Summary of Consolidated Financial Results for Year to
January 31, 2008
March 6, 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)
Annual General Meeting of Shareholders: April 28, 2008
Date of release of Business Report: April 30, 2008
Year-end dividends: Paid from April 30, 2008(¥ millions, rounded down)

1. Consolidated Financial Results (February 1, 2007–January 31, 2008)(1) Performance(% figures denote year-on-year change)
Net sales

Operating income

Ordinary income

Change(%)

Change(%)

Net income

Change(%)

Change（％）

Year to Jan. 31, 2008

49,237

8.7

3,192

15.9

3,177

15.7

1,471

(23.2)

Year to Jan. 31, 2007

45,307

8.5

2,754

24.3

2,745

24.8

1.916

42.7

Year to Jan. 31, 2008
Year to Jan. 31, 2007

Net income
per share (¥)

Fully diluted
net income
per share (¥)

Return on
equity (%)

Total
assets/Ordinary
income (%)

Operatingmargin (%)

73.90

73.82

6.4

8.7

6.5

96.97

96.91

9.0

7.9

6.1

[Reference] Equity in earnings of affiliates: ¥77 million (Jan. 2008); ¥29 million (Jan. 2007)(2) Financial Position

At Jan. 31, 2008
At Jan. 31, 2007

Total assets

Net assets

Equity ratio (%)

Net assets per share(¥)

37,44135,64823,831
22,99362.4
63.0

1,173.88
1,128.70[Reference] Equity: ¥23,369 million (Jan. 2008); ¥22,452 million (Jan. 2007)-1-

(3) Cash Flows

Year to Jan. 31, 2008

Cash flows fromoperatingactivities
3,707

Cash flows frominvestingactivities(2,443)

Cash flows fromfinancing
activities(172)

Cash and cash
equivalents at
term-end
3,775

Year to Jan. 31, 2007

2,367

(395)

(1,284)2,680

2. Cash Dividends
Cash dividends per share (¥)
InterimYear-end
Full year
Year to Jan. 2007

15.00

15.00

30.00

Total
dividends
paid (fullyear)(¥mil)
594

Payout ratio(cons.) (%)

Dividends
on netassets (%)

30.9

2.8

Year to Jan. 2008

13.00

15.00

28.00

557

37.9

2.4

Year to Jan. 2008
(est.)

18.00

18.00

36.00

-

35.8

-

3. Forecast for Fiscal Year Ending January 2009(% figures denote year-on-year change)
Net salesInterimFull year

25,900 8.6
52,900 7.4

Operatingincome
1,500
(1.0)
3,470
8.7

Ordinary
income1,430 (3.8)
3,400 7.0

Net income
780
2,000

(13.1)
35.9

Net income
per share (¥)
39.18
100.46

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 topreparation of financial statements):(a) Changes in accounting standards: Applicable(b) Other changes: None
(3) Shares issues and outstanding at end of period (common stock):(a) Shares outstanding (including treasury stock): 20,275,581 (Jan. 2008); 20,275,581 (Jan. 2007)(b) Treasury stock: 368,194 (Jan. 2008); 383,295 (Jan. 2007)-2-

[Reference] Non-Consolidated Financial Results

1. Non-Consolidated Interim Financial Results (February 1, 2007–January 31,
2008)(1) Performance(% figures denote year-on-year change)
Net salesYear to Jan. 31, 2008
Year to Jan. 31, 2007

Operating income

Ordinary income

30,785 0.3

395 (16.8)

1,051 24.7

297 (67.6)

30,701 4.6

475

843

918

Net income pershare (¥)

34.4

Net income

64.6

88.5

Fully diluted net
income per share(¥)

Year to Jan. 31, 2008

14.93

14.92

Year to Jan. 31, 2007

46.46

46.43

Total assets

Net assets(2) Financial Position
Equity ratio (%)

Net assets per share(¥)

At Jan. 31, 2008
27,25818,487
67.8
At Jan. 31, 2007
27,64018,76067.9[Reference] Equity: ¥18,487 million (Jan. 2008); ¥18,760 million (Jan. 2007)

928.66943.103. Forecast for Fiscal Year Ending January 2009(% figures denote year-on-year change)
Net salesInterimFull year

15,690 2.8
31,800 3.3

Operatingincome

250
500

7.3
26.4

Ordinary
incomeNet income

850 25.1
1,200 14.1

600 (3.2)
800 169.0

Net income pershare (¥)

Appropriate use of performance forecasts
For information on assumptions and other matters related to the above forecasts, please refer to the “1.
Performance and Financial Position” section, starting page 4.

