Summary of Consolidated Financial Results for Six Months
Ended July 31, 2008
September 5, 2008
Company name: Pigeon Corporation
Listings: First Section, Tokyo Stock Exchange (Stock code: 7956)
Phone: ++81-3-3661-4188
Website: www.pigeon.co.jp
Representative: Akio Okoshi (President and COO)
Contact: Isao Kosaka (Managing Officer, Corporate Planning Division)
Date of release of Semiannual Business Report: October 23, 2008
Dividends: Paid from October 23, 2008(¥ millions, rounded down)

1. Consolidated Interim Financial Results (February 1–July 31, 2008)(1) Performance (six months ended July 31)
2008
2007
Year to Jan. 31,
2007(¥ millions, rounded down; % figures denote year-on-year change)
Net sales
Operating income
Ordinary income
Net income
26,662
11.8% 2,118
39.8% 2,104
41.6%
1,363 51.9%
23,841
7.9% 1,515
8.8% 1,486
10.1%
897 (14.7%)
49,237
3,192
3,177
1,471
-

Net income per share (¥)
2008
39,237
2007
37,689Year to Jan. 31, 2007
[Reference] Equity in earnings of affiliates:
Six months to July 31, 2008: ¥24 million
Six months to July 31, 2007: ¥34 million
Year to Jan. 31, 2008: ¥77 million

68.28
45.09
73.90

Fully diluted net income pershare (¥)
45.03
73.82

(2) Financial Position (at July 31)
Total assets
2008
39,237
2007
37,689At Jan. 31, 2007
37,441[Reference] Equity:
July 31, 2008: ¥24,138 million
July 31, 2007: ¥23,420 million
Jan. 31, 2008: ¥23,369 million

Net assets
24,52823,826
23,831(¥ millions, rounded down)
Equity ratio (%)
Net assets per
share (¥)
61.4%
1,205 8362.1%
1,176 5062.4%
1,173 88

(3) Cash Flows (six months ended July 31)

2008
2007
Year to Jan. 31,
2007

Cash flows fromoperatingactivities
473
715
3,707

Cash flows frominvestingactivities
(289)
(914)
(2,443)

Cash flows fromfinancing
activities
381
572
(172)

Cash and cash
equivalents at
term-end
4,206
3,156
3,775

2. Cash Dividends
InterimYear to Jan. 2008
Year to Jan. 2007
Year to Jan. 2008 (est.)

13 00
23 00

Cash dividends per share (¥)
Year-end
Full year
15 00
28 00
23 00

46 00

3. Forecast for Fiscal Year Ending January 2009
Net sales
Full year

54,000 9.7%(¥ millions, rounded down; % figures denote year-on-year change)
Operating
Ordinary
Net income
Net income
incomeincomeper share (¥)
4,000 25.3%
4,000 25.9%
2,600 76.7% 129 88

4. Other(1) Major changes in scope of consolidation during period under review: None
(2) Changes in accounting treatment during period under review (changes in major items
pertaining to preparation of interim financial statements):(a) Changes in accounting standards: None(b) Other changes: None
(3) Shares issued and outstanding at end of period (common stock):(a) Shares outstanding (including treasury stock):
July 31, 2008: 20,275,581
July 31, 2007: 20,275,581
Jan. 31, 2007: 20,275,581(b) Treasury stock:
July 31, 2008: 257,793
July 31, 2007: 368,907
Jan. 31, 2007: 368,194

[Reference] Non-Consolidated Financial Results

1. Non-Consolidated Interim Financial Results (February 1–July 31,
2008)(1) Performance (six month ended July 31)
2008
2007
Year to Jan. 31,
2007(¥ millions, rounded down; % figures denote year-on-year change)
Net sales
Operating income
Ordinary income
Net income
16,015
4.9%
1,100
62.0%
919
48.3%
399
71.4％
15,263
1.4%
679
28.5%
619
(16.3%)
232(11.2%)
30,785
395
1,051
297

2008
2007
Year to Jan. 31, 2007

Net income per share (¥)
46 02
31 14
14 93

(2) Financial Position (at July 31)
Total assets
At July 31, 2007
28,531At July 31, 2006
28,588At Jan. 31, 2007
27,258[Reference] Equity:
July 31, 2007: ¥19,281 million
July 31, 2008: ¥19,097 million
Jan. 31, 2008: ¥18,487 million

Net assets
19,281
19,09718,487(¥ millions, rounded down)
Equity ratio (%)
Net assets per
share (¥)
67.6%
963 1966.8%
959 35
67.8%
928 66

3. Forecast for Fiscal Year Ending January 31, 2009
Net sales
Full year

32,000 3.9%(¥ millions, rounded down; % figures denote year-on-year change)
Operating
Ordinary
Net income
Net income
incomeincomeper share (¥)
550 39.1%
1,400 33.1%
1,050 253.1% 52 45

Appropriate use of performance forecasts
For information on assumptions and other matters related to the above forecasts, pleaserefer to the “1. Performance and Financial Position” section, starting page XX.
(Caution regarding forward-looking statements)
1. Performance forecasts and other forward-looking statements contained in thisdocument are based on available information and certain assumptions deemed
reasonable by the Company. Actual results may differ considerably from suchstatements, due to various factors.
2. After considering its results in the interim period under review and its outlook forthe future, the Company has made upward revisions to its forecasts for the fiscal year
ending January 31, 2009.

