinary Income
Net Income
Share% Millions of Yen

8.8%

14,000% Millions of Yen

5.3%

8,900

%

5.3%

Yen

222.94Notes(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) Changes in accounting policies, changes in accounting-based estimates, and restatements
1) Changes in accounting policies associated with revision of accounting standards: None
2) Changes in accounting policies other than the above 1): Yes
3) Changes in accounting-based estimates: None
4) Restatements: None
(Note) From the consolidated accounting year under review, the depreciation method of tangible fixed assets has
been changed. For further information, please refer to “Changes in Accounting Policies” in “(5) Notes on
Consolidated Financial Statements” on page 15.
(3) Number of outstanding shares (common stock)1) Number of shares outstanding at term-end (including treasury stock)
FY ended January 31, 2015: 40,551,162 shares
FY ended January 31, 2014: 40,551,162 shares
2) Number of treasury stock for the period-end
FY ended January 31, 2015: 629,996 shares
FY ended January 31, 2014: 525,652 shares
3) Number of average shares outstanding during the period
FY ended January 31, 2015: 39,932,252 shares
FY ended January 31, 2014: 40,026,022 shares(Note) Our Group carried out a 2-for-1 stock split with respect to its common stock, effective as of August 1, 2013.
The number of shares listed above was calculated on the assumption that this stock split had been
conducted at the beginning of the fiscal year ended January 31, 2014.
* Indication regarding the situation of audit procedures
Financial results for this fiscal year is not the subject of an audit procedure based on the Financial Instruments andExchange Act, and at the point in time when these financial results were disclosed, audit procedures for consolidated
financial statements are being conducted.
* 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.
See the section “(1) Performance Analysis” in “1. Performance Analysis and Financial Position Analysis” on page 4
regarding the relevant matters for the above forecast for the business performance.

Pigeon Corporation (7956) Summary of Financial Results for the Fiscal Year Ended January 2015

Table of Contents of the Appendix
1. Performance Analysis and Financial Position Analysis .................................................................. 2(1) Performance Analysis.................................................................................................................. 2(2) Financial Position Analysis ......................................................................................................... 4(3) Income Appropriation Policy ...................................................................................................... 5
2. Management Policies ....................................................................................................................... 6(1) Basic Policies ............................................................................................................................. .6(2) Performance Targets................................................................................................................... .6(3) Medium-Term Management Strategies ....................................................................................... 6(4) Issues to Address ......................................................................................................................... 6
3. Consolidated Financial Statements .................................................................................................. 7(1) Consolidated Balance Sheets....................................................................................................... 7(2) Consolidated Statements of Income and Consolidated Statements of Comprehensive Income ........... 9
Consolidated Statements of Income ............................................................................................ 9
Consolidated Statements of Comprehensive Income ................................................................ 10(3) Statement of Changes in Consolidated Shareholders’ Equity ................................................... 11(4) Consolidated Statements of Cash Flows ................................................................................... 13(5) Notes on Consolidated Financial Statements ............................................................................ 15(Notes Regarding Going Concern Assumptions)...................................................................... 15(Changes in Accounting Policies) ............................................................................................. 15(Changes in Method of Presentation) ........................................................................................ 15(Changes in Basis of Presenting Consolidated Financial Statements) ...................................... 15(Segment Information) .............................................................................................................. 16(Per Share Information) ............................................................................................................ 19(Material Subsequent Events) ................................................................................................... 191

Pigeon Corporation (7956) Summary of Financial Results for the Fiscal Year Ended January 2015

1. Performance Analysis and Financial Position Analysis(1) Performance Analysis
1) Performance Overview
During this consolidated accounting year (February 1, 2014 to January 31, 2015), Japan’s economy
was showing some signs of picking up, underpinned by stock price rise and weak-yen trend whichwere backed by the economic and monetary policies of the government and the Bank of Japan.
However, influenced by a rise in price of imported materials due to the yen depreciation, andsluggishness in private consumption accompanying the consumption tax hike, the outlook for the
economy remains uncertain. Meanwhile, overseas, although signs of economic recovery in the
United States were emerging, there has been still an economic slowdown in China and otheremerging countries, and uncertainty over the economic outlook in Europe. Therefore, the domestic
economy is subject to downward pressures until now.
Amid such economic circumstances, our Group has issued its fifth medium-term business plan (forthe period between the fiscal year ended January 2015 and the fiscal year ending January 2017), andhas put up the following slogan, “Pursuing world class business excellence, think globally, plan
agilely, and implement locally”. Thus, our Group has made a fresh start in this first year for the plan
to be implemented. Also, as its business policy, our Group aims at expanding its business andimproving management quality by providing the following “Vision 2016”.
< Vision 2016 >i) Strengthening brand power (Global Number One manufacturer of baby and child careproducts)ii) Reinforcing the management system toward a sustainable growth of our Group’s businessiii) Improving management quality by focusing on cash flowiv) Fostering our Group’s global personnel, establishing human resources systems and promoting
its employees’ activitiesv) Further enhancing corporate value
During the consolidated period under review, we have been developing the above business policies
and strategies for each of our businesses and functions. As a result, net sales amounted to ¥84,113
million (up 8.6% YOY), due to factors including healthy business expansion in our overseas
operations centered on China. Regarding earnings, operating income rose to ¥12,780 million (up23.3% YOY), ordinary income recorded ¥13,299 million (up 20.9% YOY), and net income was¥8,451 million (up 21.0% YOY), which means each significantly exceeded the previous
corresponding result although the provision of allowance for recall loss (extraordinary loss) by avoluntary product recall recorded 104 million yen. This was due to a reduction of approximately 1.0
percentage point in the sales cost ratio from the previous same period, as a result of increased sales
and efficient utilization of production bases accompanying business expansion.
2) Segment Review
So far, “Domestic Baby and Mother Care Business”, “Child-rearing Support Services”, “HealthCare and Nursing Care Business” and “Overseas Business” have been identified as our Group’sreporting segments. However, from the first quarter of the fiscal year under review, we separated
our China Business from the “Overseas Business”, which is why there is now a total of fivereporting segments. Each segment is outlined below.
Domestic Baby and Mother Care BusinessNet sales of the segment amounted to ¥24,432million (down 0.1% YOY). Segment profits
increased to ¥3,752 million (up 10.0% YOY). This resulted also from a decrease in selling, generaland administrative expenses due to reviewing marketing expenses and cost reductions in production
2