-3-

30.13
40.18

1. Performance and Financial Position
1. Performance(1) Environment and Results
In the fiscal year under review, the Japanese economy continued on a path of recovery, boosted by
improved corporate performances and associated increases in capital expenditures. The latter half of theperiod saw rises in commodity prices due to soaring costs of crude oil and other raw materials. The
resulting effects have extended to various industries, with cost increases reflected in the prices offinished products. Meanwhile, the outlook for the operating environment is uncertain, due in part to theimpact of the subprime loan crisis on the U.S. economy.
The domestic baby and child care products category represents the Pigeon Group’s main fieldof involvement. According to estimates announced by Japan’s Ministry of Health, Labour and Welfare,both childbirths and marriages have been declining year-on-year, and this trend is expected to continue.
In addition, we expect conditions for our business to remain difficult, due largely to ongoing increases
in global oil prices.
Facing these challenges, the Pigeon Group focused on promoting direct communication as ameans to further entrench its image as a leading brand in the baby and child care products category. To
this end, we sponsored television programs and held maternity-related events. Overseas, we introduced
new products and pursued a marketing strategy focused on brand-building, mainly in the China andelsewhere in East Asia, as well as in North America and Europe. In our newly reorganized healthcare
segment, meanwhile, we launched a new brand of nursing care prevention products, and are currently
reinforcing our foundation for future business advancement.
As a result, consolidated net sales for the fiscal year amounted to ¥49,237 million, up 8.7%
from the previous year. Operating income rose 15.9%, to ¥3,192 million, and ordinary income was up
15.7%, to ¥3,177 million. Net income declined 23.2%, to ¥1,471 million.
(2) Segment Review
Baby and Child Care
Sales in this segment amounted to ¥39,322 million, up 10.8% year-on-year. Operating income grew
12.4%, to ¥5,578 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 this business as arecovery in childbirths has failed to materialize. Under these circumstances, the Group focused onsolidifying its business foundation in the year under review, and strove to rebuild its brand strategy as aleading company in the baby and child care products category. In April 2007, we began sponsoring
television programs, receiving high acclaim from viewers. We also stepped up our campaign of directcommunications with customers. To this end, we hosted maternity-related events around the nation andcomprehensively revamped the “Pigeon Info” portal site, which provides word-of-mouth information to
women who are pregnant or raising children. On the product side, we introduced new items, such as
baby bottle nipples that feel like the real thing and a series of baby skincare products, while renewing
existing ones.
Overseas Business: For the year, we achieved year-on-year sales increases in practically all regions,
including China and the United States. In China, expansion of mainstay products, such as baby bottles,
baby bottle nipples, and toiletry products, together with the introduction of new ones provided a solid
revenue boost. During the year, we made good progress in expanding our presence in regional Chinese
cities. In addition, we completed construction of production facilities for skincare products, toiletries,
baby bottle nipples, and other items, with the aim of creating a stable product supply system for the
Chinese market. In the United States, meanwhile, we posted steady sales growth on the back of acontinually growing market for breastfeeding-related products. Targeting further expansion of ouroverseas business, we have positioned entry into new markets as a core priority, and our viability studies
in the Indian market have proceeded according to plan.
Child-Rearing Support Services: During the year, we continued pursuing proactive sales initiatives,
including in-company child-minding operations. We also sought to make qualitative improvements toour child-minding capabilities. Central to these efforts is Pigeon Partner Open College, an educational
system for child-minders designed to help us maintain our competitive edge over other companies.
-4-

Healthcare
Sales in this segment edged down 1.6%, to ¥6,226 million, and operating income fell 55.2%, to ¥153
million. Citing healthcare as a growth sector for the Pigeon Group, we set up an operating division totake control of our entire healthcare business. The new division has since been reinforcing the Group’sbusiness foundation and working to build a framework conducive to future growth. During the year, we
unveiled new products, including the Recoup brand of products in the nursing care prevention category,
and we held various events aimed at broadening recognition of the Pigeon brand. We also launched new
items and revamped existing ones under the Habinurse brand of nursing care offerings, but faceddifficult business conditions.
The Group made a partial write-down of goodwill in Pigeon Tahira Co., Ltd., a consolidated
subsidiary. (Such goodwill was acquired when the Group originally purchased shares in Pigeon Tahira.)
The decision was made because the Group no longer expects such goodwill to generate the earnings it
initially anticipated. The write-down was reported as an extraordinary loss.
OthersSales from other operations totaled ¥3,688 million, up 5.9% year-on-year. Operating income grew
24.2%, to ¥498 million. Pigeon Will Co., Ltd., a consolidated subsidiary that sells maternity
undergarments, expanded its business. We also broadened our range of nutritional supplements for
women who are pregnant, ready to give birth, and raising children. In addition, we posted healthy sales
growth in China, where we have launched products for women.
Outlook
The current fiscal period, ending January 2009, is the first year of our third medium-term management
plan for the 21st century. Following the basic policies of the plan, we will strive to expand ouroperations, placing key priority on the following areas of our main businesses.
Baby and Child Care
Domestic Baby and Child Care Products: Through the integration of this business into a single division,
we plan to strengthen our strategy formulation and implementation capabilities and increase our
responsiveness to changing markets, where competition to survive will further intensify. At the sametime, we will deploy basic research to raise the appeal of our products while reviving and improving
market competitiveness and brand loyalty by maintaining and entrenching direct communications. In
addition, we will seek to enhance profitability by reassessing our distribution policies and sales channel
strategies.
Overseas Business: We will prioritize allocation of managerial resources into our overseas business,
which we regard as a key growth driver for the Pigeon Group. Adopting appropriate marketingstrategies, we will work to strengthen and broaden brand loyalty in overseas markets while actively
expanding our presence in existing markets, such as China and North America. Meanwhile, we willbuild a business operational infrastructure conducive to sustained growth and step up initiatives topermit full-scale entry into new markets.
Child-Rearing Support Services: Here, we will upgrade our new personnel development system, which
we introduced in the previous fiscal year, while broadening the scope of our services, with the aim of
improving the quality of both personnel and services. At the same time, we will build an effective
business operational infrastructure, steadily boost efficiency, and focus on highly profitable services tounderpin growth. In the process, we will solidify our foundation for business expansion and improved
profitability.
Healthcare
In this segment, we will strengthen our Group-wide business operational infrastructure and pursue
consistent marketing strategies. Our plan is to consolidate nursing care-related products under the
Habinurse brand, streamline our product lineup, and steadily establish effective distribution channels inorder to enhance the productivity and profitability of existing businesses. Meanwhile, we will actively
allocate managerial resources to nurture the new Recoup brand of nursing care prevention products,
launched in 2007.
For the year ending January 31, 2009, we forecast consolidated net sales of ¥52.9 billion (up 7.4% yearon-year), operating income of ¥3.47 billion (up 8.7%), ordinary income of ¥3.4 billion (up 7.0%), andnet income of ¥2.0 billion (up 35.9%).
-5-

