This document is a summary translation of the Japanese language original version. In the event of any discrepancy, errors
and/or omissions, the Japanese language version shall prevail.

Summary of Consolidated Financial Statements (Japanese Standards)
for the Fiscal Year Ending December 31st, 2016
February 9, 2017
Listed Company Name:

Coca-Cola East Japan Co., Ltd.

Listed Stock Exchange:

Security Code:

2580

URL:

http://www.ccej.co.jp

Name:

Calin Dragan

Name:

Johan Rolf

Representative:

Title

Contact:

Title

Representative Director,
President
Senior Executive Officer
Finance Function

Scheduled date of annual shareholders’March 23, 2017
meeting:
Scheduled date of submission of annual
March 24, 2017security report:
Preparation of supplementary documents for earnings results:

Tokyo Stock Exchange

TEL: 03 (5575) 3859

Schedule date of start ofdividend payment:

March 24, 2017

Yes

Earnings results presentation/conference:

Yes(Amounts of less than one million yen are rounded down)

1． Consolidated Financial Results for the Fiscal Year Ending December 31, 2016 (January 1, 2016 – December 31, 2016)(1)
Consolidated Operating Results (YTD)(Percentages show year-on-year changes)
Net Income
Attributable to
Net Sales
Operating Income
Ordinary Income
Owner of Parent
Million Yen%

Million Yen

FY 2016
572,496
1.7
18,489FY 2015563,162
7.6
10,791(Note) Comprehensive income: FY2016: 6,464 Million Yen (-1.5%)
Net Income per
Share

Diluted Net Income
per Share

Yen

Million Yen

%

72.1

10,718100.2

10,411
8.4
FY2015: 6,560 Million Yen (39.1 %)

5,354

55.9

Operating Income
Margin

ROA
%

4.6
2.4
FY2015: 134 Million Yen

%

%

4.8
2.9

3.2
1.9

Consolidated Financial Position
Net Assets

Million Yen

Equity Ratio

Million Yen

FY2016369,348
233,635
FY2015
371,771
230,945(Reference) Shareholders’ equity: FY2016: 232,961 Million Yen

Net Asset per Share
%

Yen

63.1
62.0
FY2015: 230,525 Million Yen

1,836.64
1,817.67

Consolidated Cash Flows
Operating Activities

FY2016FY2015%

17,921

15.3

Yen

Total Assets(3)

Million Yen

ROE

FY 2016
84.51
84.30
FY 201542.70
42.64(Reference) Equity income: FY2016: 154 Million Yen
(2)

%

71.3

Investing Activities

Financing Activities

Cash and Cash Equivalents
at year-end

Million Yen

Million Yen

Million Yen

Million Yen

32,707
39,576-32,959-33,207-4,969-10,276

16,352
21,573

2．Dividends
Dividend per Share
Q1
Yen

Q2

Q3

Yen

Q4

Yen

Dividend
Payout Ratio(Consolidated)

Total Dividend
Total

Payment (Annual)

Yen

Million Yen

Yen

Ratio of Dividends
to Net Assets(consolidated)%%

FY2015－16.00－
16.00 32.00
4,058
74.9
1.8
FY2016－16.00－
16.00 32.00
4,058
37.9
1.8
FY2017－－－－－－(forecast)(Notes) FY2017 dividend forecast is omitted, as proposed business integration between the company and Coca-Cola West Co., Ltd.
through a combination of a share exchange and incorporation-type company split with April 1, 2017 as the expected
effective date.
3．The Consolidated Earnings Forecasts for the Fiscal Year Commencing January 1st and Ending December 31st ,2017(Percentages show year-on-year changes)

Net Sales
Million Yen

Operating Income%

Million Yen%

Ordinary Income

Net Income
Attributable to
Owner of Parent

Million Yen

Million Yen

%

EPS

%

Yen

Full-Year
(Notes) The proposed business integration between the company and Coca-Cola West Co., Ltd. through a combination of a shareexchange and incorporation-type company split with April 1, 2017 as the expected effective date. Reference forecast for
FY2017 based on current consolidated scope of the company is available on page 2 “Qualitative Information on the FullYear Results ”
Notes:(1)
Changes in important subsidiaries during the reporting period (Changes in specified subsidiaries
accompanied by changes in the consolidation scope)

None

Notes of Changing in important subsidiaries during the reporting period(2)

Changes in accounting policies, changes in accounting estimates, or restatement(i) Changes in accounting policies due to revisions of accounting standards, etc.

Yes(ii) Changes in accounting policies other than (i)None(iii) Changes in accounting estimatesYes(iv) Restatement

None

(3)
Number of Issued Shares (Common Shares)(i) Number of issued shares at the end of each
FY 2016
fiscal year (including treasury stocks)(ii) Number of treasury stocks at the end of
FY 2016
each fiscal year(iii) Average number of the shares during each
FY 2016
fiscal year

127,680,144 shares

FY 2015

127,680,144 shares

839,207 shares

FY 2015855,654 shares

126,837,892 shares

FY 2015

125,399,031 shares(Note) With regard to the number of shares used as the basis for calculation of net income per share (consolidated), pleaserefer to "Per Share Information" on page 31.
*Statement regarding the status of the audit procedures
At the time of disclosure of this financial summary, the audit procedures on financial statements, pursuant to the Financial
Instruments and Exchange Act, are in progress.
*Explanation regarding the appropriate use of earnings forecasts and other special notes
Although the statements in this summary are prepared based on various information available to the Company and certain
assumptions considered reasonable by the Company, actual results may differ significantly due to various factors. For detailsof assumptions for earnings forecasts and notes on the use of earnings forecasts, please see “Qualitative Information on the
Full-Year Results,” page 2 of the attached material of the summary.

Contents of the Attached Materials

1. Analysis of Operating Results and Financial Position ...................................................................................2(1) Qualitative Information on the Full-Year Results ..............................................................................................2(2) Qualitative Information on the Consolidated Financial Positions ....................................................................4(3) Basic Policies for Profit Distribution and Dividends for FY2016 and FY2017 ................................................6(4) Risks of Businesses, etc....................................................................................................................................6
2. Status of Corporate Group ..................................................................................................................................8
3. Management Policies ........................................................................................................................................ 10(1) Basic Management Policies ........................................................................................................................... 10(2) Targeting management benchmark ............................................................................................................... 10(3) Medium-to-Long Term Management Strategies............................................................................................ 10(4) Issues Requiring Action .................................................................................................................................. 10(5) Other Significant Matters for Management..................................................................................................... 11
4. Basic Policy on the Selection of Accounting Standards .............................................................................. 11
5. Consolidated Financial Statements ................................................................................................................ 12(1) Consolidated Balance Sheet .......................................................................................................................... 12(2) Consolidated Profit and Loss Statement and Comprehensive Profit and Loss Statement......................... 15(3) Consolidated Statement of Changes in Equity.............................................................................................. 17(4) Consolidated Statement of Cash flows .......................................................................................................... 19(5) Notes to Consolidated Financial Statements................................................................................................. 21(Notes to assumption of going concern) ......................................................................................................... 21(Basis for preparation of consolidated financial statements) .......................................................................... 21(Changes in accounting policies)..................................................................................................................... 22(Unapplied accounting standards, etc.)........................................................................................................... 23(Changes in presentation methods) ................................................................................................................ 23(Changes in accounting estimates) ................................................................................................................. 24(Consolidated Balance Sheet) ......................................................................................................................... 24(Consolidated Profit and Loss Statement) ...................................................................................................... 25(Consolidated Comprehensive Profit and Loss Statement) ........................................................................... 26(Consolidated Statement of Changes in Equity) ............................................................................................. 27(Consolidated Statement of Cash flows) ......................................................................................................... 28(Deferred Tax Accounting) ............................................................................................................................... 29(Segment information, etc.).............................................................................................................................. 31(Per share information) .................................................................................................................................... 32(Significant subsequent events)....................................................................................................................... 32

1

1. Analysis of Operating Results and Financial Position(1) Qualitative Information on the Full-Year Results(i) Qualitative Information on the Consolidated Operating Results
The consolidated financial results of Coca-Cola East Japan Co., Ltd. (“CCEJ” or the “Company”) for the fiscal
year ending on December 31, 2016, are as follows.
In addition to this qualitative information section, please also see the earnings presentation material posted on
our Company IR website (http://investor.ccej.co.jp), which will be used for the earnings presentation andwebcast on Friday, February 10, 2017 at 1:30 p.m. (JST).
Full-Year Results Highlight・

Operating income grew more than 70% year-on-year and net income doubled. Full-year results
came in ahead of the upward earnings revision announced on September 9, 2016, driven bycontinuous synergy capture from supply chain efficiencies and volume growth.

・

Full-year volume grew by 4% year-on-year, driven by continued good performance of newly-launched
products as well as the benefit of the integration of Sendai on April 1, 2015. Market shareperformance in terms of both value and volume was even for the full year.

