Financial Results
Year Ended December 31, 2008—Consolidated
February 13, 2009

Company name

Sapporo Holdings Limited

Security code
Listings
URL

2501
Tokyo Stock Exchange (First Section); Sapporo Securities Exchange
http://www.sapporoholdings.jp/english/

Representative
Contact

Takao Murakami, President and Group CEO
Tsutomu Kamijo, Director and General Manager of the Corporate
Planning Department+81 3-5423-7407

Telephone
Scheduled dates:
Annual general meeting of shareholders
Commencement of dividend payments
Submission of financial statements

March 27, 2009
March 30, 2009
March 30, 2009

1. Consolidated Financial Results for the Year Ended December 31, 2008
(January 1, 2008 – December 31, 2008)(1) Operating Results(amounts rounded down to the nearest million yen;percentage figures represent year-over-year changes)
Net salesYear Ended
December 31, 2008
Year ended
December 31, 2007

Year ended
December 31, 2008
Year ended
December 31, 2007

Operating income

Ordinary income

Net income

million yen%

million yen%

million yen%

million yen%

414,558(7.7)

14,68518.8

10,526

29.7

7,640

38.7

449,011

3.2

12,362

43.5

8,118

38.6

5,508

135.6

Net income
per share

Diluted
net income
per share

Return on
equityOrdinary
income to total
assetsOperatingincome to net
sales

yen

yen

%

%

%

19.49

18.89

6.3

1.9

3.5

14.10

13.76

4.6

1.4

2.8

Note: Equity method investment gains or losses:
Year ended December 31, 2008:
Year ended December 31, 2007:(1) million yen(132) million yen

1(2) Financial Position(amounts rounded down to the nearest million yen)

December 31, 2008
December 31, 2007

Total assets

Net assets

Shareholders’equity ratio

Net assets per
sharemillion yen

million yen%

yen

527,286

116,86222.1

297.60561,858

125,18922.3

319.07

Note: Shareholders equity:
December 31, 2008:
December 31, 2007:

116,636 million yen
125,135 million yen(3) Cash Flows
Cash flows fromoperating activities(amounts rounded down to the nearest million yen)
Cash and cash
Cash flows from
Cash flows fromequivalents at end
investing activities financing activitiesof period

million yen

million yen

million yen

million yen

Year ended
December 31, 2008

22,291

16,856（22,207）（22,217）

Year ended
December 31, 2007

30,690(13,495)（19,568）

5,881

2. Dividends

Record dateYear ended
December 31,
2007
Year ended
December 31,
2008
Year ended
December 31,
2009(forecast)End of 1stquarter(amounts in millions rounded down to the nearest million yen)
Dividend per share
Total dividends Payout ratio
Dividends to
End of End of 3rd
paid
net assets(consolidated) (consolidated)
2nd(full year)
quarter Year-end Full year
quarter

yen

yen

yen

yen

yen

million yen

―

―

―

5.00

5.00

―

―

―

7.00

―

―

―

7.00

2

%

%

1,960

35.5

1.6

7.00

2,743

35.9

2.3

7.00

―

91.4

―

3. Forecast of Consolidated Earnings for the Year Ending December 31, 2009
(January 1, 2009 – December 31, 2009)(amounts in millions rounded down to the nearest million yen;percentage figures represent year-over-year changes)
Net
Operating income
Ordinary income
Net income
incomeper share

Net sales
million yen%

million yen%

million yen%

million yen%yen

Six months
ending June30, 2009

188,800 （2.4）（2,000）―（3,200）―(3,700)――

Full year

408,300 （1.5）

12,000（18.3）

8,500(19.3)