2. Financial Position(1) Assets
As of January 31, 2008, Pigeon had consolidated total assets of ¥37,441 million, up¥1,793 million (or 5.0%) from a year earlier. Within this amount, total current assets rose ¥2,187 million(12.7%), while total fixed assets declined ¥394 million (2.1%).
Major factors boosting current assets were a ¥1,670 million (62.3%) increase in cash and time
deposits, a ¥347 million (3.7%) rise in notes and accounts receivable, and a ¥278 million (6.7%)
increase in inventories.
Main reasons for the decline in fixed assets were a ¥767 million (45.8%) fall in goodwill and a¥205 million (42.5%) drop in insurance reserve fund, which contrasted with a ¥386 million (19.3%)
increase in machinery and transportation equipment and a ¥388 million (177.0%) jump in constructionin progress.
(2) Liabilities
Total liabilities at fiscal year-end stood at ¥13,610 million, up ¥955 million (7.6%) over the interim
period. Current liabilities increased ¥1,911 million (18.8%), while long-term liabilities fell ¥955 million(38.2%).
Main factors boosting current liabilities were a ¥958 million surge in current portion of long-term
debt (from ¥81 million on January 31, 2007), a ¥705 million (15.6%) increase in notes and accounts
payable, and a ¥492 million (41.4%) jump in short-term bank loans.
The main reason for the decline in long-term liabilities was that fact that all of the Group’s longterm borrowings, totaling ¥1,040 million, fell due within one year and thus became current portion of
long-term debt.
(3) Net Assets
At January 31, 2008, consolidated net assets amounted to ¥23,831 million, up ¥837 million (3.6%) froma year earlier. This increase resulted mainly from a ¥913 million (7.2%) rise in retained earnings.
(4) Cash Flows
Cash and cash equivalents at January 31, 2008, stood at ¥3,775 million, up ¥1,095 million (40.9%) fromJanuary 31, 2007 (which in turn was 41.0% higher than January 31, 2006).
Factors boosting cash and cash equivalents included ¥2,800 million in income before income
taxes (down 15.3% year-on-year), ¥1,547 million in depreciation (up 7.5%), and a ¥669 million increasein notes and accounts payable (¥203 million decrease in the previous fiscal year). Contrasting factors
included ¥1,140 million in income taxes paid (up 42.9%), ¥550 million in transfers to time deposits, and¥1,717 million in acquisition of property, plant and equipment (up 25.4%).
Net cash provided by operating activities amounted to ¥3,707 million, up 56.6% from theprevious year. Factors boosting operating cash flows included ¥2,800 million in income before income
taxes, ¥1,547 million in depreciation (up 7.5%), and a ¥669 million increase in trade payables (¥203
million decrease in the previous year). Contrasting factors included ¥1,140 million in income taxes paid
(up 30.5%).
Net cash used in investing activities totaled ¥2,443 million (up 517.1%). Main factors included¥550 million in transfers to time deposits and ¥1,717 million in acquisition of property, plant andequipment (up 25.4%), which contrasted with ¥270 million in proceeds from the maturity/cancellationof an insurance reserve fund.
Net cash used in financing activities was ¥172 million (down 86.6% from the previous year).
This resulted primarily from ¥556 million in payment of cash dividends, which outweighed a ¥404
million net increase in short- and long-term debt (¥1,042 million net decrease in the previous year).
(5) Cash Flow Indicators
Year to Jan.
2006
59.9
97.9
1.9
35.5

Equity ratio (%)
Equity ratio based on market price (%)
Debt repayment term (years)
Interest coverage ratio (times)
Notes:- Equity ratio: Total shareholders’ equity ÷ Total assets-6-

Year to Jan.
2007
63.0
116.1
1.0
54.1

Year to Jan.
2007
62.4
90.7
0.7
91.4

- 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 theterm) by the number of shares outstanding at 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 theConsolidated 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. Profit Appropriation Policy
The Pigeon Group regards the return of profits to shareholders—made possible by ongoing
improvements to Groupwide profitability—as an important management priority. Our policy is to makethe most effective use of retained earnings. We actively invest these funds in growth areas, newbusinesses, and research and development, as well as in reinforcing our operating foundation by
upgrading production facilities to lower costs and raise product quality. With respect to appropriating
earnings, our policy is to actively return profits to shareholders. We do this by paying stable andongoing cash dividends, with the emphasis on raising dividend levels where possible, while properly
considering payout ratio and other factors according to our business performance. Based on this policy,
we are targeting a consolidated dividend payout ratio of 50% by the year ending January 2011, the final
year of our new medium-term management plan.
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 isbased 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 and child care products,
the Group’s main business, will be influenced by the falling birthrate, 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 has business activities
elsewhere in Asia, as well as in the Middle East, North America, and Europe. Risks associated with ouroverseas business are described below. We will hedge against such risks to the extent possible, butvarious 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 andother 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 businessresults 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 oiland pulp. If the prices of such materials rise, our manufacturing costs will also increase. Depending on
circumstances, the Group may be unable to pass such increases onto its sales prices, thus potentiallyaffecting its business results.