・

Steady progress on business integration planning with Coca-Cola West Co., Ltd. (CCW). On
schedule to form the third largest global Coca-Cola bottler in terms of revenue, “Coca-Cola Bottlers
Japan Inc.” expected to be established effective April 1, 2017.

Operating Review
Total nonalcoholic ready-to-drink (NARTD) beverage industry volumes were generally positive in this fiscal year.
Total BAPC (Bottler Actual Physical Cases) sales volume of CCEJ grew 4% year-on-year, led by continued
good performance of newly launched products as well as the integration of Sendai.

Full-year volume

excluding the integration impact (assuming previous year term volume includes Sendai) was positive 2%.
Full-year volume performance by channel is as follows: Drug & Discounter channel +15%, convenience store
channel +5%, supermarket channel +4%, eating & drinking channel +3% and vending channel negative -1%.
Sparkling beverage volume grew +3% in 2017, led by growth of brand Coca-Cola, Coca-Cola Zero and Fanta,
etc. Non-sugar tea volume grew +4%. Water grew +11%, led by continued good performance of our portfolio ofwater brands, including new product launches of the more premium, smaller package size I LOHAS water andgrowth of 2L Mori-no-Mizu Dayori brand. Coffee volume continued to grow, up 6%, mainly driven by customerexclusive branded products and Georgia The Premium series, which was launched in second half of 2015.
Juice volume grew +2%. Sports drinks volume was negative 5%, reflecting overall category performance
weakness.
Full-year channel and category performance were also driven by the Sendai integration.
Fourth quarter (October to December, Q4), total BAPC sales volume was negative 2% year-on-year, cycling
timing of product launches and other marketing activities in the prior year period.
Volume performance by channel in the fourth quarter was as follows: Supermarket channel was even year-onyear, reflecting continued improvement of selling price to customers through improved volume mix of smallersize packages. Convenience Store volume declined 5%, as growth of non-sugar tea and sparkling beverages
2was offset by weakness of coffee and waters due to cycling. Vending channel volume declined 6% as growth insparkling and water was also offset by a decrease of coffee mainly due to cycling of new products prior year.
However vending channel profitability has improved supported by the rollout of vending-exclusive products andan increased focus on cost controls. Eating & drinking channel volume was even.

Finally, the drug &discounter channel grew 3%, led by sparkling beverages, non-sugar tea and sports drinks.
In terms of fourth quarter beverage category volume performance, sparkling beverage volume grew 2% led by
growth in vending and drug & discounter channels. Non-sugar tea volume was negative 1% with growth of therenewed Sokenbicha brand offset by weakness in the supermarket and vending channels. Water and coffee
volume were negative 10% and 5%, respectively due to cycling of new product launches in the prior year.
Sports drinks volume grew 2%, led by growth in the supermarket and drug & discounter channels. Juicevolume declined 5%.
Financial Review
Reported Results
Full-Year 2016 (January to December)
In Million JPY

2015

2016

% Change

Net Sales

563,162

572,496+1.7

Operating Income

10,791

18,489+71.3

Net Income Attributable to

5,354

10,718+100.22015

2016% Change

Volume** (BAPC, in thousand)

305,945

317,991+3.9

Net Sales

563,162

572,496+1.7

Operating Income

11,902

20,168

+69.5

2015

2016

% Change

Volume** (BAPC, in thousand)

75,35874,040-1.7

Net Sales

137,632

133,851

-2.7

3,182

1,373

-56.9

Owner of Parent
Comparable* Results
Full-Year 2016 (January to December)
In Million JPY, except volume

Q4 2016 (October to December)
In Million JPY, except volume

Operating Income* Comparable: Presentation of results after excluding exceptional items such as charges, gains, etc. which are viewed bymanagement as non-recurring items impacting only the current period or the comparable period, but not both. These
comparability adjustments should be viewed in addition to, and not as an alternative for, the Company's reported results
prepared in accordance with JGAAP.
** Previous year volume shown above may be slightly different from what we shared in the previous year, as part of theimplementation and standardization for the new ERP system, CokeOne+.

Full-year reported revenue was JPY 572,496 million (positive 2% compared to the prior year period), mainly
attributable to volume growth as well as the integration of Sendai as of April 1, 2015. Fourth quarter revenue
declined 3% due to a decrease in sales volume and lower sales of finished products to other Coca-Cola bottlers
in Japan.

3

Full-year reported operating income grew significantly to JPY18,489 million (positive 71% compared to the prioryear period), driven by gross profit increase reflecting continuous synergy capture from supply chain efficiency,
volume growth, etc. Additionally, growth of advertisement & sales promotion expenses, sales commissions, etc.
due to volume growth partially offset by lower labor expenses, etc. resulted in a moderate increase of sales,
general & administrative expenses. Fourth quarter comparable operating income was negative 57% mainly due
to higher advertisement & sales promotion expenses as well as increased compensation and benefits due tothe strong business results in 2016.
We reported full-year net income of JPY10,718 million (positive 100% compared to the prior year period), due
to the increase in operating income, decrease of extraordinary loss, etc.

(ii) Forecast for The Next Fiscal Year (January 1, 2017 to December 31, 2017, Reported)
Revenue(M JPY)

Operating Income(M JPY)

Ordinary Income(M JPY)Net Income
Attributable to Ownerof Parent (M JPY)

EPS (Yen)FY2017 Forecast

580,400

20,00019,80012,30097.02

FY2016 Results

572,496

18,48917,921

10,718

84.51

+1.3

+8.1

+10.3

+14.8

+14.8

Variance (%)

The proposed business integration between the company and CCW scheduled on April 1, 2017 as the expected effective
date. The forecast for FY2017 is based on current consolidated scope of the company.

In 2017, we will continue to focus on profitable growth and optimizing investment and returns. Together with ourpartners at Coca-Cola Japan (CCJC), we plan extensive deployment of high value-added and premium
products including functional benefits, innovation in ingredients and packaging and strong execution ofmarketing and sales promotion activities.
For the Coca-Cola brand, we will introduce a new FOSHU product, Coca-Cola Plus in March 2017 as an
expansion to the growing FOSHU (Food for Specified Health Usage) category. We will also continue thesuccessful, Taste the Feeling global campaign, along with an introduction of new package graphics intrademark Coca-Cola, aiming to energize and drive the growth of trademark Coca-Cola and the sparkling
beverage category. In non-sugar tea, we have launched Karadameguricha Advance, a new functional claim tea
brand. By strengthening sales of high value, immediate consumption offerings, we aim to drive improvementsin overall pricing and mix environment and support improved profitability.
We plan to sell 323 million cases in 2017, representing positive volume growth of 2% versus prior year.

(2) Qualitative Information on the Consolidated Financial Positions(i) The Financial Positions at the end of This Fiscal YearThe financial positions at the end of this fiscal year are as follows:
Assets at the end of this fiscal year were JPY 369,348 million, a decrease of JPY 2,422 million from the end of
the previous fiscal year. This is mainly attributable due to an increase of fixed assets by acquiring the land andbuilding of our Tama manufacturing plant, etc., offset by a decrease of cash and deposits through optimizing
liquidity and a decrease of merchandise and finished goods through activities for decreasing inventory levels.

4

Liabilities at the end of this fiscal year were JPY 135,713 million, a decrease of JPY 5,112 million from the endof previous fiscal year. This is mainly due to an increase of long-term loans payable due to acquiring the landand building of our Tama manufacturing plant etc., partially offset by decrease of account receivable-trade,
lease obligations, short term loan, etc.
Net assets at the end of this fiscal year were JPY 233,635 million, an increase of JPY 2,689 million. This is due
to increase of net income partially offset by a payment of dividends, etc.
(ii) The Cash Flow Positions
Cash and Cash Equivalents at the end of this fiscal year was JPY 16,352 million, a decrease of JPY 5,221
million compared with the end of last fiscal year. Cash flow by activities in this consolidated accounting period is
as follows.
(Cash Flow from Operating Activities)
Cash generated from operating activities was JPY 32,707 million (a decrease of JPY 6,868compared with theend of last fiscal year). This results mainly from JPY 17,472 million for pre-tax income and depreciation
expenses, decrease of account receivable-trade, inventory, etc. offset by decrease in account payable-trade,
payment of corporate taxes, etc.
(Cash Flow from Investing Activities)
Cash used for investing activities was JPY 32,959 million (cash out increased JPY 248 million year-on-year).
The outflow includes expenditure for new fixed assets such as land and building, machinery and equipment forplants, cold drink equipment, intangible fixed assets due to new development of ERP system, etc.
(Cash Flow from Financing Activities)
Cash used for financing activities was JPY 4,969 million (decreasing JPY 5,306 million year-on-year). The
inflow is attributable to net increase of long-term loans. The outflow includes repayment of short-term loan,lease obligations, payment of the dividends, etc.
Transition of ratios for cash flow of CCEJ is as follows.
2012

2013

2014

2015

2016

Capital-to-asset ratio (%)

77.5

68.7

62.3

62.0

63.1

Capital-to-asset ratio based on market price (%)

41.9

84.1

65.4

66.6

88.5

－

－

240.9

95.2

139.2

687.5

134.6

32.4

89.3

257.8

Cash flow / interest bearing liability ratio (%)
Interest coverage ratio (times)(Note) CCEJ began operations as an integrated company starting in the third quarter of 2013. Above table reflects
consolidated result of the legacy Coca-Cola Central Japan (CCCJ) until 2012, and for the first and second quarter results in2013.