3,000（60.7）

7.65

4. Other(1) Changes affecting the consolidation status of material subsidiaries (scope of consolidation):
None(2) Changes in accounting principles, procedures, and method of presentation used in the
preparation of financial results:
1) Changes in accordance with amendments to accounting standards: Yes
2) Changes other than the above: Yes（Accounting method for sales）
From the fiscal year ending December 31, 2008, the Company has adopted a new
accounting method for consolidated sales, and now deducts sales incentives paid to clients(wholesalers and retailers) from net sales. The value of sales incentives depends on the sales
prices of soft drinks and other non-alcoholic beverages, and these incentives were previously
recorded under selling, general and administrative expenses.
As competition in the retail market intensifies due to consolidation in the wholesale and retailsectors over recent years, demands for price discounts have increased, and sales incentives
paid to clients based on sales prices—which means that they are effectively discounts onsales prices—have remained constant.
To calculate breakdowns of aggregate sales incentives by client, product, and othercategories, the Company built an invoice management system and instituted a framework for
distinguishing between amounts attributable to sales price discounts and amounts attributable
to selling expenses.
To ensure the proper categorization of profit and loss accounts after the introduction of thissystem, from the fiscal year ending December 31, 2008, the Company adopted an accounting
method whereby the portion of sales incentives attributable to sales price discounts isdeducted from net sales.
Due to this change, net sales and operating expenses were each ¥6,629 million lower than
the amounts that would have resulted with the previous method, but there was no effect on3

operating income.
For details of the impact of this change on segment information, refer to the notes in“ 4.Segment Information.”（Accounting method for liabilities arising from gift vouchers etc.）
In the past, unredeemed gift vouchers issued more than a certain time in the past wererecorded as income. However, the Japanese Institute of Certified Public Accountants recently
released a position statement on the auditing treatment of reserves stipulated in the Special
Tax Measures Act, statutory allowances or reserves, and reserves for directors’ retirement
benefits (Auditing and Assurance Practice Committee No. 42, April 13, 2007). Accordingly,
from the fiscal year ending December 31, 2008, for gift vouchers issued more than a certain
time in the past, the Company has started setting aside allowances for the estimated value of
those gift vouchers that will be redeemed.
Due to this change, a provision for gift voucher redemptions of ¥746 million was recorded
under extraordinary losses.

（Method for translating the revenue and expenses of foreign subsidiaries）
From the fiscal year ending December 31, 2008, the Company has adopted a new
accounting method that uses the average exchange rate during the relevant fiscal period whentranslating the revenue and expenses of foreign subsidiaries to Japanese yen. Under theprevious method, the exchange rate on fiscal period book closing date (December 31, 2008)
would have been used for the period under review.
This change was made to ensure that the method used to translate figures to Japanese yen
presents a truer picture of the Company’s operating results and financial position because thesignificance of foreign subsidiaries to the Company’s operations has increased and because
exchange rate fluctuations mean that the use of exchange rates prevailing on fiscal periodbook closing dates may not result in a true picture of the Company. The average exchange
rate is used because it is not affected by individual exchange rate movements.
Due to this change, net sales were ¥5,207 million higher, operating income was ¥198 million
higher, ordinary income was ¥335 million higher, income before income taxes and minority
interests was ¥324 million lower, and net income was ¥392 million lower than thecorresponding amounts that would have resulted with the previous method.
For details of the impact of this change on segment information, refer to the notes in “4.
Segment Information.”(3) Number of shares issued (common stock)1) Number of shares issued at end of period (treasury stock included):
December 31, 2008:
393,971,493 shares
December 31, 2007:
393,971,493 shares
2) Number of shares held in treasury at end of period:4

December 31, 2008:
December 31, 2007:

2,045,360 shares
1,785,996 shares

ReferenceNon-consolidated Financial Results for the Year Ended December 31, 2008
(January 1, 2008 – December 31, 2008)(1) Operating Results

Net sales
million yen%

Year Ended
December 31, 2008

10,31888.9

Year ended
December 31, 2007

5,462

9.3

Net income
per share
yenYear ended
December 31, 2008
Year ended
December 31, 2007

(amounts rounded down to the nearest million yen;percentage figures represent year-over-year changes)
Operating
Ordinary income
Net income
incomemillion yen%
million yen%
million yen
%
202.
7,974
318.3
8,970
4,362
116.0
0
1,906

0.0

2,970

(8.7)

2,019

―

Diluted
net income
per share
yen

11.13

10.93

5.17

―

(2) Financial Position(amounts in millions rounded down to the nearest million yen)

December 31,
2008
December31,
2007

Total assets

Net assets

Shareholders’equity ratio

Net assets per
sharemillion yen

million yen%

yen

314,401

129,93141.3

331.52

342,614

129,55837.8

330.35

Note: Shareholders equity:Year ended December 31, 2008: 129,931 million yen
Year ended December 31, 2007: 129,558 million yen