1. Performance and Financial Position
1. Performance(1) Environment and Results
The fiscal year ending January 2009 is the first year of the Pigeon Group’s third new
medium-term management plan—“Becoming a Global Company: Challenges andIndependence”—covering the three-year period from February 2008 to January 2011.
In the interim period under review, we steadily pursued initiatives reflecting basic
policies aimed at achieving the core objectives of the plan. For example, we focusedmanagerial resources on our overseas business, which serves as a growth driver for
the Group. Following appropriate strategies, we sought to strengthen and entrenchbrand loyalty in overseas markets and actively expanded our business in existing
markets, notably China and the United States. In the healthcare segment, we focusedon improving productivity and profitability in existing businesses while aggressively
nurturing Recoup, our new nursing care prevention brand.
Accordingly, we made good progress in implementing our various strategies,
including for our overseas business. Net sales for the interim period amounted to¥26,662 million, up 11.8% from the previous corresponding period. On the earnings
side, operating income jumped 39.8%, to ¥2,118 million, and ordinary income surged
41.6%, to ¥2,104 million, owing mainly to expansion of our highly profitableoverseas business, which compensated for rising prices of raw materials. For theperiod, we posted an extraordinary loss of ¥91 million, representing the cost of thevoluntary recall since February 2008 of Sterilizer Bag for Microwave Oven.
Nevertheless, net income rose 51.9%, to ¥1,363 million.
(2) Segment Review
Baby and Child Care
Sales in this segment amounted to ¥21,373 million, up 13.0% year-on-year. Operating
income grew 21.9%, to ¥3,279 million. This segment consists of three categories:
Domestic Baby and Child Care Products, Overseas Business, and Child-Rearing
Support Services.
Domestic Baby and Child Care Products: Conditions have remained difficult in thisbusiness as a recovery in childbirths shows no signs of materializing, while consumer
sentiment has been impacted by rising costs of food and gasoline amid surging pricesof raw materials. Under these circumstances, Pigeon sought to enhance its
responsiveness to changing market conditions. Specifically, in February 2008 westrengthened our organization by integrating two divisions—the Marketing Division,
responsible or planning and formulation strategies, and the Sales Division, which
implements those strategies—to form an new entity called the Domestic Baby andMother Business Division. We also launched new products, such as a breast pad forfirst-time mothers and a handy manicure set, and we upgraded existing products, suchas our haircare series. During the period, we continued holding maternity events andhosted a broad range of other forums, including experiential, seminar-style concerts.
More than 1,500 people participated in these events. In addition, we aggressively
promoted our offerings to hospitals, and we actively introduced original items andnew products on our Pigeon Mall shopping website, thus building a foundation forsales expansion. As a result, sales in the Domestic Baby and Child Care Products
category increased slightly year-on-year.
Overseas Business: For the period, we achieved year-on-year sales increases inpractically all regions, including China and the United States. In China, expansion ofmainstay offerings, such as skincare products, baby bottles, baby bottle nipples, andbreast pads, together with the introduction of new products provided a solid revenue
boost. In North America, we steadily advanced our business without feeling theimpact of the slowing U.S. economy. In July 2008, we opened a preparatory
representative office in Mumbai, India, which has since started gathering information,
expanding sales channels, and building the Pigeon brand on a full-scale basis.
Meanwhile, January 2008 saw the opening of our new plant in China. The plant hascommenced mass production of baby bottle nipples, detergents, and other products
and is preparing to begin mass production of skincare products in the autumn.
Child-Rearing Support Services: In this category, we continued pursuing proactive
sales initiatives, including in-company child-minding operations. During the interim
period under review, we were newly entrusted with the operation of five daycare
facilities. We also continued holding education forums through Pigeon Heartner Open
College, which provides training for child-minders. In this way, we sought to makequalitative improvements to our child-minding capabilities.
Healthcare
Sales in this segment increased 3.4% year-on-year, to ¥3,271 million, and operating
income rose 3.2%, to ¥128 million. With respect to the Habinurse brand of nursing
care-related products, we complemented existing items with the launch of new andmodified ones, including a wide-type incontinence pad for long-period or night use.
Regarding the new Recoup brand of nursing care prevention products, we promoted a
new supporter for reducing strain on the body. We also held events aimed at raising
recognition of Recoup on eight occasions, attracting 270 participants. For both the
Habinurse and Recoup brands, we will increase the speed of product development inorder to deliver high-quality products that match the needs of elderly people.
OthersSales from other operations totaled ¥2,017 million, up 14.6% year-on-year. Operating
income grew 13.8%, to ¥270 million. Pigeon Will Co., Ltd., a consolidated subsidiarythat sells maternity undergarments, generates most of the revenue in this segment.
During the period, we also posted increased sales of Folic Acid Plus, an easy-to-takevitamin supplement containing all the nutrients necessary while pregnant andbreastfeeding. In addition, we posted healthy sales growth in China, where we areadvancing a skincare line for women.
(3) Outlook
After considering its performance in the period under review, Pigeon has decided torevise its full-year forecasts for the year ending January 2009 (those forecasts wereannounced on March 6, 2008). Our new forecasts, announced on August 29, 2008, areas follows: net sales of ¥54.0 billion (up 9.7% year-on-year), operating income of¥4.0 billion (up 25.3%), ordinary income of ¥4.0 billion (up 25.9%), and net incomeof ¥2.6 billion (up 76.7%). Despite concerns about the impact of languishing domestic
childbirths and soaring prices of raw materials, we are confident of achieving theseforecasts.