Equity Ratio: Shareholder’s equity / Total Assets
Capital-to-asset ratio based on market price: Market cap / Total Asset
Cash flow / interest bearing liability ratio: Interest bearing liability / Operating Cash Flow
Interest Coverage Ratio: Operating Cash Flow / interest paid
(Note 1) All numbers are based on consolidated basis.
(Note 2) Market cap is calculated by “Closing share price at the end of the year × Number of shares issued(after deduction of treasury stock)”.
(Note 3) Operating cash flow and interest paid come from operating cash flow and interest paid in consolidated
cash flow statement which includes interest for lease liabilities.
5

(Note 4) Interest bearing liability consists of all the liabilities which are listed in consolidated balance sheet andrequire interest payment.

(3) Basic Policies for Profit Distribution and Dividends for FY2016 and FY2017
The Company regards the dividend policy as one of the key managerial issues and declares semi-annual
dividends under the basic policies, to continue with business investments and to place top priority on
healthy and stable payment of dividends in order to secure sustainable development and high profitable
growth of the Company into the future.
With regard to the dividend of retained earnings, year-end dividend is determined by resolution in the
Ordinary General Meeting of Shareholders, and interim dividend is determined by the Board of Directors
Meeting, respectively. Our proposed year-end dividend for FY2016 is 16 yen per share and 32 yen per
share for the annual dividend, combined with the interim dividend of 16 yen paid in September 2016.
The internal reserve will be secured for development of our future businesses and as costs of capital
expenditure, etc.
The annual dividend of the following period is not yet determined since the business integration with
CCW is scheduled to be effective as of April 1, 2017.
(4) Risks of Businesses, etc.
Of the matters related to the Group’s operating results and financial position stated in the summary of financial
statements, matters that could have a significant impact on investors’ judgment are as follows.
Any forward-looking statements contained herein are based on the judgment of the Group at the end of theyear under review.
i.

Risks relating to agreements with The Coca-Cola Company and Coca-Cola (Japan) Company
Limited.
The Group conducts businesses under the Bottler’s Agreement executed by and between theGroup, The Coca-Cola Company and Coca-Cola (Japan) Company Limited. Please refer to “(5)Other Significant Matters for Management, 3. Management Policies” for more details on theabove agreements. In case of the occurrence of a significant change in these agreements or any
events not expected thereunder, the Group’s business operations and results could be affected.

ii.

Risk relating to business integration with Coca-Coca West Co., Ltd.
In April 2017, the Group and Coca-Coca West Co. Ltd. plan to integrate their businesses andlaunch a new company named Coca-Cola Bottlers Japan Inc. The planned business integration is
expected to increase the need of reinforcing the management of the risks specified below in “iii”
through “xi”. If the execution of various initiatives and projects in the Group is delayed, suspended,or unable to achieve the objectives and initially set targets due to the effect of the businessintegration, the Group’s business results and financial position could be affected.

iii.

Risks relating to the quality and safety of products
Recently, the food and beverage industries faced the occurrence of such problems as foreign
matter contamination and illegal resale of food products that should have been disposed of as
industry waste, which has increased consumers’ attention to the quality and safety of food products.
Consumers’ growing health consciousness is turning their interest toward the safety of the caffeine,sugar, sweetener and/or food additives contained in the Group’s products. We have been6

promoting the enhancement of our quality and safety management systems to offer safe and tasty
products to consumers, and endeavoring to offer a diverse range of products and services to meetthe changing needs of consumers. However, in the event of a problem with the quality and safetyof our products, the failure to meet changing needs in a timely and appropriate manner or a
problem with the products of competitors that could have an incidental adverse effect on theGroup’s products, demand for the Group’s products could decrease and the Group’s businessresults could be affected.
iv.

Risks relating to market competition
Although significant growth is not foreseen for the beverage market, competition over market
shares among non-alcoholic ready to drink manufacturers has been intensifying. In addition, withchanges in consumer purchasing trends and distribution channels, the conventional ways of sellingare under growing pressure to change. To address these changes and survive the fierce market
competition, the Group has been implementing various sales and marketing strategies. However, if
these strategies are ineffective, that might decrease our sales and market share and increase
selling costs, thereby causing an adverse effect on the Group’s business results.

v.

Climate-related risks
Soft drink sales are susceptible to the climate (e.g., weather, temperature, etc.) due to the productcharacteristics. In particular, bad weather and low temperature during the peak season could
influence the Group’s business results.

vi.

Disaster-related risks
The Group has Group-wide risk management programs in place to ensure the health and safety of
employees, protect its business facilities and restore its important businesses within a specified
period of time in case of a natural or man-made disaster. However, a failure to fulfil the goals set
forth under these programs could lead to a loss of the Group’s important human resources, afailure in the Group’s equipment, facilities and IT systems, and/or a suspension or delay in therecovery of business operations, thereby causing adverse effects on the Group’s business results
and financial position.

vii.

Risks relating to the streamlining and optimization of business processes
Because the Group was formed by integrating five bottling companies, various programs are in
operation within the Group to concentrate, consolidate and standardize to a maximum extent thesystems, processes, equipment and facilities that had been used by the respective bottlingcompanies before the integration to enhance the efficiency and productivity of the Group’sbusiness operations. Specific projects include the introduction of new production lines and IT
systems, removal of unprofitable vending machines and dispensers and consolidation andoptimization of distribution networks. If a delay or suspension occurs in these projects or theirobjectives or intended results cannot be achieved, the Group’s business results and financial
position could be affected.

viii.

Risks relating to fluctuations in the fair value of pension assets
The Group has a defined benefit pension plan. In cases when the operation of pension assets
consisting of securities grows worse, retirement benefit expenses might increase, thereby affecting
the Group’s business results.

ix.

Risks relating to legal compliance
The Group conducts the manufacture and sales of soft drinks and ancillary businesses such as the7maintenance and repair of sales equipment and the delivery of products. These businesses are
subject to various laws and regulations, including the Food Sanitation Act, the Product Liability Act,
the Road Traffic Act and the Anti-monopoly Act. In addition, we are required to respond flexibly tocomply with laws and regulations that have the possibility of being newly introduced or revised in
the future. If additional expenses are incurred to ensure legal compliance or in the event ofviolating the laws and regulations, the Group’s reputation and business results could be affected.
x.

Risks relating to water resources
The Group has “source water preservation programs” in action at all of its plants to secure water
resources, a major ingredient of its products. Meanwhile, we are increasing the capacity to supply
water products, including ilohas, to meet the growing demand of consumers. If these efforts fail toachieve the intended results, we could become unable to secure water resources or supply waterproducts, thereby affecting the Group’s business results and financial position.

xi.

Risks relating to leakage or loss of information
In the process of conducting its business, the Group has come to hold private or confidential
information as to customers, employees and business partners. In addition, the Group’s businessis conducted by using many IT systems. Therefore, we plan to carry out integrated information
security measures led by the Information Security Committee and using the cloud computing
service. In the event of leakage or loss of information, however, the Group’s social credibility or
business results could be affected.

2. Status of Corporate GroupThe Group consists of the Company, two consolidated subsidiaries, one non-consolidated subsidiary, and threeequity method affiliated companies at the end of FY2016. The key entities are as follows;(1) Sales of non-alcoholic ready to drinks, etc.
Coca-Cola East Japan Co., Ltd. and FV East Japan Co., Ltd., are the operators of the business.
(2) Production, distribution of non-alcoholic ready to drinks and maintenance, repair service etc. of sales
equipment
Coca-Cola East Japan Co., Ltd. is the operators of the business.

8

As of December 31, 2016, the diagram of the Group is as follows;

Sales and distribution of beverages, etc.

Maintenance and repairing of the sales equipment
Sales of beverages, maintenanceand repairing of the sales

Sales of beverages, etc.

FV East Japan Co., Ltd.

Coca-Cola (Japan) Company

Rebate for sales promotion
purpose, etc., purchase ofbeverage base

※２
Purchasing of the sales equipment andpurchasing of the raw materials / othermaterials

Coca-Cola Business Sourcing Company, Limited※２
Development, operation, andmaintenance of information systems※２

Coca-Cola Integrated Business Systems Co., Ltd.

※１FV Corporation Co., Ltd.

Coca-Cola Customer Marketing Company, Limited

Insurance agent, etc.

Insurance agent, etc.

Mikuni Service Co., Ltd.