-7-(5) Problems with Manufacturing Subcontractors
The Group subcontracts part of the production of baby and child care products and healthcare 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 of legal regulations,
including the Pharmaceutical Affairs Law, Food Sanitation Law, and Product Liability Law. If suchlaws 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 of services, including
operation of child-minding and daycare centers and provision of babysitter dispatch services. It also has
its own Kids World chain of child-minding centers. Through these activities, the Group is entrusted withthe 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 the Group’s business operations.
However, there is no guarantee that such events will not occur in the future. If such an event does occur,
the Group’s business performance may be affected as a result.
(8) Responsibilities As Manufacturer
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 of reliable materials. From initial design tomass production, the Group places top priority on assuring product quality and safety. However, there isa risk that a defect may be found in a product, or that a product may cause an accident. In such an event,
the Group may suffer losses from product recalls or sales declines due to lost customers, and its businessperformance may be affected as a result.
(9) Litigation
Since its establishment, the Group has not been the target of large-sum compensation claims or lawsuits.
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 potentially be affected if it is subject to a compensation
claim, the extent of impact being determined by the outcome of such legal action.
(10) 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 otherevents. To prevent loss, mistaken use, and falsification 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 and hardware 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.
(11) Risk of Personal Information Leakage
In the course of providing products and services to consumers, the Group handles a large volume of
personal information. For some time, we have sought to ensure that all employees understand theimportance of protecting personal information, provide mandatory in-house education forums, andreinforce 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.

3. Management Policies
1. Basic Policies
Based on its corporate commitment, “providing the gift of love to all,” the Pigeon Group is dedicated tohelping those in need—while pregnant, giving birth, and rearing children, as well as in old age. Our-8-policy is to develop our business by delivering products and services that address the needs of thesepeople. 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 is recognizedworldwide. 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 threeyear 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 suitablebenchmark for targeting improved profitability and capital efficiency, and we hope to achieve ROE of
12% or higher by the year ending January 31, 2011.
3. Medium-Term Management Strategies
Under our third medium-term management plan for the 21st century, we have set the following basic
policies.
(1) In the baby and child care products business, we will target further globalization and concentrate
managerial resources in growth markets, centering on China and North America. At the same time, wewill 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 businessmodel 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 research and productdevelopment that accurately reflect the needs of customers, in order to raise competitiveness. At thesame time, we will build an infrastructure conducive to globalization of our operations.

4. Issues to Address
According to population statistics released by the Ministry of Health, Labour and Welfare in August
2007, the number of childbirths and marriages both declined from the previous year, and this trend is
expected to continue. The year ending January 2009 is the first year of the Group’s third medium-term
management plan for the 21st century. Guided by the plan, which is designed to expedite the Group’stransformation into a global company, we will steadily implement strategies for our respective
businesses, as well as functional strategies to underpin such businesses. We will also actively invest
resources into our overseas business, which we have identified as a growth sector. In the homehealthcare (HHC) and nursing care products category, we will pursue a consistent marketing strategy tofurther strengthen our Group-wide business operational infrastructure, while assertively directing
managerial resources to the new Recoup brand, positioned as a pillar for future growth. In addition, we
will target further improvements in management soundness and transparency by broadening andreinforcing our internal control system.

-9-

Consolidated Balance Sheets(Figures rounded down to nearest thousand yen)
At January 31, 2007
Thousands of yen

At January 31, 2008

% of total

Thousands of yen％

ASSETS

Change% of total

Thousands of yen％

Ⅰ Current Assets
Cash and time deposits

2,680,117

4,350,131

1,670,013

Notes and accounts receivable

9,353,907

9,701,647

347,739

Securities

6,000

－

(6,000)Inventories

4,154,981

4,433,450

278,468

571,773

515,491(56,281)Deferred tax assets
Other receivables

314,502271,169(43,333)

Other current assets

156,404

188,030

31,626

Allowance for doubtful accounts(29,983)(64,677)(34,694)

Total Current Assets

17,207,703

48.3

19,395,242

51.8

2,187,538

Ⅱ Fixed Assets
1. Tangible Fixed Assets
Buildings and structures

4,481,277

4,451,814(29,462)

Machinery and transportation equipment

2,001,623

2,387,696

386,072

Tools, furniture and fixtures
Land
Construction in progress
Total Tangible Fixed Assets

713,821666,141(47,680)

5,924,430

6,011,561

87,130219,258

607,433

388,175

13,340,411

37.4

14,124,647

37.7

784,235

2. Intangible Fixed Assets
1,675,201－(1,675,201)

Goodwill－

907,304

907,304

Software873,156

741,520(131,636)

Consolidation adjustment acounts

Other intangible fixed assets

32,404

Total Intangible Fixed Assets

2,580,762

92,492
7.2

1,741,318

60,0884.7(839,444)

3.Investments and Other Assets
Investment securities

1,513,622

1,464,667(48,955)

Bankruptcy claims

17,018106,50289,483

Deferred tax assets

218,104

112,549(105,555)

Insurance reserve fund483,489

277,774(205,715)

Other304,541

307,544

3,002

Allowance for doubtful accounts(17,628)