2. Financial Position(1) Assets
As of July 31, 2008, Pigeon had consolidated total assets of ¥39,327 million, up¥1,886 million (or 5.0%) from January 31, 2008. Within this amount, total current
assets rose ¥2,387 million (12.3%), while total fixed assets declined ¥500 million(2.8%).
Major factors boosting current assets were a ¥1,988 million (20.5%) increase innotes and accounts receivable and a ¥409 million (9.2%) increase in inventories.
(2) Liabilities
Total liabilities at interim term-end stood at ¥14,799 million, up ¥1,189 million(8.7%) over the interim period. Current liabilities increased ¥821 million (6.8%), andlong-term liabilities rose ¥368 million (23.8%).
Main factors boosting current liabilities were a ¥238 million (4.6%) increase innotes and accounts payable and a ¥1,191 million (70.8% jump) in short-term bankloans, which outweighed a ¥1,020 million (98.1%) drop in current portion of longterm debt.
The main reason for the increase in long-term liabilities was a ¥372 million risein long-term debt (from zero on January 31, 2008).
(3) Net Assets
At July 31, 2008, consolidated net assets amounted to ¥24,528 million, up ¥696
million (2.9%) from January 31. This increase resulted mainly from a ¥1,065 million(8.0%) rise in retained earnings.
(4) Cash Flows
Cash and cash equivalents at July 31, 2008, stood at ¥4,206 million, up ¥430 million(11.4%) from January 31, 2008 (and up 33.3% from July 31, 2007).
Factors boosting cash and cash equivalents included ¥1,982 million in income
before income taxes (up 26.6% year-on-year), ¥763 million in depreciation (up 8.7%),
and a ¥407 million increase in notes and accounts payable (¥79 million decrease in
the previous corresponding period). Contrasting factors included a ¥2,173 million
increase in notes and accounts receivable (up 103.4%), and ¥690 million in
acquisition of property, plant, and equipment (up 8.7%).
Net cash provided by operating activities amounted to ¥473 million, down
33.9% from the previous corresponding period. Factors boosting operating cash flows
included ¥1,982 million in income before income taxes (up 26.6%), ¥763 million in
depreciation (up 8.7%), and a ¥407 million increase in notes and accounts payable(¥79 million decrease in the previous corresponding period). Contrasting factors
included a ¥2,173 million increase in notes and accounts receivable (up 103.4%).
Net cash used in investing activities totaled ¥289 million, down 68.4%. Main
factors included ¥498 million in transfers to time deposits (zero in the previous
corresponding period) and ¥801 million in acquisition of tangible and intangible fixed
assets (down 2.7%).
Net cash provided by financing activities was ¥381 million, down 33.3%. This
resulted primarily from a ¥525 million net decrease in short- and long-term debt

(down 40.9% from the previous corresponding period).
(5) Cash Flow Indicators

Equity ratio (%)
Equity ratio based on market price (%)
Debt repayment term (years)
Interest coverage ratio (times)

Six months
to July. 2007
62.1
101.8
2.3
32.5

Six months
to July. 2008
61.4
127.2
3.6
11.6

Year to Jan.
2008
62.4
90.7
0.7
91.4

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

3. Profit Appropriation Policy
The Pigeon Group regards the return of profits to shareholders as an importantmanagement priority. Our policy is to actively return profits to shareholders throughappropriation of retained earnings and other means, while reinforcing our financial
position based on considerations of medium-term changes in business conditions andthe Group’s business strategies. In addition to strengthening our financial position, we
effectively use retained earnings in a number of ways to fortify our operational baseand improve future Group earnings. These include investing in new businesses andresearch and development, as well as investing in production facilities to raise
production capacity, reduce costs, and enhance product quality.
With respect to specific goals of shareholder return, under our medium-term
management plan announced in March 2008, we are targeting a consolidated dividend
payout ratio of 50% by the year ending January 2011, the final year of the plan. To
this end, we are seeking to further strengthen and upgrade measures for returning
profits to all shareholders. Based on this policy, we plan to declare an interim cash
dividend of ¥23.00 per share and a year-end dividend also of ¥23.00 per share.