51. Operating results(1) Analysis of operating resultsa) Review of the Fiscal Year Ended December 31, 2008
(1) Overview
Millions of yen, except percent changes

2008
2007
Change (%)

Net sales
414,558
449,011(7.7)

Operatingincome14,685
12,362
18.8

Ordinary
income10,5268,118
29.7

Net income
7,640
5,508
38.7

In 2008, the financial market turmoil triggered by U.S. subprime mortgage woes
broadened into a global financial crisis, the repercussions of which tipped muchof the world into recession.
Against such a backdrop, the Japanese economy experienced a slowdown in
consumer spending in the first half of the year amid extreme volatility ininternational commodity prices, soaring grain and crude oil prices, and resurgent
consumer price inflation. In the second half, corporate sentiment deteriorated
sharply in the wake of an equity market downturn, precipitous yen appreciation,
and a falloff in demand in key industries such as autos and electrical machinery.
This turn of events further dampened consumer confidence also.
In the alcoholic beverage, soft drink, and restaurant industries in which the Group
operates, earnings remained under pressure from input-cost inflation.
Additionally, public confidence in the food supply chain was shaken by a series offood contamination incidents. Companies’ social responsibility for food safety
consequently came under scrutiny.
Real estate market conditions, which had been holding up relatively well, likewisedeteriorated in response to the financial market turmoil. This downturn triggered
downward revisions of future cash flow projections and increases in risk premium,exacerbating downward pressure on the real estate investment market.
Faced with such an environment in the inaugural year of a two-year Management
Plan based on the Sapporo Group's New Management Framework, the Groupendeavored to strengthen its earnings base in pursuit of sustained growth.
To strengthen its earnings base, the Group further lowered its breakeven sales
level by tightening cost controls in response to sales fluctuations and sharp
increases in input costs.
To ensure sustained future growth, the Group variously laid the groundwork forattaining the Management Plan's targets. In the Alcoholic Beverages business,
the Group boosted capacity utilization by closing down the Osaka Brewery anddebuted high-value-added products produced with small-lot production systems.
Elsewhere, the Group proceeded apace with rebuilding the Soft Drinks business,
expanded the Real Estate business's property portfolio, and launched new
initiatives in the food business.

6

The Group's 2008 consolidated results are summarized as follows.
Net Sales
Consolidated net sales decreased in 2008 to ¥414.5 billion, down ¥34.4 billion, or
8%, versus 2007. The decrease was attributable to multiple factors, including adecline in the Japanese Alcoholic Beverages business's unit sales, reviews of
unprofitable sales accounts in the Soft Drink business, changes in accounting
policies, and reduction of the Real Estate business's revenues due to the sale ofthe 15% co-ownership stake in Yebisu Garden Place.
Operating Income
Consolidated operating income grew to ¥14.6 billion, up ¥2.3 billion, or 19%,versus 2007.
In the domestic Alcoholic Beverages business, unit sales declined while raw
ingredients and materials prices increased. However, these negatives were morethan offset by some positive factors including successful lifting of beer and beertype beverage prices, enhanced productivity and reductions in sales promotion
and other expenses.
Operating income was down in the Overseas Alcoholic Beverages businessdespite growth in unit sales, however, due to ingredients and raw materials priceinflation and adverse currency-translation effects.
The Soft Drinks business returned to profitability at the operating level helped byaccelerated implementation of the restructuring measures. The Restaurant
business’s operating income was down due to a fall in fiscal-fourth-quarter sales
attributable to the sharp economic contraction.
The Real Estate business maintained high occupancy rates in central Tokyo,
raised rents, and cut costs. These and other factors covered the decline in profit
due to the sale of 15% co-ownership stake in Yebisu Garden Place, and saw thebusiness achieve operating income growth.
Ordinary Income
Consolidated ordinary income grew to ¥10.5 billion, up ¥2.4 billion, or 30%,
versus 2007. Despite an increase in the average interest rate on borrowings, net
interest expense decreased ¥0.5 billion due to a reduction in debt.
Net Income
Consolidated net income increased to ¥7.6 billion, up ¥2.1 billion, or 39%, versus
2007 by virtue of a gain on the sale of the 15% co-ownership stake in Yebisu
Garden Place, although we recorded impairment charges on part of goodwill in
our Canadian subsidiary.
ROE
ROE increased to 6.4% from 4.6% in 2007 in parallel with net income's 39%
growth.