Total Investments and Other Assets

2,519,148

7.1

2,180,021

5.8(339,127)

Total Fixed Assets

18,440,323

51.7

18,045,986

48.2(394,336)

Total Assets

35,648,026

100.0

37,441,228

100.0

1,793,202- 10 -(89,016)(71,388)

Consolidated Balance Sheets(Figures rounded down to nearest thousand yen)
At January 31, 2007
Thousands of yen

At January 31, 2008

% of total

Thousands of yen％

LIABILITIES

Change% of total

Thousands of yen％

Ⅰ Current Liabilities
Notes and accounts payable

4,510,935

5,216,071

705,136

Short-term borrowings

1,188,748

1,681,160

492,412

81,7701,040,000

958,230

Accrued amount payable

2,271,845

2,212,148(59,696)

Income taxes payable

500,458

373,301(127,157)

Deferred tax liabilities

1,116

2,317

1,201

Accrued bonuses to employees

511,523

509,169(2,353)Returned goods adjustment reserve

21,00049,42528,425Current portion of long-term debt

Other current liabilities

1,067,339

Total Current Liabilities

10,154,737

982,15628.5

12,065,752(85,182)32.3

1,911,014

Ⅱ Long-Term Liabilities
Long-term borrowings

1,040,000－(1,040,000)

Deferred tax liabilities

812,829886,895

74,066

Employees' retirement benefits

188,593

215,689

27,095Retirement benefits for directors and corporate
auditors

331,812

307,786(24,025)

Other long-term liabilities

126,431

Total Long-Term Liabilities

2,499,666

7.0

1,544,271

133,900
4.1(955,394)

7,469

Total Liabilities

12,654,403

35.5

13,610,023

36.4

955,620

5,199,597

13.9－

NET ASSETS
Ⅰ Shareholder's Equity
1 Capital stock

5,199,597

14.6

2 Additional paid-in capital

5,165,498

14.5

5,167,362

13.8

1,864

3 Consolidated retained earnings

12,475,585

35.0

13,389,545

35.8

913,960

4 Treasury stock, at cost

(649,429)(1.8)(624,063)(1.7)

25,36622,191,250

62.3

23,132,442

61.8

941,191

1 Net unrealized gains (losses) on securities

34,9100.1(5,586)(0.0)(40,496)

2 Foreign currency translation adjustment

226,3810.6

242,186

0.6

15,804

Total Shareholders' Equity
Ⅱ Deffered Valuation and Exchange

Total Deffered Valuation and Exchange
Ⅲ Minority Interests

261,2910.7

236,599

0.6(24,691)

541,080

1.5

462,162

1.2(78,917)

Total Net Assets

22,993,623

64.5

23,831,205

63.6

837,581

Total Liablities and Net Assets

35,648,026

100.0

37,441,228

100.0

1,793,202- 11 -

Consolidated Statements of Income
Year ended January 31, 2007

Year ended January 31, 2008

Thousands of yen% of total

Thousands of yen% of total

Ⅰ Net Sales

45,307,931

100.0

49,237,702

100.0

3,929,770

Ⅱ Cost of Sales

28,185,960

62.2

30,568,517

62.1

2,382,557

17,121,971

37.8

18,669,184

37.9

1,547,213％

Gross profit
Reversal of reserve for returned products

26,900Transfer to reserve for returned products

21,000Adjusted gross profit

ChangeThousands of yen％

21,00049,971

17,127,871

37.8

18,640,213

37.9

1,512,341

14,373,647

32.2

15,447,613

31.4

1,073,966

2,754,223

6.1

3,192,599

6.5

438,375

Ⅳ Other Income

351,6650.8

404,4710.8

52,806

Interest

25,520

Dividend income

15,741

18,687

Rental income

108,072

109,316

Equity in earnings of nonconsolidated
subsidiaries and affiliates

29,57977,990Other

172,752

Ⅴ Other Expenses

360,265

0.8

59,302

Ⅲ Selling, General and Administrative Expenses
Operating Income

44,415

154,0620.8

419,568

Interest expense

45,60644,221

Sales discounts

176,404

186,003

Rental income-related costs

68,032

82,956

Currency exchange loss

51,49391,309Other

18,72815,078

Ordinary Income

2,745,623

6.1

3,177,502

6.5

431,878

Ⅵ Extraordinary Income

1,274,085

2.8

120,5130.2(1,153,572)

1.0(216,451)

5.7(505,242)

Gain on sales of property

1,252,745

1,075

Gain on sale of investment securities

20,000－

Reversal of allowance for doubtful accounts

1,340

319

－

Benefit income from fixed assets
Ⅶ Extraordinary Loss

713,788

119,118
1.6

497,336

Loss on disposal of property

213,028

Loss on sale/disposal of property

105,642

17,351

Impairment loss

140,947

386,644－

83,468207,440－

Transfer to allowanse for doubtful accounts
Expenses for headquarter relocation
Other
Income before Income Taxes

1,872

46,7293,305,921

8,000
7.3

2,800,678

Income Taxes

973,744971,795

Adjustment for Corporate Tax347,627

261,622

Less: Minority Interest in Net Income ofConsolidated Subsidiaries

68,1560.2

96,1290.2

27,972

1,916,392

4.2

1,471,131

3.0(445,262)

Net Income- 12 -

(3) Consolidated Statements of Changes in Shareholders’ Equity
Previous Fiscal Year (February 1, 2006–January 31, 2007)(¥ thousands)
Shareholders’ equity
Retained
Treasury
earnings
stock