Pigeon Corporation (7956) Summary of Financial Results for the Fiscal Year Ended January 2015

companies resulting from an increase in the production of in-house products including new
merchandise.
In this segment, we have released products such as a reversible stroller “Mahalo laule’a” (inFebruary) designed to ensure the comfort of the baby, an Electric Breast Pump "First Class", which
provides a comfortable breastfeeding routine while reducing frustrations of any mother willing tobreastfeed her baby, and also “Pigeon’s Skin Care Products” (in March) formulated withmoisturizing ingredients close to those found in baby’s vernix. Furthermore, in August, we released“Puti-gurt”, a yogurt flavor lactic drink designed for babies aged 7 months and older, as well as“Animal Mini-pancakes” and “Baby Pudding” in our Handmade Snack Series which feature a
suitable level of sweetness for infants. Finally, in December, we released a new baby stroller“Runfee” which can easily adjust to level gaps thanks to its 16.5 cm diameter single tire. Moreover,during the consolidated period under review, we have held a number of events planned as a part ofour direct communications program such as our “Breast Feeding Seminar” for women expecting togive birth in the near future and “Working Women Meetings for Pregnancy Training” for those whoare preparing for pregnancy, organized for 40 times. A total of approximately 2,120 women haveparticipated. Furthermore, our Company has staged a total of 10 seminars for health care
professionals, addressing the theme of breastfeeding while parenting. A total of approximately
1,030 women have participated.
In order to aid fathers who challenge various aspects of child-rearing, we carried out aparents-and-children-oriented interactive event, “Enjoyable event for both parents and children
about fathers involved in child-rearing” and the press announcement of a new-model baby stroller,“Runfee”. We will aid families during times of pregnancy, childbirth, and childcare throughmerchandises, events, and providing information, and aim to expand our business steadily.
Child-rearing Support Services
Net sales of the segment amounted to ¥6,722 million (up 1.9% YOY). Although there has been an
increase in cost for recruitment due to the current continuing shortage of nursery teachers, we
worked on the effective use of selling, general and administrative expenses, therefore, segment
profits rose to ¥189 million (up 7.9% YOY).
We have launched four in-company child-care facilities and while improving the service quality,
our Group is steadily promoting sales. Moreover, in Kids World, our early childhood education
center, a mathematical experience program, “Math-Program” which we have introduced from lastApril gained favorable comments.
Health Care and Nursing Care BusinessNet sales of the segment amounted to ¥6,761 million (up 0.6% YOY) which slightly exceeded theprevious corresponding result, while competition in the market of consumables continued tointensify. We carried out proactive activities such as the execution of marketing measures thatmatch the characteristics of products and sales channels, and, at the same time, efforts have been
made toward the effective use of selling, general and administrative expenses, and as a result,segment profits increased to ¥260 million (up 22.9% YOY). In February, we launched in thissegment “Recoup KARURU”, a new underwear which maintains conventional products’ properties
in absorption of liquids, and still it is more comfortable and has improved its functionality in urine
leakage absorption. In addition, in August, we also launched the “No Spread Sheet”, a product that
resolves leak problems in toilet support. Our Group will continue to focus on marketing products
through intensive research on priority categories and to ensure sales activities focusing on facility
routes are carried out considerately.
Overseas BusinessNet sales of the segment amounted to ¥23,373 million (up 15.1% YOY). Segment profits increased
to ¥4,969 million (up 30.8% YOY).
3

Pigeon Corporation (7956) Summary of Financial Results for the Fiscal Year Ended January 2015