4. Business Risks
The operating results of the Pigeon Group may be potentially and significantly
affected by various factors that could occur in the future. The Group has identified the
major risks that could affect its business development. Details are given below.
Information contained within related to the future is based on the Group’s judgment
as of the end of the period under review.

(1) Declining Birthrate
We predict that overall (quantitative) demand in the domestic market for baby andchild care products, the Group’s main business, will be influenced by the fallingbirthrate, and sales in this segment may decline as a result.
(2) Overseas Business Risk
At present, the Group makes products in Thailand, China, and Indonesia, and also hasbusiness activities elsewhere in Asia, as well as in the Middle East, North America,
and Europe. Risks associated with our overseas business are described below. We will
hedge against such risks to the extent possible, but various unforeseen factors could
potentially affect our business performance.
- Legal revisions or tightening regulations that have a negative impact on the Group- Socioeconomic upheaval caused by terrorist acts, war, or the outbreak of infectious
diseases, such as SARS and avian influenza- Earthquakes and other natural disasters- Unforeseen foreign exchange fluctuations(3) Climactic and Natural Disasters
The markets for baby and child care products and healthcare products, the Group’s
mainstay businesses, are relatively impervious to weather-related factors. However,the sudden occurrence of natural and other disasters or unprecedented accidents could
cause losses in the form of damage to manufacturing and distribution facilities,
forfeiture of assets, or suspension in supply of products. The Group’s business results
could be affected as a result.
(4) Changes in Raw Materials Prices
Major raw materials used by the Group include some that are affected by the market
prices of crude oil and pulp. If the prices of such materials rise, our manufacturingcosts will also increase. Depending on circumstances, the Group may be unable topass such increases onto its sales prices, thus potentially affecting its business results.
(5) Problems with Manufacturing Subcontractors
The Group subcontracts part of the production of baby and child care products andhealthcare products to outside manufacturers. While all due care is taken to ensure top
quality, there is a risk that quality could be compromised by an unforeseen event, and
the Group’s business performance could be affected as a result.
(6) Changes in Laws and Regulations
In the course of developing its domestic business, the Group is subject to a variety oflegal regulations, including the Pharmaceutical Affairs Law, Food Sanitation Law,
and Product Liability Law. If such laws and regulations are revised, or unexpected
ones introduced, the Group’s business performance could be affected as a result.
(7) Risks Related to the Child-Rearing Support BusinessTo assist families in which both parents are working, the Group offers a number ofservices, including operation of child-minding and daycare centers and provision ofbabysitter dispatch services. It also has its own Kids World chain of child-minding
centers. Through these activities, the Group is entrusted with the care of numerous
babies and toddlers. The Group takes every precaution to ensure maximum safety, butacknowledges the possibility that an accident could cause injury to a baby or toddler.
To date, there have been no accidents or compensation claims that could affect theGroup’s business operations. However, there is no guarantee that such events will notoccur in the future. If such an event does occur, the Group’s business performance
may be affected as a result.
(8) Litigation Risk
As a manufacturer of products for consumers, the Group recognizes the extreme
importance of being regarded as a supplier of high-quality, safe products made ofreliable materials. Complaints about product reliability and safety could cause a sharp
decline in revenue, which could affect the Group’s business performance. Since its
establishment, the Group has not been the target of large-sum compensation claims orlawsuits. In our business, however, there is a constant inherent risk of being sued,
either in Japan or overseas. Therefore, the Group’s business results could potentiallybe affected if it is subject to a compensation claim, the extent of impact being
determined by the outcome of such legal action.
(9) Information System Risk
The Group has in its possession personal information about numerous customers,
acquired via sales promotion campaigns, the annual “Newborn Baby Commemorative
Tree-Planting Campaign,” and other events. To prevent loss, mistaken use, andfalsification of such important information, the Group undertakes security measures
for managing its systems and information. However, unforeseen events could cause
our information systems to break down, stop, or undergo temporary disruption,
resulting in potential loss, leakage, or falsification of personal and other internal
information. Such events, which include power outages, major disasters, software andhardware defects, computer viruses, and illegal access, could have a negative impact
on the Group’s operating activities and potentially affect its performance and financial
position.
(10) Risk of Personal Information Leakage
In the course of providing products and services to consumers, the Group handles alarge volume of personal information. For some time, we have sought to ensure that
all employees understand the importance of protecting personal information, provide
mandatory in-house education forums, and reinforce our systems for managing
customer information. Due to unforeseen circumstances, however, there is a risk that
personal information could be leaked to a third party, which could potentially affect
the Group’s business performance.