7

Segment Information
Millions of yen, except percent changes
Net sales

Alcoholic
Beverages
Japan
Overseas
Soft Drinks
Restaurants
Real Estate

Operating income

2008
324,7202007
343,670

Change(%)(5.5)

299,698
25,021
36,84829,53723,451

315,892
27,77752,23928,954
24,147(5.1)(9.9)(29.5)
2.0
(2.9)

2008
8,610

2007
7,854

Change
(%)
9.6

7,709
901
220
550
7,612

6,189
1,664
(839)
656
7,073

24.6
(45.9)–(16.1)
7.6

Alcoholic Beverages (Japan)
In 2008, net sales in the Japanese alcoholic beverages business were ¥299.6
billion, down ¥16.1 billion, or 5%, versus 2007, and operating income was ¥7.7
billion, up ¥1.5 billion, or 25%, versus 2007.
Total demand in the Japanese beer and beer-type beverages market in 2008
was down 2.5% compared with 2007, largely due to consumers increasingly
shifting into belt-tightening mode in response to an overall increase in food prices
as well as higher prices for many other consumer goods, brewers across theboard revising prices in response to surging prices of raw ingredients andmaterials, and the impact of the sudden onset of global economic recession
during the second half of 2008.
Against this backdrop, sales of our core Sapporo Black Label Beer andcommercial-use kegs were solid. Although sales of Yebisu brand products
declined, the decline stayed largely in line with the decline in total demand．
Meanwhile, sales of Mugi to Hop, a new product launched in June, were strong
and greatly outstripped initial projections. However, this was not enough to offset
the drop in demand in the happoshu market and the decline in sales of existing
new-genre products. As a result, sales of beer and beer-type beverages in 2008
were down 8.5% compared to 2007.
Wine sales volume was up in 2008 compared with 2007. With total demand forboth domestic and imported wines on par with 2007 levels, domestic wine sales
volume was largely in line with 2007 on the back of strong sales of the Aroma
Mutenka line and large-volume wines. Among imported wines, we enjoyed robust
sales of our core Yellow Tail range of wines as well as strong sales of the Santa
Rita range, which we began stocking again in September. As a result, net sales
were up 1% in 2008 compared with 2007.
Shochu sales also grew, up 12.6% in 2008 versus 2007. The increase wasattributable to the penetration of Waramugi, Karariimo, and other singly distilled
shochu into the commercial-use market, as well as the launch of new products
Triangle Smooth and Tsunto and solid sales of large-volume products.
Cost-wise, however, rising prices of ingredients and materials, particularly
imported malt, barley, and aluminum cans, exerted upward pressure on cost of8

sales. In response, we raised prices on beer and beer-type beverages from April,clamped down on sales promotion expenses, and cut general overhead
expenses and other costs. As result of such initiatives to improve its earnings
structure, the Japanese Alcoholic Beverages business achieved significantly
higher operating income in 2008 compared with 2007.
Alcoholic Beverages (Overseas)
Despite solid sales volumes in 2008, net sales in the Overseas Alcoholic
Beverages business fell ¥2.7 billion, or 10%, versus 2007 to ¥25.0 billion, due toadverse exchange rate movements and other factors. Operating income declined¥0.7 billion, or 46%, versus 2007 to ¥0.9 billion.
In the North American beer market, competition is intensifying against a
backdrop of meager growth in estimated total demand, but demand is growing
solidly in certain premium categories, such as domestic craft beers. However, theU.S. economy is in the midst of a slowdown, triggered by subprime mortgage
woes dating back to last year, that has intensified markedly since last fall.
Amid this environment, we engaged in proactive sales activities in the premium
market, where Sapporo is particularly competitive. In 2008, we began testmarketing of Yebisu Beer in the U.S. to determine acceptance in the high-end
beer market. As a result of these efforts, 2008 sales volume was up 6% versus
2007 at Canadian subsidiary Sleeman Breweries and 9% at Sapporo USA.
Export sales volume was also up 11% compared with 2007.
The Overseas Alcoholic Beverage business faced cost pressures from rising
prices of ingredients and materials, mainly malt and materials for beverage cans.
It also ramped up marketing investments relative to 2007.
Soft Drinks
Net sales in the Soft Drink business in 2008 were down ¥15.3 billion, or 29%,
versus 2007 to ¥36.8 billion, reflecting changes to accounting policies and otherfactors. As business restructuring was carried out ahead of schedule, operating
income turned positive, totaling ¥0.2 billion, a ¥1.0 billion improvement versus
2007.
Total demand in the Japanese soft drink market was estimated to havecontracted in 2008, slipping by around 1% versus 2007.
Against this background, the Group is building its own unique brands while also
rapidly restructuring the Soft Drink business through a select-and-focus approachand pursuing strategies aimed at transitioning to a sustainable earnings structure.
Specifically, this effort involves the development and growth of high value-added
products, organizational restructuring and the redeployment of personnel,
reviews of unprofitable sales accounts, the efficient use of sales promotion
expenditures, and the reduction of vending machine costs.
Sales volume was down 19% in 2008 versus 2007. However, we strengthened
efforts vis-à-vis Kissui, a new brand of canned coffee, the Gerolsteiner naturally
carbonated water product line, and functional fruit juice product lines such as