In North America, full-scale sales of nursing bottles were launched in January 2014. While we aremaking efforts to further expand our product categories, we will promote enhancement of our brandas a company that provides assistance for breastfeeding with total support from breast pumps,
storage of breast milk, and breastfeeding. In India, we are continuing to actively expand sales andmarketing activities with a view to establish our brand on the market. In the future we intend tofurther strengthen the sales/distribution system. In addition, we have been promoting thestreamlining of the product supply organization starting with our flagship baby bottle nipples byplant operation. In addition, in March, 2014 we have established a consolidated subsidiary,
PIGEON PRODUTOS INFANTIS LTDA. in Brazil for the purpose of the local marketing researchto get access to new markets. We will continue the operation aiming at further business expansion.
China BusinessNet sales of the segment amounted to ¥26,301 million (up 19.7% YOY). Although the selling,
general and administrative expenses increased as a result of marketing activities conducted alongwith an active expansion of the business, the segment profits increased to ¥7,525 million (up 25.5%
YOY).
This segment recorded an increase in net sales and segment profits from the previous year, assisted
mainly by the effects of a steady growth in product categories such as nursing bottles and nipples,due to continuous reinforcement of marketing and sales promotion activities, and an efficientutilization of production bases within China accompanying strong sales of existing products
including consumables. We aim to steadily expand sales, as we will continue to implement effective
marketing initiatives.
Other Businesses
Net sales of the segment amounted to ¥1,276 million (up 10.8% YOY), as OEM product orders
increased. The segment profits decreased to ¥173 million (down 15.2% YOY).
(2) Financial Position Analysis
1) Assets
As of January 31, 2015, total asset amounted to ¥72,367 million, up ¥1,441 million (or 24.9%) fromthe previous fiscal year ended January 31, 2014.
Current assets had an increase of ¥47,027 million (or 33.0%), and fixed assets had an increase of¥25,339 million (or 12.2%).
Current assets increased mainly due to an increase in cash and deposits of ¥8,488 million (or64.8%) and an increase in notes and accounts receivable-trade of ¥2,709 million (or 21.6%).
Fixed assets increased mainly due to an increase in machinery and transportation equipment of¥1,224 million (or 24.9%) and an increase in buildings and structures of ¥563 million (or 9.0%).
2) Liabilities
As of January 31, 2015, total liabilities amounted to ¥25,069 million, up ¥7,096 million (or 39.5%)
from the fiscal year ended January 31, 2014. Current liabilities had an increase of ¥2,453 million (or19.1%), and fixed liabilities had an increase of ¥4,642 million (or 90.1%).
Current liabilities increased mainly due to an increase in short-term borrowings of ¥494 million (or125.2%), an increase in accrued expenses of ¥478 million (or 40.5%) as included in other current
liabilities, an increase in income taxes payable of ¥381 million (or 33.0%), and an increase inaccrued account payable of ¥377 million (or 11.1%).
Fixed liabilities increased mainly due to an increase in long-term borrowings of ¥3,916 million (or194.7%) and an increase in deferred tax liabilities of ¥682 million (or 28.9%).
3) Net Assets
As of January 31, 2015, net assets amounted to 47,297 million, up ¥7,315 million (or 18.3%) fromthe fiscal year ended January 31, 2014.
This increase resulted mainly from an increase in foreign currency translation adjustment of ¥3,065
4Pigeon Corporation (7956) Summary of Financial Results for the Fiscal Year Ended January 2015

million (or 136.88%) and an increase in retained earnings of ¥4,453 million (or 16.5%).
4) Cash Flow
As of January 31, 2015, cash and cash equivalents (hereinafter referred to as “net cash”) amounted
to ¥21,590 million, up ¥8,488 million from a year earlier.
Cash Flows from Operating Activities
Net cash provided by operating activities amounted to ¥10,135 million, up from ¥7,930 million of
the previous year. Factors increasing operating cash flows included a ¥13,140 million in income
before income taxes and a ¥1,914 million in depreciation. Contrasting factors included an increaseof ¥1,312 million in trade receivables and a ¥3,444 million in income taxes paid.
Cash Flows from Investing Activities
Net cash used in investing activities totaled ¥3,134 million, down from ¥3,794 million of theprevious year. Main factors included expenditures of ¥2,682 million in the acquisition of property,
plant and equipment.
Cash Flows from Financing Activities
Net cash used in financing activities was ¥150 million, down from ¥3,163 million of the previous
year. Decreases resulted primarily from ¥1,000 million in repayment of short-term debt and ¥3,995
million in payment of cash dividends. Contrasting factors included a ¥1,390 million in proceedsfrom short-term debt and a ¥5,000 million in proceeds from long-term loans payable.
[Reference] Cash Flow Indicators for the Fiscal Year Ended January 31
FY2013

FY2014FY2015Equity Ratio (%)

65.3

67.5

63.8

Equity Ratio based on Market Price (%)

205.7

325.6

407.7

Debt Repayment Term (years)

0.4

0.4

0.8

Interest Coverage Ratio (times)

98.1

334.5

297.4

Notes:- Equity ratio: Total shareholders’ equity ÷ Total assets- Equity ratio based on market price: Market value of total stock ÷ Total assets- Debt repayment term: Interest-bearing debt ÷ Operating cash flows- Interest coverage ratio: Operating cash flows ÷ Interest paid
1. Each index is calculated based on consolidated financial figures.
2. Market value of total stock is calculated by multiplying the stock price (closing price at the end of the term) by the number of shares outstandingat the end of the term (after deduction of treasury stock).
3. Operating cash flow figures are taken from the Cash Flows from Operating Activities section of the Consolidated Statements of Cash Flows.
4. Interest-bearing debt refers to all debt that incurs interest (listed in Consolidated Balance Sheets).
5. For interest paid, interest expenses (listed in Consolidated Statements of Cash Flows) are used.

(3) Income Appropriation Policy
The Pigeon Group regards the return of income to shareholders as an important management
priority. Our policy is to actively return income to shareholders through appropriation of retained
earnings and other means, while reinforcing our financial position based on considerations of
medium-term changes in business conditions and the Group’s business strategies. In addition tostrengthening our financial position, we effectively use retained earnings in a number of ways tofortify our operational base and improve future Group earnings. These include investing in new
businesses for further growth and research and development, as well as investing in production
facilities to raise production capacity, reduce costs, and enhance product quality.
With respect to targets of shareholder return, under the Fifth Medium-Term Business Planannounced in March 2014, we are aiming to increase dividends compared to previous year andtargeting a consolidated total shareholder return of 45-50%.To this end, we are seeking to further
strengthen and upgrade measures for returning profits to all shareholders.
Based on such policies, with respect to the interim dividends for this fiscal year, an ordinary
dividend of ¥45 per share was made. With the strong performance that significantly exceeded thecurrent profit plan, with respect to the end of term dividend, the Company has planned an ordinary
5Pigeon Corporation (7956) Summary of Financial Results for the Fiscal Year Ended January 2015