CapitalCapitalsurplus

Balance at Jan. 31, 2006
Changes during period
Distribution of earnings

5,199,597

5,146,690

11,052,496(920,087)

20,478,696－－(493,303)－(493,303)

Net income
Disposal of treasury stock
Acquisition of treasury
stock
Changes not related toshareholders’ equity (net)Total changes during
periodBalance at Jan. 31, 2007

－
－
－

－
18,807－

1,916,392－－－
272,763(2,105)

1,916,392
291,571(2,105)

－

－

－

－

－

－

18,807

1,423,089

270,657

1,712,554

5,199,597

5,165,498

12,475,585(649,429)

22,191,250

Minority
interests

Total net
assetsValuation and translation adjustments
Net
ForeignTotal
unrealized
currency
gains (losses)
translation
on securities
adjustment

Balance at Jan. 31, 2006
Changes during period
Distribution of earnings
Net income
Disposal of treasury stock
Acquisition of treasury
stock
Changes not related toshareholders’ equity (net)Total changes during
periodBalance at Jan. 31, 2007

Total
shareholders’equity38,218(204,080)(165,862)

443,656

20,756,489

－
－
－
－

－
－
－
－

－
－
－
－

－
－
－
－

(493,303)
1,916,392
291,571(2,105)(3,308)430,462

427,154

97,424

524,578(3,308)430,462

427,154

97,424

2,237,133

34,910226,381261,291

541,080

22,993,623- 13 -

Fiscal Year in Review (February 1, 2007–January 31, 2008)(¥ thousands)
Shareholders’ equity
CapitalCapitalsurplusRetainedearnings

Treasury
stock

Total
shareholders’equityBalance at Jan. 31, 2007
Changes during period
Distribution of earnings
Net income
Disposal of treasury stock

5,199,597

5,165,498

12,475,585(649,429)

22,191,250

－
－
－

－
－
1,864

(557,171)
1,471,131－－－
27,111(557,171)
1,471,131
28,976

Acquisition of treasury
stock
Changes not related toshareholders’ equity (net)Total changes during
periodBalance at Jan. 31, 2007

－

－

－

(1,744)(1,744)

－

－

－

－

－

－

1,864

913,960

25,366

941,191

5,199,597

5,167,362

13,389,545(624,063)

23,132,442

Minority
interests

Total net
assetsValuation and translation adjustments
Net
ForeignTotal
unrealized
currency
gains (losses)
translation
on securities
adjustment

Balance at Jan. 31, 2007
Changes during period
Distribution of earnings
Net income
Disposal of treasury stock
Acquisition of treasury
stock
Changes not related toshareholders’ equity (net)Total changes during
periodBalance at Jan. 31, 2008

34,910226,381261,291

541,080

22,993,623

－
－
－
－

－
－
－
－

－
－
－
－

－
－
－
－

(557,171)
1,471,131
28,976(1,744)(40,496)

15,804(24,691)(78,917)(103,609)(40,496)

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

837,581(5,586)242,186

236,599

462,162

23,831,205- 14 -

Consolidated Statements of Cash Flows(Figures rounded down to nearest thousand yen)
Year ended January 31, Year ended January 31,
2007
2008

ChangeThousands of yen

Thousands of yen

Thousands of yen

3,305,921
1,439,031
140,9472,800,678
1,547,456
386,644(505,242)
108,424
245,696

Amortization of difference between investment
costs and equity in net assets acquired

376,734－(376,734)

Amortization of goodwill
Increase/decrease in allowance for doubtful accounts
Change in accrued bonuses to employees
Change in employees' retirement benefits－
17,93526,45818,480382,833
107,512(2,409)27,095

382,833
89,576(28,867)
8,615

Increase/decrease in reserve for retirement
benefits to directors and corporate auditors(6,843)(24,025)(17,182)

Interest and dividend income(41,261)(63,102)(21,840)

Equity in earnings (losses) of nonconsolidated
subsidiaries and affiliates(29,579)(77,990)(48,411)45,606(1,252,745)(20,000)
213,028
105,642(1,531,070)
375,149(203,713)
326,676
93,432(4,205)(195,011)
46,5293,247,143
37,810(43,726)(874,025)
2,367,201

44,221(1,075)－
1,872
17,351(269,356)(239,021)
669,088(108,133)(58,297)(89,483)(169,989)(68,166)
4,813,703
74,821(40,553)(1,140,177)
3,707,793(1,384)
1,251,669
20,000(211,155)(88,290)
1,261,714(614,172)872,801(434,809)(151,730)(85,278)
25,022(114,695)
1,566,559
37,0103,173(266,151)
1,340,591－(1,369,168)
1,388,298(176,168)(265,469)
25,000(51,494)
67,968(30,093)(2,046)
1,750(83,499)
130,728(31,748)(395,941)(550,500)(1,717,216)
40,977(272,322)(10,000)－(32,018)
270,849(175,201)(2,117)2,465(19,294)
15,1786,013(2,443,187)(550,500)(348,048)(1,347,320)(96,153)
255,469(25,000)
19,476
202,880(145,108)(70)
715
64,205(115,550)
37,761(2,047,245)

8,302,165(8,993,005)
1,000,000(1,351,442)(492,953)(38,369)
291,571(2,105)(1,284,139)
89,634
776,755
1,903,361
2,680,117

8,490,236(8,003,696)－(81,770)(556,690)(47,873)
28,976(1,744)(172,563)
3,470
1,095,513
2,680,117
3,775,631