9

Karada ni Oishi Ume and Ocean Spray Cranberry. This steadily expandedcustomer contact points and reinforced our presence in the market.
Restaurants
Net sales in the Restaurant business in 2008 were up ¥0.5 billion, or 2%, versus
2007 to ¥29.5 billion, but operating income fell ¥0.1 billion, or 16%, versus 2007
to ¥0.5 billion as cost cutting efforts were unable to keep up with the rapid decline
in sales during the fourth quarter.
The restaurant industry was challenged by substantial increases in gasoline andfood prices during the first half of 2008, in particular heavily impacting family
restaurant operators whose core business is in suburban restaurants. The
economic climate experienced a deep and rapid downturn in response to global
financial malaise in the second half of 2008, resulting in lower sales at dinnerrestaurants and other establishments that generate high spending-per-customer.
Izakaya-format restaurants, chiefly those in the high spending-per-customer
category, also saw sales wane as companies cut back on expenses andconsumers increasingly shifting into belt-tightening mode.
Amid this environment, the Restaurant business worked to boost earnings byimproving menus and quality of service, based on a commitment to safety, peaceof mind, and authenticity.
Existing establishments sales edged up slightly in 2008 versus 2007. Beer halls
in the Tokyo area turned in a strong performance that made up for lower sales
versus 2007 at Japanese-style restaurants, where pre-booked group events thatgenerate relatively high spending-per-customer account for a large proportion ofbusiness. However, sales for almost all restaurant formats were lower year overyear toward the end of the 2008 as corporate sentiment dropped sharply.
We opened eight new establishments in 2008, totaling just under 6,500 square
meters, including a large all-you-can-eat buffet restaurant within the Nasu Morino Beer En facility located in Nasu, Tochigi prefecture. We closed fiverestaurants in 2008, including restaurants operated under contract at golf clubs,so the total number of restaurants in operation at the end of 2008 was 204.
Real Estate
Net revenue in the Real Estate business in 2008 was down ¥0.6 billion, or 3%,
versus 2007 to ¥23.4 billion, while operating income was up ¥0.5 billion, or 8%,
to ¥7.6 billion.
Economic woes have flung the real estate industry into a major period of
consolidation. Office vacancy rates in central Tokyo have been on the rise since
the start of the year, and although office rents remain high, they flattened out andmoved into decline during the second half of 2008.
Amid this environment, we maintained high occupancy rates and worked toincrease rents, particularly in central Tokyo properties, including Yebisu Garden
Place. Stable occupancy rates saw development properties completed in 2007
make solid contributions to earnings, and we developed properties held in the10Ebisu and Nagoya areas as well as a new development site in the Shinjuku area.
We also newly acquired income-generating properties in Tokyo.
Although revenues decreased following the sale of a 15% co-ownership stake in
Yebisu Garden Place, operating income increased by virtue of the efforts
described above and a decline in depreciation.
b) Outlook for the Fiscal Year Ending December 31, 2009
(1) Overview
Millions of yen, except percent changes

2009 forecast
2008
Change (%)

Net sales
408,300
414,558(1.5)

Operatingincome12,00014,685(18.3)