2. Management Policies
1. Basic Policies
Based on its corporate commitment, “providing the gift of love to all,” the PigeonGroup is dedicated to helping those in need—while pregnant, giving birth, and rearing
children, as well as in old age. Our policy is to develop our business by delivering
products and services that address the needs of these people. Fulfilling our role as a“lifestyle support company focusing on child rearing,” we are leveraging the Pigeon
brand and the quality of our management to build a high corporate profile that isrecognized worldwide. This is our medium-term corporate vision.

2. Performance Targets
The Pigeon Group has formulated its third medium-term management plan for the
21st century. The new plan, designed to expedite Pigeon’s transformation into a truly
global company, covers the three-year period from February 1, 2008, to January 31,
2011.
By steadily implementing initiatives as stated in our basic medium-term
policies, which are outlined in the paragraphs below, we have set the following
performance targets for the fiscal year ending January 31, 2011: net sales of ¥64.0
billion, operating of ¥5.8 billion, ordinary income of ¥5.6 billion, and net income of¥3.3 billion. We have also adopted return on equity (ROE) as a suitable benchmark
for targeting improved profitability and capital efficiency, and we hope to achieve
ROE of 12% or higher by the year ending January 31, 2011. For the interim period
under review, ROE was 5.7%.
3. Medium-Term Management Strategies
Under our third medium-term management plan for the 21st century, we have set thefollowing basic policies.
(1) In the baby and child care products business, we will target further globalizationand concentrate managerial resources in growth markets, centering on China andNorth America. At the same time, we will actively tap new markets.
(2) In our domestic operations, we will seek to further strengthen existing businesses,
particularly related to baby and child care products and nursing care products. We
will also build a new business model to cover such areas as nursing care prevention
products and IT sales channels.
(3) To achieve growth in each of our businesses, we will promote in-depth researchand product development that accurately reflect the needs of customers, in order toraise competitiveness. At the same time, we will build an infrastructure conducive toglobalization of our operations.

4. Issues to Address
According to population statistics released in August 2008 by the Ministry of Health,Labour and Welfare, the number of childbirths and marriages in the first half of thecalendar year remained mostly unchanged from the previous corresponding period. In
the future, childbirths are expected to remain at the same level or continue to decline.
According to population estimates released by the Ministry of Internal Affairs andCommunications in August 2008, elderly people aged 65 and over accounted for 22%
of Japan’s population as of August 1, 2008. The number of elderly people is expected
to continue increasing in the future. Meanwhile, there are growing concerns about
downward pressure being placed on the world economy, due to such factors as
financial market turmoil in the United States, depressed stock markets, global
inflationary signs caused by surging prices of raw materials, and retraction of
consumer demand. It is also clear that Japan’s longest postwar recovery period has
ended, and the economy has now about to shift gears.

The year ending January 2009 is the first year of the Group’s third mediumterm management plan for the 21st century, entitled “Becoming a Global Company:
Challenges and Independence.” Guided by the plan, which is designed to expedite theGroup’s transformation into a global company, we will steadily implement strategies
for our respective businesses, as well as functional strategies to underpin suchbusinesses. We will also actively invest resources into our overseas business, which
we have identified as a growth sector. In the home healthcare (HHC) and nursing careproducts category, we will pursue a consistent marketing strategy to further
strengthen our Group-wide business operational infrastructure, while assertively
directing managerial resources to the new Recoup brand, positioned as a pillar for
future growth.
To enhance profitability, we will develop high-value-added products, and toboost productivity we will make proactive investments aimed at reducing
manufacturing costs.
In addition, we will target further improvements in management soundness
and transparency by broadening and reinforcing our internal control system.

Consolidated Interim Financial Statements : Balance Sheets
As of July 31 and January 31, 2008
(Thousands of Yen)

July 31, 2008

Janauray 31, 2008

ChangeAmountAmountAmount%Cash and time deposits

4,206,212

4,350,131(143,919)(3.31)

Notes and accounts receivable

11,690,483

10,606,682

1,083,801

10.22

Inventories

4,843,130

4,359,001

484,129

11.11

Deferred tax assets

584,479

542,646

41,833

7.71

Other receivables

247,002

218,496

28,506

13.05

Other current assets

281,959

231,880

50,07921.60

Allowance for doubtful accounts(70,807)(32,273)(38,534)

119.4021,782,458

20,276,563

1,505,895

7.43

Buildings and Structures:

4,844,552

4,497,660

346,892

7.71

Machinery and transporation equipment

2,188,635

2,149,892

38,743

1.80

738,111712,027

26,084

3.66

5,940,920

6,017,983(77,063)(1.28)