dividend of ¥60 per share which represents an increase by ¥8 per share compared to forecast of theannual dividends released on Dec 1, 2014 (ordinary dividend per share ¥52).
As a result, the annual dividend for the fiscal year will total ¥105 per share, a per share increase by¥17 from the previous year. (Calculation is based on the number of shares after 2-for-1 stock split)
2. Management Policies(1) Basic Policies
By delivering on its corporate commitment, “providing the gift of love to all” in the form of
products and services, the Group deploys operations to fulfill its mission of bringing joy, happinessand delight to babies and families around the world. Guided by this philosophy, the Group has set inits medium-term corporate vision the goal of becoming global number one in its field, as the
producer of childcare products that is most trusted by the world’s parents and families.
(2) Performance Targets
The Group has drafted its fifth medium-term business plan, covering the period from February 1,
2015 to January 31, 2017, adopting the slogan, “Pursuing world class business excellence, thinkglobally, plan agilely, and implement locally”. By resolutely implementing the necessary measures,
the Group aims to achieve the following targets by the final year of the plan, the fiscal year ending
January 31, 2017: Net sales of ¥100 billion, operating income of ¥15 billion and net income of ¥9billion. Moreover, to achieve further improvements in profitability and capital efficiency, the Groupwill focus on management indices such as return on equity (ROE) and return on invested capital(ROIC), with the aim of attaining further improvements.
(3) Medium-Term Management Strategies
In its fifth medium-term business plan, covering the period from February 1, 2015 to January 31,
2017, the Group has stipulated Vision 2016 as outlined below, aiming to expand Group operations
and improve management quality.
< Vision 2016 >i) Strengthening brand power (Global Number One manufacturer of baby and child careproducts)ii) Reinforcing the management system toward a sustainable growth of our Group's businessiii) Improving management quality by focusing on cash flowiv) Fostering our Group’s global personnel, establishing human resources systems and promoting
its employees’ activitiesv) Further enhancing corporate value(4) Issues to Address
The Group expects uncertainty to linger in the economic environment in which it operates. A
substantial recovery in the Japanese economy is slow to arrive, while trends remain unclear in the
global economy and particularly in North America and Europe. However, the Group expects to see
continuation of the trend in which the nations of East Asia ex-Japan and other emerging nations
drive growth in the world economy.
To thrive in this environment, the Group is steadily implementing a series of measures in new
strategies drafted for each business segment, along with a functional strategy on which these arebased. In particular, the Group is focusing on overseas operations, which are positioned as acontinuing growth field. In this arena the Group will expand and deepen its presence in existing
markets, most notably in China and North America, while making determined inroads in newmarkets. In so doing, the Group aims for further expansion in business results.
Further, for enterprises, the primal mandate is the continuation of business and with respect to theGroup’s Business Continuity Plan, we will further enhance the global risk management structurethat has already been put in place.
Further, in order to further enhance the soundness and transparency of management going forward,
6

Pigeon Corporation (7956) Summary of Financial Results for the Fiscal Year Ended January 2015a through enforcement of internal control systems, including the compliance organization will bemade for fortifying corporate governance.

7

Pigeon Corporation (7956) Summary of Financial Results for the Fiscal Year Ended January 2015

3. Consolidated Financial Statement(1) Consolidated Balance Sheets(Thousands of yen)
At January 31, 2014ASSETS
I. Current Assets:
Cash and deposit
Notes and accounts receivable - trade
Merchandise and finished goods
Work in process
Raw materials and supplies
Deferred tax assets - current
Receivables
Other current assets
Allowance for doubtful accounts
Total Current Assets
II. Fixed Assets:
1. Tangible Fixed Assets:
Buildings and structures
Accumulated depreciation
Buildings and structures, net
Machinery and transportation equipment
Accumulated depreciation
Machinery and transportation equipment, net
Tools, furniture and fixtures
Accumulated depreciation and accumulated
impairment loss
Tools, furniture and fixtures, net
LandConstruction in progress
Total Tangible Fixed Assets
2. Intangible Fixed Assets:
Goodwill
Software
Other intangible fixed assets
Total Intangible Fixed Assets
3. Investments and Other Assets:
Investment securities
Bankruptcy claims
Deferred tax assets
Insurance reserve
Other
Allowance for doubtful accounts
Total Investments and Other Assets
Total Fixed Assets
Total Assets

8

At January 31, 2015

13,102,606
12,569,111
5,350,773
281,547
2,420,080
825,622369,348475,283(30,988)
35,363,386

21,590,935
15,278,435
5,899,152
242,058
2,357,688
772,892
396,872
520,206(31,073)
47,027,168

13,421,260(7,182,701)
6,238,559
12,998,456(8,076,077)
4,922,379
5,463,526

14,538,984(7,736,527)
6,802,457
6,223,775(4,519,669)
1,704,105
14,921,816(4,158,908)(8,775,324)

1,304,618
6,080,256
477,649
19,023,463

6,146,492
6,138,953
591,349
21,383,358

441,108
415,512584,710
1,441,331

302,173
486,464
935,717
1,724,355

1,448,245
45,441
120,483
206,197
350,241(43,424)
2,127,185
22,591,980
57,955,367

1,531,542
34,873130,823
214,125
356,075(35,242)2,232,197
25,339,911
72,367,080

Pigeon Corporation (7956) Summary of Financial Results for the Fiscal Year Ended January 2015

(Thousands of yen)
At January 31, 2014

At January 31, 2015

LIABILITIES
I. Current Liabilities:
Notes and accounts payable - trade

4,518,251

4,462,757

395,212890,205

Current portion of long-term loans payable

1,004,953

1,200,000

Accrued account payable

3,401,135

3,778,828

Income taxes payable

1,155,862

1,535,554

Accrued bonuses to employees

782,653783,744

Reversal of reserve for returned products

57,31846,207－

38,571Other current liabilities

1,503,546

2,536,873

Total Current Liabilities

12,818,934

15,272,743

Long-term borrowings

2,011,503

5,928,235

Deferred tax liabilities

2,356,706

3,038,815

287,276

315,383

323,894

342,566

175,438

172,121

Total Fixed Liabilities

5,154,818

9,797,120

Total Liabilities

17,973,753

25,069,864

Capital stock

5,199,597

5,199,597

Capital surplus

5,180,246

5,180,246

Retained earnings

26,929,960

31,383,875

Treasury stock(455,960)(942,114)