Ordinary
income
8,500
10,526(19.3)Net income
3,000
7,640
(60.7)In 2009, the Group will focus on achieving sustainable growth, strengthening its
earnings base, and expanding operations that capitalize on its strengths, inaccord with the 2009–2010 Sapporo Group Management Plan, a rolling two-year
plan.
More specifically, with the operating environment undergoing drastic change, theGroup aims to strengthen its earnings base through further cost structure reform
across all businesses. The Group also aims to achieve growth into the future byfunneling management resources into businesses that best capitalize on its
strengths.
Net Sales
We project 2009 consolidated net sales of ¥408.3 billion, a ¥6.2 billion, or 2%,
decrease versus 2008.
In the Alcoholic Beverages business, we anticipate that domestic sales will
decrease as a result of growth in new-genre beers' share of unit sales. Overseas,
we intend to increase sales through further market penetration in the U.S. andexpansion of Sleeman Breweries' share of the Canadian market. In the Soft Drinkbusiness, we expect sales to decline as a result of continued weeding-out of
unprofitable sales accounts. In the Restaurant business, we aim to increase
sales by efficiently opening new locations and revitalizing existing ones. In theReal Estate business, we plan to grow revenues by developing new properties
and raising rents at existing properties while maintaining high occupancy rates.
Operating Income
We project consolidated operating income of ¥12.0 billion, a ¥2.6 billion, or 18%,
decrease from 2008.
In the Alcoholic Beverages business, we anticipate a decline in operating income
from domestic operations as a result of input cost inflation, increased
depreciation due to a change in accounting policy, and inventory valuation losses
to be booked as an operating expense. Overseas, we will cut costs to offset

11

adverse currency-translation effects. In the Soft Drink business, we expect toincrease operating income through continued efforts to rapidly improve profit
margins. In the Restaurant business, we project operating income growth byvirtue of sales growth coupled with cost containment. In the Real Estate business,
we project operating income growth from acquisition of new properties and rent
increases at existing properties.
Ordinary Income
Although inventory valuation losses will be booked as an operating expense, we
expect ordinary income to decline in conjunction with the projected decrease inoperating income. We project consolidated ordinary income of ¥8.5 billion, a ¥2.0
billion, or 19%, decrease versus 2008.
Net Income
We project consolidated net income of ¥3.0 billion, a ¥4.6 billion, or 61%,
decrease versus 2008, reflecting an anticipated decline in extraordinary income(e.g., gains on sale of fixed assets).
ROE
As a result of the projected decline in net income, we expect ROE to fall to 2.6%
in 2009 from 6.3% in 2008.
(2) Outlook by Segment
Millions of yen, except percent changes
Net sales

Alcoholic
Beverages
Japan
Overseas
Soft Drinks
Restaurants
Real Estate

Operating income

2009
317,700

2008
324,720

Change(%)(2.2)

295,600
22,10035,50030,50024,600299,698
25,021
36,84829,53723,451(1.4)(11.7)
(3.7)
3.3
4.9

2009
6,500

2008
8,610

Change(%)(24.5)

5,600
900
300
700
7,700

7,709
901
220
550
7,612

(27.4)
(0.1)
36.0
27.1
1.2

Alcoholic Beverages (Japan)
With overall domestic demand for alcoholic beverages expected to languish in
the wake of the ongoing economic slump and shrinkage of the drinking
population, we anticipate further shifts in the competitive landscape acrossproduct categories.
In the beer market, demand is expected to continue to migrate to new-genre
beers as consumers increasingly seek to maintain their standard of living throughthrift. The high-end beer market's growth trend of recent years is likely to level off
or turn downward in 2009, but we expect that price-insensitive epicurean
consumers that purchase products in accord with their own tastes will steadily
increase over the medium to long term.

12

In response to such major changes in the market environment and further
diversification of consumer preferences, we will conduct marketing activities
targeted at these trends again in 2009 in the aim of boosting profits by offering
distinctive Sapporo value.
Specifically, we aim to further enhance the Yebisu brand's value proposition in
the high-end market segment. In the rapidly growing new-genre market segment,
we intend to grow sales by strengthening our core Draft One and Mugi to Hopbrands and launching new products that offer fresh gusto to beer drinkers, withthe ultimate aim of boosting market share.
In response to consumers' recent scrutiny of food safety, we will utilize
advertising copy that specifically emphasizes the quality of our beers' ingredientsto impart the confidence to enjoy our products with peace of mind.
Although costs will be impacted by changes in accounting policies, we willcontinue to implement purchasing policies that effectively smooth out fluctuationsin input prices, and we will also endeavor to establish flexible production systems
and improve overhead cost-efficiency, particularly with respect to sales
promotion expenditures, to strengthen our earnings base.