188,070989,309(1,000,000)
1,269,672(63,736)(9,504)(262,595)
360
1,111,576(86,164)
318,758
776,755
1,095,513

Ⅰ．Cash Flows from Operating Activities
Income before income taxes
Depreciation
Impairment loss

Interest expense
Gain on fixed assets disposal
Gain on sales of investment securities
Loss on fixed assets disposal
Loss on fixed assets sales
Decrease (increase) in trade receivables
Decrease (increase) in inventories(Decrease) increase in trade payables(Decrease) increase in account payables
Decrease (increase) in consumption tax payable
Increase/decrease in bankruptcy claims
Increase in employees’accrued retirement benefits
Other
SubtotalInterest and dividends received
Interest paid
Income taxes paid
Net Cash Provided by (Used in) Operating Activities
Ⅱ．Cash Flows from investing Activies
Transfers to 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
Proceeds from sales of investments in securities
Payment to life insurance fund for directors
Proceeds due to maturity/cancellation of insurance reserve
Acquisition of shares in subsidiaries
Loans advanced
Collection of loan receivables
Proceeds from recovery of lease deposits
Collection of lease deposits
Other
Net Cash Provided by (Used in) Investing Activities
Ⅲ．Cash Flows from Financing Activities
Net increase in short-term bank loans
Repayment of short-term debt
Proceeds from long-term debt
Repayment of long-term debt
Payment of cash dividends
Payment of cash dividends to minority shareholders
Proceeds from sale of treasury stock
Acqisition of treasury stock
Net Cash Provided by (Used in) Financing Activities
Ⅳ．Translation Gain (Loss) Related to Cash and Cash Equivalents
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 Term

- 15 -

Segment Information
1. Information by Business Segment
Previous fiscal year (February 1, 2006–January 31, 2007)(¥ thousands)
Baby &
child care

Healthcare

OthersTotal

Eliminationor corporate

Consolidated(1) Sales tooutside customers(2) Inter-segment

35,501,224

6,324,827

3,481,879

45,307,931－

45,307,931

－

－

－

－

Total
Operatingexpenses
Operating income
II Assets,
depreciation, &capitalexpenditure
AssetsDepreciation
Capitalexpenditure

35,501,224

6,324,827

3,481,879

45,307,931

305,538,872
4,962,352

5,983,201
341,626

3,080,363
401,515

39,602,438
5,705493

2,951,269(2,951,269)

42,553,707
2,754,223

22,679,488
968,483
1,211,035

4,273,671
142,357
52,6572,257,905
85,338127,166

29,211,065
242,852
1,390,859

6,436,961
242,852
300,801

35,648,026
1,439,031
1,691660

I Sales &operating income
Sales

－

（－）

（－） 45,307,931

Notes: 1. Pigeon’s business is classified into segments for control of its in-house organization.
2. Main products/services of each segment are summarized below.
Segment
Baby & child care
Healthcare
OthersMain products/services
Breastfeeding- and weaning-related products, skincare products, child-rearing
support services, etc.
Nursing care products, nursing care support services, etc.
Women’s care items (nutritional supplements, maternity-related products),
general-use wet tissues, etc.

3. Operating expenses for the year included all noncategorized expenses covered in the“Elimination or corporate” column. Such expenses were mainly related to divisions incontrol of consolidated administration and R&D.
4. Assets at year-end included all companywide assets covered in the “Elimination or
corporate” column. Such assets consisted mainly of a foreign currency translation
adjustment amount (incurred when translating financial statements of overseas consolidated
subsidiaries into yen), surplus working capital of the parent company (cash and deposits),
long-term investment capital (investments in securities, etc.), and R&D-related assets.
5. “Depreciation” and “Capital expenditure” do not include long-term prepaid expenses ordepreciation related to such expenses.

- 16 -

Fiscal Year in Review (February 1, 2007–January 31, 2008)(¥ thousands)
I Sales &operatingincomeSales(1) Sales tooutsidecustomers(2) Intersegment
Total
Operatingexpenses
OperatingincomeII Assets,
depreciation,& capital
expenditure
AssetsDepreciation
Impairment
Loss
Capitalexpenditure

Baby & child
care

Healthcare

OthersTotal

Elimination or
corporate

39,322,476

6,226,453

3,688,772

49,237,702－
39,322,476－
6,226,453－
3,688,772－
49,237,702

(－)
(－)

－
49,237,702

33,743,680
5,578,795

6,073,303
153,150

3,189,908
498,864

43,006,892
6,230,810

3,038,210(3,038,210)

46,045,103
3,192,599

24,976,493
1,070,185

3,633,146
149,578

2,311,759
96,55030,951,400
1,316,314

6,489,828
231,141

37,441,228
11,547,456―

386,644－386,644－386,6442,018,245

117,235

23,5902,159,070

130,173

2,289,243－

Consolidated

49,237,702

Notes: 1. Pigeon’s business is classified into segments for control of its in-house organization.
2. Main products/services of each segment are summarized below.
Segment
Baby & child care
Healthcare
OthersMain products/services
Breastfeeding- and weaning-related products, skincare products, child-rearing support
services, etc.
Nursing care products, nursing care support services, etc.
Women’s care items (nutritional supplements, maternity-related products), generaluse wet tissues, etc.