Total Shareholders’ Equity

36,853,843

40,821,604

30,52036,8112,240,472

5,306,072

2,270,992

5,342,883

856,777

1,132,727

39,981,614

47,297,215

57,955,367

72,367,080

Short-term borrowings

Provision for loss on litigation

II. Fixed Liabilities:

Net defined benefit liability
Provision for directors and corporate
auditors’ retirement benefits
Other fixed liabilities

NET ASSETS
I. Shareholders’ Equity:

II. Accumulated Other Comprehensive Income:
Valuation difference on available-for-salesecurities
Foreign currency translation adjustment
Total Accumulated Other
Comprehensive Income
III. Minority Interests
Total Net Assets
Total Liabilities, Minority Interests and Net
Assets9

Pigeon Corporation (7956) Summary of Financial Results for the Fiscal Year Ended January 2015

(2) Consolidated Statements of Income and Consolidated Statements of Comprehensive Income(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. Non-operating Income:Interest income
Dividend income
Foreign exchange gains
Equity in earnings of non-consolidated
subsidiaries and affiliates
Refund of consumption tax
Other
Total Non-operating Income
V. Non-operating Expenses:
Interest expense
Sales discounts
Other
Total Other Expenses
Ordinary Income
VI. Extraordinary Income:Gain on sales of property
Gain on negative goodwill
Total Extraordinary Income
VII. Extraordinary Loss:
Loss on sales of property
Loss on disposal of property
Provision for loss on litigation
Loss on recall
Total Extraordinary Loss
Income before Income Taxes
Income taxes - current
Income taxes - deferred
Total Corporate Income Tax
Income before Minority Interests
Minority interests in income
Net Income

10Year Ended
January 31, 2014
77,465,007
42,992,337
34,472,670
47,12355,431
34,464,362
24,098,736
10,365,625(Thousands of yen)
Year Ended
January 31, 2015
84,113,237
45,830,574
38,282,662
57,41444,01338,296,063
25,515,329
12,780,734

105,184
19,051410,098

189,276
2,730
162,186

58,102

23,56899,914
281,886
974,238

372,547
172,994
923,304

43,350258,685
35,547
337,583
11,002,280

64,795
293,076
46,982404,854
13,299,184

5,345
3,480
8,825

8,259

2,616
21,640－－24,257
10,986,848
3,077,667
705,869
3,783,537
7,203,311
217,640
6,985,670

4,817
24,36433,845
104,382
167,410
13,140,033
3,768,140
734,969
4,503,110
8,636,923
185,1448,451,778

8,259

(Consolidated Statements of Comprehensive Income)

Income before minority interests
Other comprehensive income
Valuation difference on available-for-salesecurities
Foreign currency translation adjustment
Total Other Comprehensive Incomes
Comprehensive Income(Breakdown)Comprehensive income on parent company
Comprehensive income on minority interests

11

Year Ended
January 31, 2014
7,203,311(Thousands of yen)
Year Ended
January 31, 2015
8,636,923

3,875

6,290

3,298,595
3,302,470
10,505,781

3,206,483
3,212,774
11,849,697

10,200,672
305,109

11,523,669
326,028

(3) Statement of Changes in Consolidated Shareholders’ Equity
Fiscal Year Ended January 31, 2014
(Thousands of yen)
Shareholders’ equity
Common stock
Balance at the
beginning of the period
Changes during theperiodDividends fromsurplus
Net income
Acquisition oftreasury stock
Changes in items
other thanshareholders’ equity(net)
Total changes during
the period
Balance at the end ofcurrent period

5,199,597

CapitalsurplusRetainedearnings

Treasurystock

5,180,246

22,686,099(450,289)

32,615,653(2,741,809)(2,741,809)

6,985,670

6,985,670(5,671)(5,671)－－

4,243,861(5,671)4,238,189

5,199,597

5,180,246

26,929,960(455,960)

36,853,843

Minority
interests

Total net
assets

Accumulated other comprehensive income
Total
Valuation
Foreignaccumulateddifference on
currency
otheravailable-for-saletranslation
comprehensive
securities
adjustment
incomeBalance at the
beginning of theperiodChanges during theperiodDividends fromsurplus
Net income
Acquisition oftreasury stock
Changes in items
other thanshareholders’ equity(net)
Total changes during
the period
Balance at the end ofcurrent period

Totalshareholders’equity26,644(970,653)(944,008)

693,726

32,365,371(2,741,809)
6,985,670(5,671)

3,875

3,211,126

3,215,001

163,051

3,378,053

3,875

3,211,126

3,215,001

163,051

7,616,243

30,5202,240,472

2,270,992

856,777

39,981,614

12

Fiscal Year Ended January 31, 2015
(Thousands of yen)
Shareholders’ equity
Common stock
Balance at the
beginning of the period
Changes during theperiodDividends fromsurplus
Net income
Acquisition oftreasury stock
Changes in items
other thanshareholders’ equity(net)
Total changes during
the period
Balance at the end ofcurrent period

5,199,597

5,199,597

CapitalsurplusRetainedearnings

Treasurystock

5,180,246

26,929,960(455,960)

5,180,246

30,5202,240,472

36,853,843(3,997,863)(3,997,863)

8,451,778

8,451,778(486,154)(486,154)

4,453,914(486,154)

3,967,760

31,383,875(942,114)