Alcoholic Beverages (Overseas)
The overseas Alcoholic Beverages business is at risk of adverse repercussions
from the global economic slowdown triggered by the U.S. financial crisis. In the
North American beer market, where our overseas operations are concentrated,
overall demand is expected to stagnate or contract slightly in 2009, but we intend
to solidify our position in the North American market by continuing to capitalize
on our strengths in the premium beer category.
In the Canadian market, subsidiary Sleeman Breweries will continue to invest in
marketing to maintain and enhance the brand value of its core premium brands,
Sleeman, Unibroue, and Okanagan Spring. Sleeman Breweries aims to achieve
unit sales growth in excess of the Canadian beer market's total demand growthrate inclusive of the growing value-brand segment.
In the U.S. market, where Sapporo USA is our core subsidiary, we aim to solidify
Yebisu Beer's foothold in the high-end market segment in addition to expanding
the Sapporo brand's presence. By strengthening our presence beyond the ethnic
Japanese market segment, we aim to achieve unit sales growth in excess ofgrowth in total demand.
In export and overseas production operations, we aim to increase sales throughaggressive expansion into growth markets, while also looking for opportunities tocultivate new markets and possibly exiting regions with unfavorable prospects forearnings growth. This strategy aims to further expand the overseas Alcoholic
Beverages business and strengthen its foundation.

13

Soft Drinks
In the Soft Drink business, we will continue to implement a two-pronged strategy
of realigning our profit structure to achieve sustained profitability while also
pursuing growth by building brands that establish a meaningful market presence.
More specifically, we intend to implement marketing strategies focused on
cultivating and strengthening existing brands and products. We aim to capture
demand with unique product offerings such as functional fruit-juice beverages
Ocean Spray Cranberry and Karada ni Oishii Ume; Gerolsteiner naturally
carbonated water, Germany's top-selling mineral water; and Ribbon Citron, whichis slated for brand renewal in 2009 to commemorate its 100th year on the market.
Cost-wise, we will strengthen profitability by continuing to select and focus on key
soft drink operations for a second consecutive year. We aim to further improve
operating income by continuing to rationalize costs throughout the value chain.
Restaurants
In the Restaurant business, we will continue to create establishments that attract
strong customer numbers by developing our menus and providing memorable
service based on a commitment to safety, peace of mind, and authenticity. We
will also promote Sapporo as a trusted brand and draw in customers throughevents to celebrate the 110th year since our founding. Given the current
economic environment, we also intend to develop and open mainly small andmid-sized new format restaurants designed for relatively low spending-percustomer.
We will work to reduce personnel expenses by installing an employee timekeeping system that will make it easy to allocate available personnel amongclosely located restaurants to meet staffing requirements. We will also endeavor
to reduce overheads by controlling Web-based sales promotion expenses, whichhave been on the rise.
Real Estate
The Japanese real estate market appears to be entering a downturn, largely inresponse to deterioration in corporate profits.
Amid such a market environment, we will strengthen our Real Estate business's
earnings power by raising rents to fair-market levels while maintaining or
boosting occupancy rates, capitalizing on the locational advantages of ourproperties, most notably Yebisu Garden Place. We will also continue to pursue
property acquisitions and initiatives to upgrade the value of our existing
properties.
Note: The above projections and other forward-looking statements are based on
information available to the Company as of the date of the release of thisdocument as well as assumptions, current as of the date of the release of this14