※１： Non-consolidated subsidiaries※２： Equity method affiliated companies※３： Other companies that are the affiliated companies of The Coca-Cola Company

9

General consumers and customers

Coca-Cola East Japan Co., Ltd.

※３

3. Management Policies(1) Basic Management Policies
Based on our mission, “Create a new world of beverages,” the Group will achieve further development tocontribute to all stakeholders through sustainable growth, being: “Number One in the Beverage Industry,” “The
Only One for the Community,” and “The Best One as a Workplace,” while placing our first and top priority on
delivery of safe products and services to our customers.
To achieve our mission, the company has established a mid- to long-term strategy, “One+ Roadmap for
Growth” to become a world-class Japanese Coca-Cola bottler.
(2) Targeting management benchmark
As a management benchmark for FY2017, the Group is targeting to deliver 20 billion yen of operating income
based on the current consolidated scope of the company. The proposed business integration between thecompany and Coca-Cola West Co., Ltd. through a combination of a share exchange and incorporation-typecompany split is expected to be effective on April 1, 2017. An announcement of the integrated company’sbusiness plan for 2017 will be made later in the year.
(3) Medium-to-Long Term Management Strategies
The company has in place a mid-to-long term strategy, “One+ Roadmap for Growth” to become a world-class
Japanese Coca-Cola bottler.
In line with the One+ Roadmap for Growth, we are actively and rapidly implementing action plans to achieve
our growth target, which include realigning our Commercial organization and capabilities toward revenue
growth, generating synergies by reducing costs and driving efficiency across our supply chain – manufacturing,logistics and distribution, incremental investment for infrastructure and people development.
In order to ensure further growth, business integration with Coca-Cola West Co., Ltd. is scheduled to take effectfrom April 1, 2017. Through this business integration, it is aimed that our corporate value be improved for all of
our stakeholders by establishing an even stronger business management basis and by gathering the knowhow that both companies have developed for their sales activities from the customers’ perspective and for the
improvement in the productivity in the area of manufacturing and therefore implement the initiative for realizing
a structure where we can correspond to the even fiercer competitive environment in a prompt manner.
(4) Issues Requiring Action
The non-alcoholic ready to drink beverage industry in Japan continues to face challenges amid the highly
diversified needs of the consumers and customers and the fierce sales competition between the soft drink
companies.
By the business integration scheduled on April 1, 2017, we will aim to ensure further growth by developing ourcommunity-based sales activities which both companies had established in each of their business areas, byreinforcing cost competitiveness in the supply chain, reformation in the business processes, optimization of
the allocation of personnel, and reviewing the way the entire Coca-Cola System should exist within Japan,
and will also aim to coexist and co-prosper with the local communities by ensuring community-based businessactivities and social contribution activities.
In addition, under our partnership with Coca-Cola (Japan) Company Limited, we will vigorously conduct sales
promotion activities and introduction of new products, while pursuing further synergy through the businessintegration and accelerating growth to become a world-class Coca-Cola bottler based in Japan.

10(5) Other Significant Matters for Management
The Company has entered into an Agreement with The Coca-Cola Company and Coca-Cola (Japan) Company
Ltd. for manufacturing and sales of Coca-Cola and other products and use of the trademarks etc. in Tokyo and
15 prefectures in Kanto, Koshinetsu, Chubu and South Tohoku regions.
In addition, the Company has entered into the Capital and Business Alliance Agreement with The Coca-Cola
Company, Coca-Cola (Japan) Company Ltd. and Coca-Cola West Co., Ltd. in order to further promote
development and to enhance corporate value.

4. Basic Policy on the Selection of Accounting Standards
CCEJ group prepares consolidated financial statements in Japanese accounting standards considering thecomparability of past years.

115. Consolidated Financial Statements(1) Consolidated Balance Sheet

12Consolidated Balance Sheet(MM yen)
FY2015FY2016

AssetsCurrent assets
Cash and deposits

21,57816,357

Notes and accounts receivable-trade44,56543,510301－

Merchandise and finished products

34,35931,676

Raw materials and supplies

3,377

3,531

Securities

Deferred tax assets

2,241

2,468

Accounts receivable-other

13,184

10,514

Other

7,801

6,783

(67)

(153)

127,343

114,688

Buildings and structures, net

124,594

127,022

Accumulated depreciation(78,733)(81,615)

Buildings and structures, net

45,86145,406

Machinery Equipment And Vehicles

78,36089,229(40,708)(45,871)

Allowance for doubtful accounts
Current assets
Noncurrent assets
Property, plant and equipment

Accumulated depreciation
Machinery, equipment and vehicles, net
Sale equipment
Accumulated depreciation
Sales equipment,net

37,65243,358

199,744

191,694(133,631)(125,891)

66,11265,802Tools, furniture and fixtures

7,408

8,112

Accumulated depreciation(5,636)(5,976)

Tools, furniture and fixtures, net

1,772

2,136

Land

50,883

63,132

Lease assets

15,653

1,548

Accumulated depreciation(7,962)(1,176)

Lease assets, net

7,691

371

Construction in progress

345

494

210,318

220,702

8,361

9,119

9,720

7,907

Property, plant and equipment
Intangible assets
Investments and other assets
Investment securities
Stocks of subsidiaries and affiliates

323

650

Long-term loans receivable

1,971

1,760

Deferred tax assets

4,732

6,091

Other

9,225

8,655

Allowance for doubtful accounts

(225)

(227)

Investments and other assets

25,74824,838

Noncurrent assets

244,428

254,660

371,771369,348

Assets13

FY2015

FY2016(MM yen)

Liabilities
Current liabilities
Accounts payable-trade29,14921,607

Short-term loans payable

5,160

－

Current portion of bonds－

14,000Current portion of long-term loans payable

1,234

1,855

Lease obligations

3,401

224

accounts payable-other and accrued expenses

36,77036,366

Income taxes payable

1,100

420

Provision for bonuses

1,364

2,761

Provision for directors' bonuses

37

169

Provision for environmental measures－

45

Provision for early termination

963

850

Asset retirement obligations

33

27

Other

3,452

2,810

Current liabilities

82,66881,140Bonds payable

30,00016,000Long-term loans payable

2,520

13,664

Lease obligations

4,493

159

Noncurrent liabilities

Deferred tax liabilities

0

－

335

254

Provision for early termination

1,392

581

Net defined benefit liability

17,59722,399Provision for environmental measures

Asset retirement obligations

776

816

Other

1,040

696

Noncurrent liabilities

58,15654,572140,825

135,713

Capital stock

6,499

6,499

Capital surplus

157,313

157,323

Retained earnings

68,454

75,114

Treasury stock(1,178)(1,158)

Shareholders' equity

231,089

237,779

Valuation difference on available-for-sale securities

2,151

1,732

Deferred gains or losses on hedges

(463)

(89)

Remeasurements of defined benefit plans(2,251)(6,461)

Accumulated other comprehensive income(564)(4,818)

Liabilities
Net assets
Shareholders' equity

Accumulated other comprehensive income

Stock acquisition rights
Net assets
Liabilities and net assets

14

420

673

230,945

233,635

371,771369,348

(2) Consolidated Profit and Loss Statement and Comprehensive Profit and Loss Statement(Consolidated Profit and Loss Statement)(MM yen)
FY2015FY2016

Net sales

563,162

572,496

Cost of sales

302,087

299,604

Gross profit

261,075

272,892

Selling, general and administrative expenses

250,284

254,402

Operating income

10,791

18,489Non-operating income
Interest income

96

63

Dividends income

147

116

Share of profit of entities accounted for using equity method

134

154

Rent income

388

345

Gain on sales of valuable wastes

282

428

Other
Non-operating income

319

180

1,368

1,289

Non-operating expenses
Interest expenses

446

132

Loss on sales and retirement of noncurrent assets

864

1,494

Other

436

229

Non-operating expenses

1,748

1,856

10,411

17,921Gain on transfer of business

247-

Gain on bargain purchase

84-

Insurance income

79-

Gain on sales of noncurrent assets

821Gain on sales of investment securities

725

222

Ordinary lncome
Extraordinary income

OthersExtraordinary income

30

16

1,175

260

Extraordinary loss
Cost of system interruption
Loss on sales and retirement of noncurrent assets
Lease contract cancellation penalty

160

-

1,130

132

467

341

Restructuring cost

1,020

192

Defective work cost

235-

Impairment loss

8

4

Integration expenses

39-

Others237

39

Extraordinary loss

3,300

709

Income before income taxes

8,286

17,472

Income taxes-current

1,956

6,287

Income taxes-deferred

975

466

Income taxes

2,932

6,753

Net income

5,354

10,718Net income attributable to owners of parent

5,354

10,71815

(Consolidated Comprehensive Profit and Loss Statement)(MM yen)
FY2015
Net income

FY2016

5,354

10,718

507

(419)

1,465

(4,209)

(766)

374

Other comprehensive income
Valuation difference on available-for-sale securities
Remeasurements of defined benefit plans
Share of other comprehensive income of associates accounted for using
equity method
Other comprehensive income※