143,444

317,826(174,382)(54.87)

13,855,662

13,695,388

160,274

1.17

Goodwill

774,150

1,485,365(711,215)

Software710,906

804,325(93,419)(11.61)Others

92,686

97,734(5,048)(5.17)

1,577,742

2,387,424(809,682)(33.91)

Investment securities

1,417,871

1,538,549(120,678)(7.84)

Deferred tax assets

113,262

199,109(85,847)(43.12)

Insurance reserve fund236,288486,179(249,891)(51.40)

Others432,581

317,594

114,987

36.21

Allowance for doubtful accounts(88,082)(17,677)(70,405)398.292,111,920

2,523,754(411,834)(16.32)

17,545,324

18,606,566(1,061,242)(5.70)

39,327,782

38,883,129

444,653

1.14

ASSETS
Current Assets:

Total Current Assets
Fixed Assets:
Tangible Fixed Assets:

Tools, Furniture and Fixtures:Land
Construction in progress
Total Tangible Fixed Assets
Intangible Fixed Assets:

Total Intangible Fixed Assets
Investments and Other Assets:

Total Investments and Other Assets
Total Fixed Assets
Total Assets

Consolidated Interim Financial Statements : Balance Sheets
As of July 31 and January 31, 2008
(Thousdands of yen)

July 31, 2008
AmountJanuary 31, 2008
AmountChangeAmount%LIABILITIESCurrent Liabilities:
Notes and account payable

5,454,343

5,134,505

319,838

6.23

Short-term borrowings

2,872,240

2,151,450

720,790

33.50

Current portion of long-term debt

20,0001,040

18,9601,823.08

Accrued amount payable

2,312

1,040,000(1,037,688)(99.78)

Income taxes payable

480,885

412,007

68,87816.72

Accrued bonuses to employees

531,969

507,140

24,829

4.90

Returned goods adjustment reserve

65,37337,48027,89374.42

1,149,949

1,002,218

147,731

14.74

10,577,071

10,285,840

291,231

2.83

Long-term borrowings

372,240

20,000(523,142)

1,761.20

Deferred tax liabilities

895,382

864,544

30,838

3.57

Employees' retirement benefits

230,145

201,243

28,902

14.36

Retirement benefits for directors and corporate aut

289,471

307,126(17,655)(5.75)

Other Long-term liabilities

125,315

132,625(7,310)(5.51)

1,912,553

1,525,538

387,01525.37

12,489,624

11,811,378

678,246

5.74

Capital stock

5,199,597

5,199,597

00.00

Additional paid-in capital

5,180,246

5,167,246

13,0000.25

Consolidated retained earnings

14,454,728

13,074,831

11,58710.55(437,102)(625,214)

188,112(30.09)24,397,469

22,816,460

1,581,009

6.93

Net unrealized gains(losses) on securities(32,290)

24,714(57,004)(230.65)

Foreign currency translation adjustment(227,085)

579,158(806,243)(139.21)

Total Valuation, Translation Adjustment
and Others(259,375)

603,872(863,247)(142.95)

Minority Interests

389,999

406,080(16,081)(3.96)

Total Net Assets

24,528,093

23,826,412

701,681

2.94

Total Liabilities and Net Assets

37,017,717

35,637,790

1,379,927

3.87

OthersTotal Current Liabilities
Non-Current Liabilities:

Total Non-Current Liabilities
Total Liabilities
NET ASSETS
Shareholders' Equity:

Treasury stock
Total Shareholders' Equity
Valuation, Translation Adjustment and Others:

Consolidated Interim Statements of Income
For the three months ended July 31 2007 and 2008 and the year ended January 31, 2008
Three Months Three Months
Ended July
Ended July
31, 2007
31, 2008

Revenue
Cost of services
Reversal of reserve for returned products
Transfer to reserve for returned products
Gross Profit:
Selling, general
Operating Income (Loss)
Non-Operating Income:Interest income
Dividend income
Rent income
Equity in earnings of nonconsolidated
OthersTotal Non-Operating Income
Non-Operating Expenses:
Interest expenses
Sales discounts
Currency exchange loss
Rental income-related costs
OthersTotal Non-Operating Expenses
Ordinary Income (Loss)
Extraordinary Gains:
Gain on sales of property
Reversal of allowance for doubtful accounts
Benefit income from fixed assets
Total Extraordinary Gains
Extraordinary Losses:
Loss on sales of property
Loss on disposal of property
Impairment loss
Voluntary product recall expenses
OthersTotal Extraordinary Losses
Income (Loss) before
Income Tax
Adjustment of Corporate Taxes
Minority Interests
Net Income (Loss)