40,821,604

Accumulated other comprehensive income
Total
Valuation
Foreignaccumulateddifference on
currency
otheravailable-for-saletranslation
comprehensive
securities
adjustment
incomeBalance at the
beginning of theperiodChanges during theperiodDividends fromsurplus
Net income
Acquisition oftreasury stock
Changes in items
other thanshareholders’ equity(net)
Total changes during
the period
Balance at the end ofcurrent period

Totalshareholders’equity2,270,992

Minority
interests

856,777

Total net
assets39,981,614(3,997,863)
8,451,778(486,154)

6,290

3,065,599

3,071,890

275,950

3,347,840

6,290

3,065,599

3,071,890

275,950

7,315,601

36,811

5,306,072

5,342,883

1,132,727

47,297,215

13

(4) Consolidated Statements of Cash Flows
Year Ended
January 31, 2014
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 provision for employees’
retirement benefits
Increase (decrease) in provision for directors andcorporate auditors’ retirement benefits
Interest and dividend income
Share of (gain) loss of entities accounted forusing equity method
Interest expense
Foreign exchange loss (gain)
Loss (gain) on sale of property
Loss on disposal of property
Decrease (increase) in notes and accounts
receivable - trade
Decrease (increase) in inventories
Increase (decrease) in notes and accounts
payable - trade
Increase (decrease) in account 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 Operating Activities
II. Cash Flows from Investing Activities:
Purchase of property, plant and equipment
Proceeds from sales of property, plant andequipment
Purchase of intangible assets
Purchase of investment securities
Purchase of investments in subsidiaries
Purchase of insurance funds
Proceeds from cancellation of insurance funds
Payments of loans receivableCollection of loan receivables
Payment for lease deposits
Collection of lease deposits
Other
Net Cash Used in Investing Activities

14(Thousands of yen)
Year Ended
January 31, 2015

10,986,848
1,865,351
205,951

13,140,033
1,914,284
180,292(707)(11,978)

163,978(22,032)(39,548)

18,506(65,870)

18,671(124,236)(192,007)(58,102)(23,568)

43,350(377,564)(2,728)21,64064,795(282,987)(3,441)
24,564(587,612)(1,312,697)(480,119)

136,281(154,424)(721,411)(1,534)(123,120)(110,848)
412,686

8,698

10,568(218,452)
11,061,797
133,527(23,705)(3,241,602)
7,930,017

295,223
13,534,934
79,271(34,083)(3,444,658)
10,135,463(3,223,309)(2,682,791)

15,96948,472(453,270)(1,825)(87,300)(8,754)
41,492(1,995)
1,678(17,606)
12,193(71,735)(3,794,463)(472,653)(1,846)－(7,178)－(2,194)
2,151(39,678)
36,399(14,804)(3,134,124)

Year Ended
January 31, 2014
III. Cash Flows from Financing Activities:
Increase in short-term loans payable
Decrease in short-term loans payable
Proceeds from long-term loans payable
Repayments of long-term loans payable
Payment of cash dividends
Cash dividends paid to minority shareholders
Purchase of treasury stock
Other
Net Cash Used in Financing Activities
IV. Effect of Exchange Rate Changes on Cashand Cash Equivalents
V. Net Increase (Decrease) in Cash and Cash
Equivalents
VI. Cash and Cash Equivalents at Beginning of
PeriodVII. Cash and Cash Equivalents at End of
Period15(Thousands of yen)
Year Ended
January 31, 2015

7,079,810(8,153,100)
752,444(29,688)(2,740,876)(51,276)(5,671)(14,923)(3,163,282)

1,390,866(1,000,000)
5,000,000(1,005,031)(3,995,361)(50,078)(486,154)(4,669)(150,427)

1,556,008

1,637,416

2,528,280

8,488,328

10,574,326

13,102,606

13,102,606

21,590,935

(5) Notes on Consolidated Financial Statements(Notes Regarding Going Concern Assumptions)Not applicable.
(Changes in Accounting Policies)
Changes in the Method for Determining Depreciation of Tangible Fixed Assets
Our Group and its consolidated subsidiaries previously used the declining-balance method for
depreciation and amortization of tangible fixed assets (straight-line method had been applied tobuildings, excluding facilities attached to buildings, acquired after April 1, 1998), but effective fromthis consolidated fiscal year, the straight-line method has been applied to all tangible fixed assets.
In our Group’s fifth medium-term business plan, effective from this current consolidated fiscal year,
taking into consideration our Group’s further global business development going forward and thesubstantial growth in corporate earnings expected overseas, the change in method was madefollowing a review of the investment effect of tangible fixed assets from the perspective ofintegrating Group accounting policies and properly adjusting periodic income, as it has been
motivated by changes in our Group’s capital investment circumstances. Consequently, property,
plant and equipment held by our Group and its consolidated subsidiaries generally are subject tosteady operation over their expected lifetime. In addition, as we can expect also from our Group’s
product lines to generate stable profits, the change has been implemented because, firstly, it isreasonable, from a cost distribution point of view, to adopt the straight-line method as adepreciation method for the tangible fixed assets, and secondly, the economic conditions should be
more appropriately reflected by doing so.
As a result of this change, operating income, ordinary income, and net income before income taxes
all increased by ¥189,891 thousand compared with the results under the previous method.
(Change in Method of Presentation)
With the application of the “Accounting Standard for Retirement Benefits” (ASBJ Statement No.26,
May 17, 2012) and “Guidance on Accounting Standard for Retirement Benefits” (ASBJ Guidance
No.25, May 17, 2012), those indicated as “provision for employees’ retirement benefits” in theprevious consolidated accounting year are shown as “net defined benefit liability” from thisconsolidated accounting year.
(Change in Basis of Presenting Consolidated Financial Statements)
Revisions to amounts of the deferred tax asset and deferred tax liability due to change in rate ofcorporate income tax“Act for Partial Revision of the Income Tax Act, etc.” (Law No. 10 of 2014) will be promulgatedon March 31, 2014, and a special corporate tax for reconstruction will not be imposed from thefiscal year which starts on or after the April 1, 2014. Accordingly, the effective tax rate used to
calculate deferred tax assets and deferred tax liabilities will change from 38.0% to 35.6% for those
expected to be recovered or paid on or after the fiscal year 2015 (February 1, 2015 to January 31,2016).
The effects to deferred tax assets, deferred tax liabilities, and income taxes-deferred for this fiscal
year are immaterial.