Comprehensive income
Comprehensive income attributable to owners of parent

16

1,206

※

(4,254)

6,560

6,464

6,560

6,464

(3) Consolidated Statement of Changes in Equity
FY2015 (From January 1st, 2015 to December 31st, 2015)(Million JPY)
Shareholders' equity
Capital stock Capital surplus
Balance as of December 31st 2014

6,499

Retainedearnings

143,134

Cumulative effect of change in accounting policy

66,837-1,170Total
215,301

917
6,499

Adjusted balance as of December 31st 2014

Treasury stock

143,134

67,755917-1,170216,218

Changes of items during the period
Increase by share exchange

14,175

14,175

Dividends from surplus-3,965-3,965

Net income attributable to owners of parent

5,354

5,354

Purchase of treasury stock
Disposal of treasury stock3

Increase or decrease due to the merger of nonconsolidated subsidiaries by the consolidated
subsidiaries
Net changes of items other than shareholders'equity

-14

7

11

-689

Total changes of items during the period
Balance as of December 31st 2015

-14

6,499

-689

14,179699-714,871

157,31368,454-1,178231,089

Accumulated other comprehensive income

Balance as of December 31st, 2014
Cumulative effect of change inaccounting policy
Adjusted balance as of December 31,
2014

Valuationdifference on
available-for-salesecurities

Deferred gain orloss on hedges

Remeasurementsof defined benefit
plans

1,644

302

-3,717

Total-1,770Stock acquisitionrightsNet assets

223

213,754
917

1,644

302

-3,717-1,770223

214,672

Changes of items during the period
Increase by share exchange

14,175

Dividends from surplus-3,965

Net income attributable to owners of

5,354

parentPurchase of treasury stock-14

Disposal of treasury stock

11

Increase or decrease due to themerger of non-consolidated
subsidiaries by the consolidated
subsidiaries
Net changes of items other thanshareholders' equity
Total changes of items during theperiodBalance as of December 31st, 2015

-689

507

-766

1,465

1,206

196

1,402

507

-766

1,465

1,206

196

16,273

2,151

-463

-2,251-564

420

230,945

17

FY2016 (From January 1, 2016 to December 31, 2016)(Million JPY)
Shareholders' equity
Capital stock Capital surplus
Balance as of December 31st, 2015

6,499

Retainedearnings

157,313

Treasury stock

68,454-1,178

Total
231,089

Changes of items during the period
Dividends from surplus-4,058-4,058Net income attributable to owners of parent

10,718

10,718Purchase of treasury stock
Disposal of treasury stock

9

-6

-6

27

37

Net changes of items other than shareholders'equityTotal changes of items during the period
Balance as of December 31st, 2016

6,499

9

6,660

20

6,690

157,323

75,114-1,158

237,779

Accumulated other comprehensive income
Valuation
Deferreddifference on
loss/gain fromavailable-for-salehedging activities
securities
Balance as of December 31st 2015

2,151

Remeasurementsof defined benefit
plans

-463

-2,251

Total

-564

Stock acquisitionrightsNet assets

420

230,945

Changes of items during the period
Dividends from surplus-4,058Net income attributable to owners of

10,718parentPurchase of treasury stock-6

Disposal of treasury stock37

Net changes of items other thanshareholders' equity

-419

374

-4,209-4,254253-4,000Total changes of items during theperiod-419

374-4,209-4,254253

2,689

Balance as of December 31st 2016

1,732

-89

-6,461-4,818673

233,635

18

(4) Consolidated Statement of Cash flows
Consolidated Statement of Cash flows(MM yen)

FY2015FY2016

Cash Flows from Operating Activities:
Income (loss) before income taxes

8,286

17,472

Depreciation and amortization

23,831

22,287

Amortization of long-term prepaid expenses

12,477

12,021(24)

88(1,663)(1,203)

Increase (decrease) in provision for directors' bonuses

(0)

132

Increase (decrease) in provision for directors' retirement benefits(2)－Interest income and dividends income

(243)

(179)

Interest expenses paid

446

132

Share of (profit) loss of entities accounted for using equity method

(134)

(154)

Special retirement expenses

619

105

Loss (gain) on sales of noncurrent assets

(41)

12

Loss on retirement of noncurrent assets

1,939

1,588

Gain (loss)on sales of investment securities

(725)

(222)

8

4

(Increase) decrease in notes and accounts receivable-trade(4,959)1,055(Increase) decrease in inventories

1,971

2,529

(12,093)(12,004)

Increase (decrease) in notes and accounts payable-trade

3,856(7,541)

Changes in other assets and liabilities, net

2,323

3,995

Other

234

299

Subtotal

36,106

40,418Interest and dividends income received

246

184

Interest expenses paid

(443)

(126)

Special retirement expenses paid

(380)

(381)

Income taxes paid

(3,941)(8,100)

Income taxes returned

7,989

714

Net cash derived from operating activities

39,57632,707

Increase (decrease) in allowance for doubtful accounts
Increase (decrease) in net defined benefit liability

Impairment loss

(Increase) decrease in long-term prepaid expenses

19Consolidated Statement of Cash flows
Cash Flows from Investing Activities:(MM yen)

Purchase of property, plant and equipment(40,939)(32,718)482

382

Purchase of Intangible assets(3,460)(2,690)

Proceeds from sales and redemption of investment securities

3,353

1,695

(84)

(40)

3,138

－

Net increase (decrease) in short-term loans receivable

(41)

12

Payments of loans receivable

(336)

(545)

Collection of loans receivable

938

920

Proceeds from government grants

4,033

－

Other

(289)

23

(33,207)(32,959)(13,040)(5,160)

Proceeds from long-term loans payable－

13,000

Repayment of long-term loans payable(890)(1,234)16,000

－

0

1

(12)

(6)

Repayments of lease obligations(8,365)(7,510)Cash dividends paid

(3,969)(4,058)Proceeds from exercise of stock option00

Net cash derived from financing activities(10,276)(4,969)Net Increase/Decrease in Cash and Cash Equivalents (-: decrease)(3,907)(5,221)

Cash and Cash Equivalents at Beginning of Period

24,971

21,573509－

21,573

16,352

Proceeds from sales of property, plant and equipment

Purchase of investment securities
Proceeds from acquisition of investments in subsidiaries resulting
in change in scope of consolidation

Net cash used in investing activities
Cash Flows from Financing Activities:
Net increase (decrease) in short-term loans payable

Proceeds from issuance of bonds
Proceeds from sales of treasury stock
Purchase of treasury stock

Increase (decrease) in cash and cash equivalents resulting fromchange of scope of consolidation
Cash and Cash Equivalents at End of Period20(5) Notes to Consolidated Financial Statements(Notes to assumption of going concern)
Not applicable(Basis for preparation of consolidated financial statements)
1. Scope of consolidation:(1) Number of consolidated subsidiaries: 2
FV East Japan Co. Ltd, Mikuni Service Co., Ltd(2) Non-consolidated subsidiaries:
FV Corporation Co., Ltd.
This company’s total assets, sales, net income or loss (amount corresponding to proportional ownership) andretained earnings (amount corresponding to proportional ownership) are small in size and do not have a material
effect on the consolidated financial statements.
2. Application of equity method(1) Number of the affiliated companies with equity method applied: 3
Coca-Cola Customer Marketing Company Co., Ltd., and Coca-Cola IBS Co., Ltd., Coca-Cola Business Sourcing Co.,Ltd.
(2) Non-Consolidated Subsidiaries and Affiliated Companies excluded from the equity method
FV Corporation Co., Ltd.
Reason for exclusion from the equity method: This company is excluded from the equity method as the impact on
the consolidated financial statements is minor and there is little significance as a whole taking into account the current
net income or loss (amount corresponding to the equity interest), retained earnings (amount corresponding to theequity interest), etc.
3. Fiscal year of consolidated subsidiaries, etc.
The end of fiscal year of consolidated subsidiaries is same as that of the consolidated account closing date.
4. Accounting standards(1) Valuation standards and methods for significant assets
1) Securities:
Other securities
Securities with available market values:…Market value method based on the market price, etc. as at the balance sheet date (Valuation differences areto be reported as a component of shareholders’ equity, and the costs of securities sold are to be calculated
by using the moving average method.)
Securities without available market value:…Cost method based on the moving average method
2) Inventory assets:
Cost method mainly based on the total average method (Balance sheet amount are calculated by the inventory
write-down method to reflect the decline of profitability)(2) Depreciation method used for significant depreciable assets
1) Tangible fixed assets: (Excluding the lease assets)
Straight-line method
Durable years of the major items are as follows.
Buildings:

2 - 58 years

Machinery, equipment & vehicles:

2 - 20 years

Sales equipment:

4 - 9 years

2) Intangible fixed assets: (Excluding the lease assets)
Straight-line method
As to software, straight-line method over the internally estimated useful lives (within 10 years) is applied.
3) Lease assets