Change(Thousands of yen)
Year Ended
January 31,
2008

Amount26,662,527
16,566,629
48,47964,987
9,982,432
7,961
9,974,471

Amount23,841,570
14,732,812
21,00037,4809,050,278
20
9,050,258

Amount2,820,957
1,833,817
27,47927,507932,154
7,941
924,213

%
11.83
12.45
130.8573.39
10.30
39,705.00
10.21

Amount49,237,702
30,568,517
21,00049,971
18,598,214
44
18,598,170

20,046
1,409
59,05624,25064,237
168,998

19,794
3,247
55,46834,734
43,462
156,705--

12,293

7.84

44,415
18,687
109,316
77,990154,062
404,470

33,536
88,685

19,43986,59828,333
44,232
6,655
185,257
9,021,706--(2,798)939,304(1.51)
10.41

44,221
186,00391,30982,956
15,078419,567
18,583,073

755
127
86,737
87,619(85,546)(97.63)

1,075
319
119,118
120,512

610
7,850
8,460
16,9201,565,968
523,438
111,682
33,216
8,424,069

-

-

1,872
17,351
386,644

232,557
416,203

1,374.45
26.58

24,219671,160

72.91
7.97

91,468497,3352,800,678
971,795
261,622
96,12916,876,704

49,117
11,121
182,459
9,961,010
1,891
182
2,073
763
32,391
91,584
124,739
249,477
1,982,171
607,267(46,325)
57,435
9,095,229-

Previous Interim Period (February 1-July 31, 2007)(Figures rounded down to nearest thousand yen)

Shareholders' Equity
Total
Treasury stock shareholders'equityCapitalCapitalSurplusRetainedearnings

5,199,597

5,165,498

12,475,585(649,429)

22,191,250

Distribution of earnings－－(298,384)－(298,384)

Net income－－

897,630－

897,630

Disposal of treasury stock

－

1,748

－

25,41627,165Acquisition of treasury stock

－

－

－

(1,201)(1,201)

Changes not related to shareholders’ equity
(net)

－

－

－

－

－

Total changes during period

－

1,748

599,245

24,215625,209

5,199,597

5,167,246

13,074,831(625,214)

22,816,460

Balance at Jan. 31, 2007
Changes during period

Balance at Jul. 31, 2007

(Figures rounded down to nearest thousand yen)

Valuation and exchange differences etc.
Profit/loss ondeferredvaluation ofother securities

Profit/loss ondeferredexchange

Total Valuationand exchange
difference

34,910226,381261,291

541,080

22,993,623

Distribution of earnings

－

－

－

－

(298,384)

Net income

－

－

－

－

897,630

Disposal of Treasury Stock

－

－

－

－

27,165Acquisition of Treasury Stock

－

－

－

－

(1,201)

Changes not related to shareholders’ equity(net)(10,195)

352,776

342,581(135,000)

207,580

Total changes during period(10,195)

352,776

342,581(135,000)

832,790

Balance at Jul. 31, 2007

24,714579,158

603,872

406,080

23,826,413

Balance at Jan. 31, 2006

Minority
Intersets

Total net
assetsChanges during period

Consolidated Interim Statement of Shareholders' Equity
Interim Period in Review (February 1–July 31, 2007)(Figures rounded down to nearest thousand yen)

Shareholders' Equity
Total
Treasury stock shareholders'equityCapitalCapitalSurplusRetainedearnings

5,199,597

5,167,362

13,389,545(624,063)

23,132,442

Distribution of earnings－－(298,610)－(298,610)

Net income－－

1,363,794－

1,363,794

Disposal of treasury stocks－

12,884－

188,136

201,020

Acquisition of treasury stocks

－

－

－

(1,176)(1,176)

Changes not related to shareholders’ equity
(net)

－

－

－

－

－

Total changes during period－

12,884

1,065,183

186,960

1,265,028

5,199,597

5,180,246

14,454,728(437,102)

24,397,470

Balance at Jan. 31, 2006
Changes during period

Balance at Jul. 31, 2007

(Figures rounded down to nearest thousand yen)

Valuation and exchange differences etc.
Profit/loss ondeferredvaluation ofother securities

Profit/loss ondeferredexchange

Total Valuationand exchange
difference(5,586)242,186

236,599

462,162

23,831,205

Distribution of earnings

－

－

－

－

(298,610)

Net income

－

－

－

－

1,363,794

Disposal of treasury stocks

－

－

－

－

201,021

Acquisition of treasury stocks

－

－

－

－

(1,176)

Changes not related to shareholders’ equity(net)(26,704)(469,271)(495,976)(72,163)(568,139)

Total changes during period(26,704)(469,271)(495,976)(72,163)

696,888

Balance at Jul. 31, 2007

(32,290)(227,085)(259,376)

389,999

24,528,093

Balance at Jan. 31, 2006

Minority
Intersets

Total net
assetsChanges during period

Consolidated Interim Statement of Shareholders' Equity
Previous Fiscal Year (February 1, 2006–January 31, 2007)(Figures rounded down to nearest thousand yen)