16

(Segment Information)
1. Summary of Reporting Segments
In respect of the Company’s reporting segments, these are, of the constituent units in the Group,
those for which separate financial information are available and those that are the subject of regularexamination by the board of directors to make decisions on management resource allocation andassessment of performance.
The Company separates sales of principally nursing products into domestic and overseas sales and,in addition, is engaged in providing sales and services relating to health care and nursing care,services relating to supporting childcare. The Company has established business headquarters
along products, services, and regions.
For this purpose, the Company is configured by segments by products and services and by regions
and constituted by 4 reporting segments, namely, “Domestic Baby and Mother Care Business”,“Child-rearing Support Services”, “Health Care and Nursing Care Business” and “Overseas
Business”.
The Company’s reporting segment types are as follows.
(i) Domestic Baby and Mother Care Business
It is engaged in the manufacture and sales of childcare products and feminine products in Japan.
(Principal Products) Breastfeeding-related products, weaning-related products, skincare products,
wet tissues, baby foods, baby outing products, feminine care products (supplements,
maternity products), other(ii) Child-rearing Support Services
It is engaged in provision of child-rearing support services in Japan.
(Principal Services) Operation and contracting of nursery facilities, operation of preschool
educational facilities, babysitter dispatch services, other(iii) Health Care and Nursing Care Business
It is engaged in the manufacture and sales of health care products and nursing care products as wellas provision of nursing care services in Japan.
(Principal Products) Incontinence protection products, skincare products, wet tissues, wheel chairs,
products for nursing care facilities, nursing care support services, other(iv) Overseas Business
It is engaged in the manufacture and sale of principally child-rearing products and feminine careproducts for overseas countries.
2. Calculation Method for the Values in Segmental Sales, Income or Losses, Assets and Other Items
The methodology adopted in calculating the segmental sales, profits or losses, assets and otheritems is generally the same as in “Basis for preparing Consolidated Financial Statements”.

17

3. Information Regarding Net Sales, Profit (Loss), Assets and Other Items in Each Reporting Segment
Fiscal Year Ended January 2014
(Thousands of yen)
Reporting Segment
Domestic
Health Care
Child-rearing
Baby andand Nursing
SupportMother Care
Care
Services
Business
Business
Net Sales
Net sales toexternalcustomers
Internal salebetweensegments, or
exchange

Overseas
Business

China
Business

21,683,867 76,313,096

Sub Total

Other
Businesses(Note) 1

Total

AmountAdjustments Accounted on(Note) 2
Quarterly(Note) 3
Consolidated(Note) 4
Statements of(Note) 5
Income(Note) 6－

77,465,007

3,745,305(3,745,305)－

21,683,867 76,313,096

1,151,911 77,465,007(3,745,305)

77,465,007

3,798,120

5,997,633 13,972,292

204,390 14,176,682(3,811,056)

10,365,625

14,891,988

19,718,580 49,615,791

1,085,308 50,701,099

7,254,267

57,955,367

24,451,183

6,599,506

6,721,454

16,857,087

－

－

－

3,448,890

Total

24,451,183

6,599,506

6,721,454

16,857,087

Segment profit

3,411,850

176,026

212,061

Segment asset

10,372,814

1,214,589

3,417,813

296,415

3,745,305

1,151,911 77,465,007－

Other Items
Depreciation
376,917
29,571
108,709555,801
538,533 1,609,533
47,067 1,656,600
208,751
1,865,351(Note) 7
Amortization of
3,720
202,231205,951
205,951
205,951－－－－－
Good Will
Increase in
Tangible Fixed
Assets and508,748
23,146
110,573
1,053,440
1,754,106 3,261,794
47,345 3,309,139
266,438
3,575,578
Intangible Fixed
Assets(Note) 8(Notes)1. “Other” represents a business segment not included in the reporting segments and principally covers manufacture and sales by
manufacturing subsidiaries of the company for sales outside the Group.
2. The negative amount of ¥3,434,457 thousand from adjustments in segment profits includes ¥376,599 thousand in elimination ofintersegment transactions, and a negative ¥3,811,057 thousand in non-allocable operating expenses. Non-allocable operating expenses aremainly administrative costs of our Group.
3. Segment asset adjustments are all company assets and consist principally of investments of surplus of the parent company (Cash andDeposits), long term investment assets (Investment Securities and the Like) and assets relating to the administrative area.
4 Depreciation adjustments is depreciations relating the entire company assets。
5 Tangible fixed assets and intangible assets relate to all company assets。
6. Segment profit has been adjusted with the operating income in the consolidated financial statements
7. Amortization relating to long term pre-paid expenses are included in the depreciation expenses。
8. Increases in tangible fixed assets and intangible fixed assets include increases in long term pre-paid expenses。

18

Fiscal Year Ended January 2015
(Thousands of yen)
Reporting Segment
Domestic
Health Care
Child-rearing
Baby andand Nursing
SupportMother Care
Care
Services
Business
Business
Net Sales
Net sales toexternalcustomers
Internal salebetweensegments, or
exchange