21

Lease assets are depreciated by the straight-line method over useful lives that are determined based onlease terms, and the residual values are zero.
4) Long-term prepaid expenses
Amortization over the contractual terms(3) Basis for recording significant allowances
1) Allowance for doubtful accounts
In order to prepare for bad debts loss of receivables such as accounts receivable-trade, we provide allowance for
doubtful accounts based on credit loss ratio for general accounts receivables and the individual collectability of
specific receivables such as doubtful accounts receivables.
2) Allowance for bonuses
In order to prepare for the payment of bonuses for employees, we accrues an estimated incurred amount at the endof this fiscal year.
3) Allowance for officers’ bonuses
In order to prepare for the payment of bonuses for officers, we accrues an estimated amount as of the end of thisfiscal year.
4) Allowance for environmental measures
In order to prepare for disposing polychlorinated biphenyl waste kept in storage, we accrues an estimated incurred
amount at the end of this fiscal year.
5) Allowance for losses on contracts
In preparation for payment of system usage fees after cancellation under the contracts, the estimated amount isrecorded.
(4) Accounting treatment for retirement benefits
1) Method of attributing estimated retirement benefit to the fiscal period
When calculating retirement benefit liabilities, the benefit formula criteria is used as the method of attributing theestimated retirement benefit payments for the period up to the end of the current fiscal year.
2) Treatment of actuarial differences, past service costs
Actuarial differences are amortized from the following consolidated fiscal year by the straight-line method using acertain number of years (mainly 13 years) which is shorter than the employees’ average remaining service years
estimated at the time when such difference incurred.
Past service costs are amortized by the straight-line method using a certain number of years (mainly 13 years) whichis shorter than the employees’ average remaining years of service estimated at the time when such cost incurred.
(5) Goodwill amortization method and standard

For goodwill amortization, will be equally depreciated with estimated years (within 20years after posting)(6) Cash and cash equivalents in consolidated statement of cash flows
Cash and cash equivalents in consolidated statement of cash flows includes cash on hand, demand deposits, andhighly liquidate short term investments that has maturity dates within three months from the acquisition date andare readily convertible into cash and has low volatility.
(7) Other significant matters for preparation of the consolidated financial statements
Accounting treatment for consumption tax, etc.
Before-tax method is applied.

(Changes in accounting policies)(Application of accounting standards regarding retirement benefits)
From this fiscal year, the Company has applied the “Accounting Standard for Business Combination” (AccountingStandards Board of Japan Statement No.21, Sept. 13, 2013), the “Accounting Standard for Consolidated Financial
Statements” (Accounting Standards Board of Japan Statement No.22, Sept. 13, 2013), and the “Revised AccountingStandard for Business Divestures” (Accounting Standards Board of Japan Statement No.7, Sept. 13, 2013.), etc.

22

Accordingly, the accounting method have been changed to record the differences arising from changes in the
Company’s ownership interest in subsidiary, when control continues, as capital surplus, and to record the acquisitionrelated costs as expenses in the fiscal year in which they are incurred. Furthermore, for the business combinations
carried out on or after January 1, 2016, accounting method has been changed to reflect the adjustments to theacquisition cost allocation arising from finalization of provisional accounting treatment in the consolidated financial
statements of the period in which the business combination occurred. In addition, presentation of net income and otherrelated items was changed, and the presentation of “minority interests” was changed to “non-controlling interests.” Inorder to reflect these changes, the consolidated financial statements for the previous fiscal year have been reclassified.
The Accounting Standard for Business Combination etc. have been applied prospectively from the beginning of thisfiscal year in accordance with the transitional treatment set forth in Article 58-2 (4) of the Accounting Standard forBusiness Combination, Article 44-5 (4) of the Accounting Standard for Consolidation, and Article 57-4 (4) of the
Accounting Standard for Business Divestures.
There was no impact on the consolidated financial statements for this fiscal year.

(Unapplied accounting standards, etc.)“Implementation Guidance on Recoverability of Deferred Tax Assets”（Implementation Guidance of Corporate Accounting Standards No. 26, March 28, 2016）(1) Overview
With respect to the treatment of recoverability of deferred tax assets, the following necessary reviews are taking place,upon fundamentally adhering to the framework outlined in Audit Committee Report No. 66 “Auditing treatment on
determining the recoverability of deferred tax asset “; that is to say that entities are divided into five categories andestimate the amounts to be recorded as deferred tax assets according to such categories.
① Treatment of the entities that do not meet any of the requirements for (Category 1) through (Category 5）② Requirements for (Category 2）and (Category 3）③ Treatment of deductible temporary difference that cannot be scheduled for the entities in (Category 2）④ Treatment of periods that can be reasonably estimated for future taxable income before temporary difference of theentities in (Category 3）⑤ Treatment of the entities that satisfy the requirements of（Category 4）and also fall into (Category 2）or (Category3）(2) Scheduled date of implementation
Above changes are scheduled to be implemented from the beginning of the fiscal year ending December 2017(3) Impact of the implementation of these accounting standards, etc.
The amount of impact is to be evaluated at the time of preparation of the consolidated financial statements.
(Changes in presentation methods)（Matters relating to consolidated balance sheet）
The Short-term Loan, which was included in the Current Assets of the previous consolidated accounting period, has
become less important and is therefore included in Others of the Current Assets from this consolidated accounting
period. In order to reflect this change in the presentation method, the consolidated financial statements of the previous
consolidated accounting period have been reclassified.
Consequently, the Short-term Loan of 821 MM yen included in the Current Assets of the consolidated balance sheet ofthe previous consolidated accounting period has been reclassified into Others of 7,801 MM yen of the Current Assets.
The Consumption Tax Payable, which was included in the Current Liabilities of the previous consolidated accounting
period, has become less important and is therefore included in Others of the Current Liabilities from this consolidated
accounting period. In addition, the Provision for Loss on Contracts and Asset Retirement Obligation, which were
included in Others of the Current Liabilities, have become more important and are presented separately from thisconsolidated accounting period.

In order to reflect these changes in the presentation method, the consolidated

financial statements of the previous consolidated accounting period have been reclassified.

23

Consequently, The Consumption Tax Payable1,784 MM yen, which was included in the Current Liabilities of theprevious consolidated accounting period have been reclassified into accounts payable-other accrued expenses of
36,770MM yen. The Others of 4,449 MM yen included in the Current Liabilities of the consolidated balance sheet of theprevious consolidated accounting period have been reclassified into the Provision for Loss on Contracts of 963 MM yen,
the Asset Retirement Obligation of 33 MM yen, and Others of 3,452 MM yen.
The Asset Retirement Obligation, which was included in Others of the Fixed Liabilities in the previous consolidated
accounting period, has increased its monetary importance and is therefore presented separately from this consolidated
accounting period. In order to reflect this change in the presentation method, the consolidated financial statements ofthe previous consolidated accounting period have been reclassified.
Consequently, the Others of 1,816 MM yen of the Fixed Liabilities in the consolidated balance sheet of the previous
accounting period have been reclassified into the Asset Retirement Obligation of 776 MM yen and Others of 1,040 MM
yen.
（Matters relating to Consolidated Profit and Loss Statement）
The Gain on Container Deposit Reversal, which was included in the Non-Operating Income in the previous
consolidated accounting period, has become less important and is included in Others of Non-Operating Income fromthis consolidated accounting period. In order to reflect this change in the presentation method, the consolidated
financial statements of the previous consolidated accounting period have been reclassified.
Consequently, the Gain on Container Deposit Reversal of 1 MM yen included in the Non-Operating Income of theConsolidated Profit and Loss Statement of the previous consolidated accounting period has been reclassified into
Others.
The Rent Expenses, which were included in the Non-Operating Income in the previous consolidated accounting period,
have become less important and are included in Others of Non-Operating Income from this consolidated accounting
period. In order to reflect this change in the presentation method, the consolidated financial statements of the previous
consolidated accounting period have been reclassified.
Consequently, the Rent Expenses of 111 MM yen included in the Non-Operating Income of the Consolidated Profit andLoss Statement of the previous consolidated accounting period have been reclassified into Others.

(Changes in accounting estimates)(Change of useful lives of fixed assets)
The useful lives of machinery and equipment used for production purposes had been previously defined as 10 years.
Triggered by events such as the development of systematic maintenance policy for the machinery and equipment as
CCEJ group, and the progress of internalization of maintenance activities, as well as the commencement of a new
production structure for the entire CCEJ group after the legal entity integration of Sendai Coca-Cola Bottling Co., Ltd.
effective January, 2016, we revisited the physical durability and lifecycle of production machinery, etc. As a result, fromthe first quarter of the fiscal year ending on December 31, 2016, we have prospectively changed the useful lives to arange of 7 to 20 years, which more accurately reflects the economical useful lives.
As a result of this change, gross profit, operating income, ordinary income increased by JPY 1,798 million, and pre-tax
income increased by JPY 1,797 million, respectively.