3. Operating expenses for the year included all noncategorized expenses covered in the“Elimination or corporate” column. Such expenses were mainly related to divisions incontrol of consolidated administration and R&D.
4. Assets at year-end included all companywide assets covered in the “Elimination or
corporate” column. Such assets consisted mainly of a foreign currency translation
adjustment amount (incurred when translating financial statements of overseas consolidated
subsidiaries into yen), surplus working capital of the parent company (cash and deposits),
long-term investment capital (investments in securities, etc.), and R&D-related assets.
5. “Depreciation” and “Capital expenditure” do not include long-term prepaid expenses ordepreciation related to such expenses.

- 17 -

2. Information by Geographical Segment
Previous fiscal year (February 1, 2006–January 31, 2007)(¥ thousands)
I Sales &operatingincomeSales(1) Sales tooutsidecustomers(2) Intersegment
Total
Operatingexpenses
OperatingincomeII Assets

Japan

East Asia

OthersTotal

Eliminationor corporate

Consolidated

37,338,353

4,702,168

3,267,409

45,307,931－

45,307,931

619,329

1,724,227－

2,343,556(2,343,556)－

37,957,682

6,426,395

3,267,409

47,651,487(2,343,556)

45,307,931

33,520,904

5,226,159

3,070,202

41,817,265

736,441

42,553,707

4,436,778

1,200,236

197,2075,834,221(3,079,998)

2,754,223

25,508,045

5,263,228

2,520,747

33,292,021

2,356,005

35,648,026

Notes: 1. Segmentation of countries and regions is based on geographic proximity.
2. Main countries and regions outside of Japan are as follows.
East Asia: Singapore, Thailand, China
Other: United States, etc.
3. Operating expenses for the year included ¥2,951,269 thousand in expenses fornoncategorized spending covered in the “Elimination or corporate” column. Such expenses
were mainly related to divisions in control of consolidated administration and R&D.
4. Assets at year-end included ¥6,436,961 thousand in companywide assets covered in the“Elimination or corporate” column. Such assets consisted mainly of a foreign currencytranslation adjustment amount (incurred when translating financial statements of overseas
consolidated subsidiaries into yen), surplus working capital of the parent company (cashand deposits), long-term investment capital (investments in securities, etc.), and R&Drelated assets.

- 18 -

Fiscal year in review (February 1, 2007–January 31, 2008)(¥ thousands)
I Sales &operatingincomeSales(1) Sales tooutsidecustomers(2) Intersegment
Total
Operatingexpenses
OperatingincomeII Assets

Japan

East Asia

OthersTotal

Elimination or
corporate

Consolidated

37,800,500

7,153,305

4,283,896

49,237,702－

49,237,702

974,8212,621,770－

3,596,591(3,596,591)－

38,775,322

9,775,075

4,283,896

52,834,294(3,596,591)

49,237,702

34,663,908
4,111,413

7,958,196
2,176,879

3,876,183
407,713

46,138,288
6,696,005(93,185)(3,503,406)

46,045,103
3,192,599

25,484,166

7,570,195

2,655,732

35,720,094

1,721,134

37,441,228

Notes: 1. Segmentation of countries and regions is based on geographic proximity.
2. Main countries and regions outside of Japan are as follows.
East Asia: Singapore, Thailand, China
Other: United States, etc.
3. Operating expenses for the year included ¥3,038,210 thousand in expenses fornoncategorized spending covered in the “Elimination or corporate” column. Such expenses
were mainly related to divisions in control of consolidated administration and R&D.
4. Assets at year-end included ¥6,489,828 thousand in companywide assets covered in the“Elimination or corporate” column. Such assets consisted mainly of a foreign currencytranslation adjustment amount (incurred when translating financial statements of overseas
consolidated subsidiaries into yen), surplus working capital of the parent company (cashand deposits), long-term investment capital (investments in securities, etc.), and R&Drelated assets.

- 19 -

3. Overseas Sales
Previous fiscal year (February 1, 2006–January 31, 2007)(¥ thousands)
I Overseas
sales
II Consolidated
net sales
III Overseas
sales/Net sales(%)

East Asia
5,436,987

North America
2,718,886

Middle East
1,139,045

Other
1,295,860

Total
10,590,780

45,307,931

－

－

－

－

12.0

6.0

2.5

2.9

23.4

Notes: 1. Segmentation of countries and regions is based on geographic proximity.
2. Main countries and regions outside of Japan are as follows.
(1) East Asia: China, Singapore, South Korea, etc.
(2) North America: United States, Canada, etc.
(3) Middle East: United Arab Emirates, etc.
(4) Other: United Kingdom, Australia, South Africa, etc.
3. Overseas sales consist of sales by the Company and its consolidated subsidiaries incountries and regions outside of Japan.
Fiscal year in review (February 1, 2007–January 31, 2008)(¥ thousands)
I Overseas sales

East Asia
8,049,228

North America
3,549,909

Middle East
1,143,584

Other
1,606,893

Total
14,349,616

II Consolidated net
sales

－

－

－

－

49,237,702

III Overseas
sales/Net sales (%)

16.3

7.2

2.3

3.3

29.1

Notes: 1. Segmentation of countries and regions is based on geographic proximity.
2. Main countries and regions outside of Japan are as follows.
(1) East Asia: China, Singapore, South Korea, etc.
(2) North America: United States, Canada, etc.
(3) Middle East: United Arab Emirates, etc.
(4) Other: United Kingdom, Australia, South Africa, etc.
3. Overseas sales consist of sales by the Company and its consolidated subsidiaries incountries and regions outside of Japan.

- 20 -