Shareholders' Equity
Total
Treasury stock shareholders'equityCapitalCapitalSurplusRetainedearnings

5,199,597

5,165,498

12,475,585(649,429)

22,191,250

Distribution of earnings－－(557,171)－(557,171)

Net income－－

1,471,131－

1,471,131

Disposal of treasury stocks

－

1,864

－

27,111

28,976

Acquisition of treasury stocks

－

－

－

(1,744)(1,744)

Changes not related to shareholders’ equity
(net)

－

－

－

－

－

Total changes during period

－

1,864

913,960

25,366

941,191

5,199,597

5,167,362

13,389,545(624,063)

23,132,442

Balance at Jan. 31, 2006
Changes during period

Balance at Jan. 31, 2007

(Figures rounded down to nearest thousand yen)

Valuation and exchange differences etc.
Profit/loss ondeferredvaluation ofother securities

Profit/loss ondeferredexchange

Total Valuationand exchange
difference

34,910226,381261,291

541,080

22,993,623

Distribution of earnings

－

－

－

－

(557,171)

Net income

－

－

－

－

1,471,131

Disposal of treasury stocks

－

－

－

－

28,976

Acquisition of treasury stocks

－

－

－

－

(1,744)

Changes not related to shareholders’ equity(net)(40,496)

15,804(24,961)(78,917)(103,609)

Total changes during period(40,496)

15,804(24,691)(78,917)

837,581

Balance at Jan. 31, 2007

(5,586)242,186

236,599

462,162

23,831,205

Balance at Jan. 31, 2006

Minority
Intersets

Total net
assetsChanges during period

Consolidated Interim Statements of Cash Flows
For the three months ended July 31, 2007 and 2008
(Thousdands of yen)Three Months Ended
July 31, 2008
Ⅰ Cash Flows from Operating Activities:
Income (Loss) before income taxes and minority interests
Depreciation
Impairment loss
Amortization of goodwill
Increase/decrease n allowance for doubtful accounts
Increase(decrease)in accrued bonusese to employees
Increase(decrease)in employees' retirement benefits
Increase(decrease) in reserve for retirement
Interest and dividend income
Equity in earnings(losses) of nonconsolidated subsidiaries
Interest expense
Loss on disposal of fixed assets
Decrease(increase)in trade receivables
Decrease(increase) in inventories
Increase(decrease)in trade payables
Increase(decrease) in other payables
Decrease(increase) in consumption tax payable
Increase(decrease) in employees' accrued retirement benefits
Others(Subtotal)Interest and dividents received
Interest paid
Income taxes paid
Total Cash Flows from Operating Activities
Ⅱ Cash Flows from Investing Activities:
Transfer to time deposits
Reversed of time deposits
Acquisition of property, plant and equipment
Proceeds from sales of property, plant and equipment
Acquisition of intangible assets
Acquisition of investments in securities
Payment to life insurance fund
Proceeds due to maturity/cancellation of insurance fundAcquisition of shares in subsidiaries
Loans advacnced
Collection of loan receivables
Proceeds from recovery of lease deposits
OthersTotal Cash Flows from Investing Activities
Ⅲ Cash Flows from Financing Activities:
Net increase in short-term bank loans
Repayment of short-term debt
Repyament of long-term debt
Payment of cash dividends
Payment of cash dividends to minority shreholders
Proceeds from sales of treasury stock
Acquisition of treasury stock
Total Cash Flows from Financing Activities
ⅣTranslation Gain(Loss) Related to Cash and Cash Equivale
V Net Change in Cash and Cash Equivalents
VI Cash and Cash Equivalents at Beginning of Term
VII Cash and Cash Equivalents at End of TermThree Months Ended
July 31, 2007

AmountAmount1,982,171763,531-

1,565,968
702,482-

133,153
23,242
14,456(18,314)(21,455)(24,250)
33,53632,391(2,173,905)(519,562)
337,196
407,995(257)(63,028)
934,846
21,732(40,844)(442,222)
473,512

191,416(5,312)
12,649(24,685)(23,041)(34,734)
19,4397,850(1,068,941)(105,563)
530,225(79,793)(88,399)(178,071)
715,890
12,242(22,014)(618,144)
715,890498,000(690,174)
5,714(111,675)(9,898)46,230(1,600)998
14,401(34,791)(289,448)(635,078)
40,334(189,263)(19,572)
50,532(175,201)
1,208
1,066
10,681
2,987(914,721)

6,399,640(4,853,840)(1,020,000)(299,211)(44,526)
201,021(1,176)
381,906(135,389)
430,5813,775,631
4,206,212

5,312,693(4,360,942)(61,770)(298,371)(45,371)
27,165(1,201)
572,201
102,832
476,2032,680,117
3,156,320(6,652)