(Consolidated Balance Sheet)*1 The accumulated depreciation of tangible fixed assets include accumulated impairment losses.
*2 Compensation books deducted from acquisition cost of tangible fixed assets by government grants.
breakdown are as follows.

Machinery Equipment And Vehicles

FY2015FY2016

4,033 MM yen

4,033 MM yen

24

(Consolidated Profit and Loss Statement)*1Year-end inventory represents the amount after write-down due to a decreased profitability and the inventory
appraisal loss shown below is included in the cost of goods sold.
(Net of prior year provision reversal)*2

FY2015FY201623MM yen-200MM yen

Major items and amounts of selling and general administration expenses are as follows.
FY2015FY2016

Sales commission

47,637 MM yen

48,116 MM yen

Advertisement and promotion cost

27,52033,127

Transportation cost

57,38457,351

Salaries/allowance and bonuses

52,93850,661Retirement benefit cost

1,835

1,107

Provision of allowance for bonus

1,205

2,477

37

169

Provision of allowance for bonuses for Officers
Provision of allowance for doubtful accounts
Depreciation cost
*3

30

135

16,31916,015

Breakdown of loss on disposal (sales) of noncurrent assets are as follows.
FY2015

Machinery Equipment And Vehicles

1 MM yen

Sale equipment
Total

*4

FY2016
1 MM yen

862

1,492

864

1,494

Breakdown of gain on sales of noncurrent assets are as follows.
FY2015FY2016

Tools, furniture and fixtures

0 MM yen－MM yen

Land

7

21

8

21

Total

*5

Breakdown of loss on disposal (sales) of noncurrent assets are as follows.
FY2015FY2016

Buildings and structures

400 MM yen

59 MM yen

Machinery Equipment And Vehicles

631

33

Tools, furniture and fixtures

16

6

Lease assets

4

－

Land

5

23

Intangible assets

71

9

1,130

132

Total

25

*6 Details of lease cancellation penalty
FY2015FY2016

Machinery Equipment And Vehicles

261 MM yen

334 MM yen

Sale equipment

202

6

3

－

467

341

Tools, furniture and fixtures
Total
*7

Breakdown of restructuring cost is as follows.

Expenses related to transition of
mission-critical systems
Subsidiary integration related
expenses
Expenses for the relocation of head
office and branch offices, etc.
Special retirement expenses
Special retirement expenses for
Directors
Total

FY2015FY2016331 MM yen－MM yen

－

81

48

5

619

105

20

－

1,020

192

Expenses related to transition of mission-critical systems in FY2015 was 331 MM yen accrued in provision for loss on contract.
*8

Impairment loss

The Group has posted the impairment loss for the below assets for FY 2015 as follows.
Location

PurposeType

Impairment loss (MM yen)

Ohtawara city Tochigi Pref

Unutilized asset

Land

2

Utsunomiya-city Tochigi Pref.

Unutilized asset

Land

1

Izu city Shizuoka Pref.

Unutilized asset

Land

1

Nasu ,Tochigi Pref.(others)

Unutilized asset

Land

2

For business assets, the Group uses management accounting unit for the basis of asset groups and applies thegrouping minimum unit to produce independent cash flow. In addition, for unutilized assets, the Group judges signs of
impairment loss using an individual property as grouping minimum unit.
Regarding the unutilized assets, they are currently idle and expected to be under suspension of operation. Moreover
the future use is not determined, thus we have decreased the book value to recoverable value and posted the decrease
as impairment loss for extraordinary loss. In addition, the recoverable value has been measured at net sales value andthe evaluation is of less importance, thus it is based on the value calculated with rational adjustment of the fixed asset tax
assessed valuation.
The Group has posted the impairment loss for the below assets for FY 2016 as follows.
Location

PurposeType

Impairment loss (MM yen)Izu city Shizuoka Pref.

Unutilized asset

Land

1

Toba city Mie Pref.

Unutilized asset

Land

2

For business assets, the Group uses management accounting unit for the basis of asset groups and applies thegrouping minimum unit to produce independent cash flow. In addition, for unutilized assets, the Group judges signs of
impairment loss using an individual property as grouping minimum unit.
Regarding the unutilized assets, they are currently idle and expected to be under suspension of operation. Moreover
the future use is not determined, thus we have decreased the book value to recoverable value and posted the decrease
as impairment loss for extraordinary loss. In addition, the recoverable value has been measured at net sales value andthe evaluation is of less importance, thus it is based on the value calculated with rational adjustment of the fixed asset tax
assessed valuation.

(Consolidated Comprehensive Profit and Loss Statement)*Amounts of reclassification adjustment and tax effect for other comprehensive income

26

FY2015

FY2016

Valuation difference on available-for-sale securities:
Amount incurred during the period

1,086 MM yen-529 MM yen

Reclassification adjustment value

-707

-147

Before tax effect adjustment

378

-677

Tax effect value

128

257

Valuation difference on available-for-sale securities

507

-419

Remeasurements of defined benefit plans:
Amount incurred during the period

2,047 MM yen-6,136MM yen

Reclassification adjustment value

507

131

Before tax effect adjustment

2,555-6,004

Tax effect value-1,088

1,795

Remeasurements of defined benefit plans

1,465-4,209

Share of other comprehensive income of associates accounted for using
equity methods:
Amount incurred during the period-766 MM yen

Reclassification adjustment value

－

－

-766

374

1,206

-4,254

Share of other comprehensive income of associates accounted forusing equity method
Other comprehensive income

374 MM yen(Consolidated Statement of Changes in Equity)
FY 2015 (Jan 1st, 2015- Dec. 31st, 2015)
1.

Type and total number of issued shares, and type and number of treasury shares
Type of shares

Issued shares

Shares as of Jan. 1st,
2015

Increase in Shares for Decrease in shares for Shares as of Dec. 31st,
FY 2015
FY 20152015

SharesSharesSharesSharesCommon shares

121,898,978

5,781,166－

127,680,144

Total

121,898,978

5,781,166－

127,680,144

Treasury shares

SharesSharesSharesSharesCommon shares

854,430

6,590

5,366

855,654

Total

854,430

6,590

5,366

855,654

Notes: 1. The total number of shares outstanding has increased 5,781,166 shares by exchanging shares with Sendai Coca-Cola BottlingCo., Ltd. on April 1, 2015 (exchange ratio 1: 2.563)
2. The increase in the number of treasury shares is due to purchase of odd lot shares.
3. The decrease in the number of treasury shares is due to sale by the Company of odd lot shares and exercise of stock options.

2. Share Options, etc.
Share options as stock options
Closing balance of share options at the end of FY2015:27

420MM yen

3. Dividends(1) Dividends paid
Total Amount of
Dividends (MM yen)

Dividends per Share(yen)

Common1,936

Common2,029

Resolution

Type of ShareMarch 30, 2015
Annual Shareholders Meeting
August 6, 2015
BOD Meeting

Record Date

Effective Date

16

December 31, 2014

March 31, 201516

June 30, 2015

September 7, 2015

(2) Of the dividends which base date is in FY2015 dividends which effective date is in FY2016
Resolution

Total AmountType of Share Source of Dividends of Dividends(MM yen)March 29, 2016
Annual Shareholders Meeting

CommonRetained earnings

Dividends per
Share (yen)2,029Record Date

Effective Date

16 December 31, 2015 March 30, 2016

FY 2016 (Jan 1st, 2016- Dec. 31st, 2016)
1. Type and total number of issued shares, and type and number of treasury shares
Type of shares
Shares as of Jan. 1st, Increase in Shares for Decrease in shares for Shares as of Dec. 31st,2016
FY 2016
FY 20162016
Issued shares

SharesSharesSharesSharesCommon shares

127,680,144－－

127,680,144

Total

127,680,144－－

127,680,144

SharesSharesTreasury shares

SharesSharesCommon shares

855,654

3,346

19,793

839,207

Total

855,654

3,346

19,793

839,207

Notes: 1. The increase in the number of treasury shares is due to purchase of odd lot shares.
2. The decrease in the number of treasury shares is due to sale by the Company of odd lot shares and exercise of stock options.