Overseas
Business

China
Business

25,776,288 82,837,060

Sub Total

Other
Businesses(Note) 1

Total

AmountAdjustments Accounted on(Note) 2
Quarterly(Note) 3
Consolidated(Note) 4
Statements of(Note) 5
Income(Note) 6－

84,113,237

4,754,986(4,754,986)－

26,301,701 82,837,060

1,276,176 84,113,237(4,754,986)

84,113,237

4,969,294

7,525,898 16,698,319

173,406 16,871,725(4,090,991)

12,780,734

18,234,518

24,224,772 58,471,865

1,265,630 59,737,496

12,629,583

72,367,080

24,432,198

6,722,562

6,761,631

19,144,378

－

－

－

4,229,573

Total

24,432,198

6,722,562

6,761,631

23,373,952

Segment profit

3,752,460

189,985

260,699

Segment asset

10,984,153

1,264,594

3,763,827

525,4124,754,986

1,276,176 84,113,237－

Other Items
Depreciation
283,918
19,441
75,279644,352
667,984 1,690,976
36,171 1,727,147
187,136
1,914,281(Note) 7
Amortization of
2,790
270,383
302,173
302,173－－－－－－
Good Will
Increase in
Tangible Fixed
Assets and942,606
20,806173,3031,510,373
593,482 3,240,573
187,407
187,407333,246
3,761,226
Intangible Fixed
Assets(Note) 8(Notes)1. “Other” represents a business segment not included in the reporting segments and principally covers manufacture and sales by
manufacturing subsidiaries of the company for sales outside the Group.
2. The negative amount of ¥4,090,991 thousand from adjustments in segment profits includes a negative ¥19,948 thousand in elimination ofintersegment transactions, and a negative ¥4,110,940 thousand in non-allocable operating expenses. Non-allocable operating expenses aremainly administrative costs of our Group.
3. Segment asset adjustments are all company assets and consist principally of investments of surplus of the parent company (Cash andDeposits), long term investment assets (Investment Securities and the Like) and assets relating to the administrative area.
4 Depreciation adjustments is depreciations relating the entire company assets。
5 Tangible fixed assets and intangible assets relate to all company assets。
6. Segment profit has been adjusted with the operating income in the consolidated financial statements
7. Amortization relating to long term pre-paid expenses are included in the depreciation expenses。
8. Increases in tangible fixed assets and intangible fixed assets include increases in long term pre-paid expenses。

4. Matters concerning Changes in the Reporting Segments
Starting with the first quarter of the consolidated current term, our Group made changes in its
business classification, reorganizing its business in five reporting segments – “Domestic Baby andMother Care Business”, “Child-rearing Support Services”, “Health Care and Nursing Care
Business”, “Overseas Business”, and “China Business” - as the latter, included before in theOverseas Business segment, had increased in importance.
In addition, please note that, the reporting segments disclosed in the previous fiscal year differ as
they were prepared pursuant to the reporting segment classification subsequent to the changes andreflected in this consolidated financial report.
5. Changes in the Method for Determining Depreciation of Tangible Fixed Assets
As stated in the “Changes in Accounting Policies” (page 15), our Group and its consolidated
subsidiaries have switched to the straight-line method from the depreciation method for a part of its
tangible fixed assets, effective from the consolidated accounting year under review.
The impact of this change on segment profits rose by ¥105,778 thousand in “Domestic Baby andMother Care Business”, ¥3,897 thousand in “Child-rearing Support Services”, ¥16,879 thousand in“Health Care and Nursing Care Business”, ¥18,971 thousand in “Overseas Business”, and ¥13,931
thousand in “Other Businesses”. Also, the amount of not-allocable operating expenses recorded an
19increase of ¥30,433 thousand.
(Per Share Information)
Previous fiscal year

Current fiscal year

(February 1, 2013 to January 31, 2014)(February 1, 2014 to January 31, 2015)¥977.49¥174.52¥260.93¥211.65

Net Assets per ShareNet Income per Share(Notes) 1. With respect to Net Income for the Term after Adjustments for Latent Shares, there are no latent shares existing, thus, has
not been included.
2. The basis for the calculation of the Net Income per Share is as follows.

Net Income (¥ thousands)
Amount not Attributable to Ordinary
Shareholders (¥ thousands)
Net Income Relating to Ordinary
Shares (¥ thousands)
Average Number of Shares during theTerm (shares)

Previous fiscal year

Current fiscal year

(February 1, 2013 to January 31, 2014)(February 1, 2014 to January 31, 2015)

6,985,670

8,451,778－－

6,985,670

8,451,778

40,026,022

39,932,252

3. Our Group carried out a 2-for-1 stock split with respect to its common stock, effective as of August 1, 2013. The figures for
net assets per share and net income per share are calculated on the assumption that this stock split had been conducted at
the beginning of the fiscal year ended January 31, 2014.

(Material Subsequent Events)
Capital increase in a consolidated subsidiary
We determined to increase the capital of PIGEON (SHANGHAI) CO., LTD, a consolidated
subsidiary, at a meeting of the Board of Directors held on January 13, 2015.
1. Reason for capital increase
In order to establish a base of business and strengthen the administrative function of the Groupbusiness corresponding to business expansion in China, we plan to change the subsidiary to“a regional-headquarters of the multinational firm with administrative function” and satisfy therequirement.
2. Details of the capital increase
The amount of capital increase: 1,050,000 US$
Date of capital increase:
February, 2015
3. Overview of concerned subsidiary
Company name: PIGEON (SHANGHAI) CO., LTD
Location:
Shanghai, People’s Republic of China
Capital stock before capital increase: 950,000 US$ (wholly-owned subsidiary)
Capital stock after capital increase:2 million US$ (wholly-owned subsidiary)20