2. Share Options, etc.
Share options as stock options
Closing balance of share options at the end of FY2016: 673 MM yen
3. Dividends(1) Dividends paid
Total Amount of
Dividends (MM yen)

Dividends per Share(yen)

Common2,029

Common2,029

Resolution

Type of ShareMarch 29, 2016
Annual Shareholders Meeting
June 27, 2016
BOD Meeting

Record Date

Effective Date

16

December 31, 2015

March 30, 201616

June 30, 2016

September 9, 2016

(2) Of the dividends which base date is in FY2016 dividends which effective date is in FY2017
Resolution
March 23, 2017
Annual Shareholders Meeting

Total AmountType of Share Source of Dividends of Dividends(MM yen)CommonRetained earnings

2,029

Dividends per
Share (yen)Record Date

Effective Date

16 December 31, 2016 March 24, 2017

(Consolidated Statement of Cash flows)*1. Relation between the closing balance of cash and cash equivalent for the period and accounts in the consolidatedbalance sheet

28

FY 2015

FY 2016(Jan 1st, 2015- Dec. 31st, 2015)(Jan 1st, 2016- Dec. 31st, 2016)

Cash and deposit account

21,578 MM yen

Fixed-term deposit which deposit term exceeds 3 months
Cash and cash equivalent

16,357 MM yen-5-521,573

16,352*2. Assets and liabilities of new consolidated subsidiaries acquired through share exchanges during the consolidated fiscal
year
FY 2015 (Jan 1st, 2015 - Dec. 31st, 2015)
As a result of integration through share exchange with five companies including Sendai CCBC and others, the breakdown ofassets and liabilities and relation between stock acquisition price and “Proceeds from acquisition of investments in
subsidiaries resulting in change in scope of consolidation” at the time of consolidation starts are as follows:
Current asset
Noncurrent asset
Current liability
Noncurrent liability
Gain from negative goodwill
The acquisition cost of the stock
Cash and cash equivalentIssuance Costs for share exchange
Commission for share exchange
Proceeds from acquisition of investments in subsidiaries
resulting in change in scope of consolidation

13,290 MM yen
22,677-11,299-10,408-84
14,175-3,227-14,175
89
3,138

FY 2016 (Jan 1st, 2016 - Dec. 31st, 2016)
Not applicable
3 Note on significant non-cash transactions
FY 2015 (Jan 1st, 2015 - Dec. 31st, 2015)
Capital surplus increased through share exchange: 14,175MM yen
FY 2016 (Jan 1st, 2016 - Dec. 31st, 2016)
Not applicable(Deferred Tax Accounting)1.

Breakdown by main reason of occurrence of deferred tax assets and deferred tax liabilities
FY2015(1) Current Assets
Deferred tax assets
Enterprise tax payable
Provision for bonuses
Amount of loss carried forward
Deletion of inventory unrealized gain
Provision for loss on contract
Other
Subtotal of deferred tax assets
Valuation allowance
Total deferred tax assets(2) Non-current assets
Deferred tax assets
Net defined benefit liability

29

FY2016150 MM yen
453
474
706
117
339
2,241
-0
2,241

207 MM yen
859
563
－
265
573
2,468
－
2,468

5,764 MM yen

6,917 MM yen

Valuation difference on land
Valuation difference on available-for-salesecurities
Provision for loss on contract
Excess amount of depreciation
Excess amount of amortization on prepaid
expenses
Asset retirement obligations
Other
Subtotal of deferred tax assets
Valuation allowance
Total deferred tax assets
Deferred tax liabilities
Valuation difference on land of subsidiaries
Valuation difference on available-for-salesecurities
Other
Total deferred tax liabilities
Net deferred tax assets(3) Non-current liabilities
Deferred tax liabilities
Other
Total deferred tax liabilities
Net deferred tax liabilities

3,236

3,086

229

169

726
2,395

176
2,860

266

266

263
1,332
14,214-4,300
9,914

259
1,061
14,798-4,086
10,712-3,570 MM yen-3,350 MM yen-1,469-1,166-141-5,182
4,732-103-4,6206,091-0 MM yen-0-0

－MM yen－－

2. Break down of reasons on important variance between statutory effective tax rate and the burden ratio of corporation
tax after applying tax effect accounting
FY2015
Statutory effective tax(Adjustment)
Items not permanently included in gross revenue
such as dividend income
Eliminated dividend income by consolidated
Items not permanently included in gross revenue
such as entertainment expenses
Inhabitant tax on per capital basis

FY2016
－

33.0%

－

-9.4

－

9.4

－

1.1

－

1.8

Increase / decrease of valuation allowance

－

-0.2

Impact of tax difference

－

3.7

Other

－

-0.7

－

38.7%

Corporate income tax burden ratio after applying
tax effect accounting(Note) For 2015, the difference between statutory effective tax rate and corporate income tax burden ratio after
applying tax effect accounting is less than 5%, so the note is omitted.
3. Modification of the amount of deferred tax assets and deferred tax liabilities due to changes of corporate tax rate
The “Law Revising a Portion of the Income Tax Law” (2016, Law No. 15) and “Law Revising a Portion of Local Tax” (2016,
Law No. 13) were promulgated on March 31, 2016, which amends corporate tax rate, etc. from the consolidated fiscal year
starting on April 1, 2016 onwards. Consequently, the effective statutory tax rates to be used for the calculation of deferred tax
assets and deferred tax liabilities shall be as follows, according to the periods for the settlement of temporary differences:
33.0% up to December 31, 2016
30.8% from January 1, 2017 to December 31, 2018
30.6% from January 1, 2019 onwards
As a result of these tax rate changes, deferred tax assets (the amount after subtracting deferred tax liabilities) decreasedby 558 million yen, Income Taxes-Deferred increased by 451million yen, while Valuation Difference on Available-for-Sale
Securities increased by 41 million yen, respectively. Remeasurements of defined benefit plans decreased by 148 million yen.

30

(Segment information, etc.)
a. Segment Information
The Group has sole segment of beverage business, thus the description is omitted.
b. Related Information
FY 2015 (Jan. 1st, 2015 - Dec. 31st, 2015)
1. Information by product and service
The beverage business’ net sales to unaffiliated customers accounts for more than 90% of the total net sales in the
consolidated Statement of income, thus the description is omitted.
2. Information by area
(1) Net sales
The net sales to unaffiliated customers in Japan accounts for more than 90% of the net sales in the consolidated Statementof income, thus the description is omitted.
(2) Tangible fixed assets
Since the amount of tangible fixed assets located in Japan exceeds 90% of the amount of tangible fixed assets on the
consolidated balance sheet, the description is omitted..
3. Information by major customer
Of the net sales to unaffiliated customers, the Group has no account whose net sales accounts for 10% of the nets sales in
the consolidated Statement of income, thus the description is omitted.
FY 2016 (Jan. 1st, 2016 - Dec. 31st, 2016)
1. Information by product and service
The beverage business’ net sales to unaffiliated customers accounts for more than 90% of the total net sales in the
consolidated Statement of income, thus the description is omitted.
2. Information by area
(1) Net sales
The net sales to unaffiliated customers in Japan accounts for more than 90% of the net sales in the consolidated Statementof income, thus the description is omitted.
(2) Tangible fixed assets
Since the amount of tangible fixed assets located in Japan exceeds 90% of the amount of tangible fixed assets on the
consolidated balance sheet, the description is omitted.
3. Information by major customer
Of the net sales to unaffiliated customers, the Group has no account whose net sales accounts for 10% of the nets sales in
the consolidated Statement of income, thus the description is omitted.
c. Information on impairment loss of fixed assets by reported segment
FY 2015 (Jan. 1st, 2015 - Dec. 31st, 2015)
The Group has sole segment, thus the description of impairment loss of fixed assets by reported segment is omitted.
FY 2016 (Jan. 1st, 2016 - Dec. 31st, 2016)
The Group has sole segment, thus the description of impairment loss of fixed assets by reported segment is omitted.
d. Information on amortized amount and unamortized balance of goodwill by reported segment
FY 2015 (Jan. 1st, 2015 - Dec. 31st, 2015)

31

The Group has sole segment, thus the description of it by reported segment is omitted.
FY 2016 (Jan. 1st, 2016 - Dec. 31st, 2016)
The Group has sole segment, thus the description of it by reported segment is omitted.
e. Information on profit of negative goodwill by reported segment
FY 2015 (Jan. 1st, 2015 - Dec. 31st, 2015)
The Group has sole segment, thus the description of it by reported segment is omitted.
FY 2016 (Jan. 1st, 2016 - Dec. 31st, 2016)
Not applicable.

(Per share information)
FY2015
Net assets per share

FY2016

1,817.67 yen

1,836.64

yen

Net income per share for the year

42.70 yen

84.51

yen

Net income per share fully diluted for the year

42.64 yen

84.30

yen

Note: The basis for calculation is as follows.
(1) Net assets per share
FY2015FY2016

Net assets per share
Total amount of the section of net assets (MM yen)

230,945

233,635

Amount deducted from total amount of the section of net assets (MM yen)

420

673

(Share options of the above) (MM yen)

(420)

(673)

230,525

232,961

126,824,490

126,840,937

Net assets for common shares at year-end
Number of issued common shares at year-end (shares)(2) Net income per share and diluted net income per share
FY2015FY2016

Net income per share
Net income for the year (MM yen)

5,354

10,718

－

－

5,354

10,718125,399,031

126,837,892

Increase in number of common shares (shares)

171,625

305,705(Number of share options of the above) (shares)(171,625)(305,705)

Amount not attributable to common shareholders
Net income for the year attributable to common shares
Average number of common shares (shares)

Diluted net income per share
Adjustment to net income (MM yen)

(Significant subsequent events)
Not Applicable32