document, regarding uncertainties that may affect future operating results. Actual
operating results may differ materially from those expressed or implied by theabove forward-looking statements due to various factors.
2) Financial Condition(a) Assets, Liabilities, and Net Assets
Consolidated assets totaled ¥527.2 billion at December 31, 2008, a decrease of¥34.5 billion versus December 31, 2007. This mainly reflects a decrease in tradenotes and accounts receivable as well as a decrease in fixed assets due to thesale of the 15% co-ownership stake in Yebisu Garden Place, impairment charges
on goodwill and other items at Sleeman Breweries Ltd., and lower unrealized
capital gains on investment securities. These factors more than offset anincrease in cash and cash equivalents.
Consolidated liabilities totaled ¥410.4 billion at December 31, 2008, a decreaseof ¥26.2 billion versus December 31, 2007. This mainly reflects a decrease inbonds and a decrease in the allowance for employees’ retirement benefits due torevisions to the retirement benefits plan.
The balance of consolidated net assets was ¥116.8 billion at December 31, 2008,
a decrease of ¥8.3 billion versus December 31, 2007. This mainly reflects adecrease in unrealized holding gains on securities, due to lower unrealized gains
on investment securities, and a decrease in foreign currency translation
adjustments due to the strength of the yen at the end of 2008 against local
currencies in locations where overseas subsidiaries operate.
(b) Cash Flows
Consolidated cash and cash equivalents (“cash”) at December 31, 2008, were¥22.2 billion, an increase of ¥16.3 billion, or 278%, versus December 31, 2007.
This mainly reflects the sale of property, plant and equipment and a positive net
cash flow from operating activities, despite repayments on borrowings and otherfactors.
The following presents consolidated cash flow figures for 2008 together with an
overview of factors that affected each category.
Cash flows from operating activities
Net cash provided by operating activities in 2008 was ¥22.2 billion, a decrease of¥8.3 billion, or 27%, compared with 2007. This was mainly due to positive factors
such as income before income taxes and minority interests of ¥17.9 billion,
depreciation and amortization of ¥21.6 billion, and impairment charges of ¥8.2
billion, which were somewhat offset by a ¥25.8 billion gain on the sale of property,
plant and equipment.

15

Cash flows from investing activities
Net cash provided by investing activities in 2008 was ¥16.8 billion, in contrast
with the ¥13.4 billion used in investing activities in 2007. This mainly reflects
outflows of ¥22.7 billion for the acquisition of property, plant and equipment being
more than offset by proceeds of ¥49.0 billion from the sale of property, plant andequipment.
Cash flows from financing activities
Net cash used in financing activities in 2008 was ¥22.2 billion. The Group used
¥19.5 billion in financing activities in 2007. This mainly reflects a ¥48.0 billion
decrease in short-term bank loans and ¥35.6 billion in repayments of long-term
debt, which more than offset proceeds from long-term debt of ¥20.3 billion.
Cash flow indicators
Equity ratio (%)
Equity ratio based onmarket capitalization (%)
Cash flow to interestbearing debt (years)
Interest coverage ratio (%)

2004
15.3
28.6

As at December 31,
2005
2006
2007
19.8
19.2
22.3
42.8
43.5
62.8

2008
22.1
41.5

10.1

6.5

9.4

8.0

9.9

6.3

10.9

9.1

7.2

6.0

Equity ratio: Equity capital / Total assets
Equity ratio based on market capitalization: Market capitalization / Total assets
Cash flow to interest-bearing debt: Interest-bearing debt / Cash flow
Interest coverage ratio: Cash flow / Interest payments
Notes:
1. All indicators above are based on consolidated figures.
2. Market capitalization is based on the number of shares issued and outstanding(excluding treasury stock).
3. Operating cash flow is used as the figure for cash flow.
4. Interest-bearing debt refers to all debts recorded on the consolidated balance
sheets that incur interest payments.
3) Dividend Policy and Dividends for 2008 and 2009The Sapporo Group views the appropriate return of profits to shareholders as a
key management policy. The Group’s basic policy when setting dividends is tomaintain a stable dividend payment with due consideration given to operating
performance and financial condition.
In accordance with the Group’s management plan, internal reserves will beallocated to strategic investments with the potential to produce new growth aswell as efforts to strengthen the Group’s financial base, the ultimate objective
being to maximize corporate value.

16In accord with the above, the Group intends to pay a total annual dividend of ¥7
per share.
In 2009, the Sapporo Group intends to maintain a total annual dividend paymentof ¥7 yen per share by steadily executing its management plan while undertaking
strategic investments and working to strengthen the Group’s financial base.
Dividends for 2008 and 2009 (yen per share)
Fiscal year ending December 31,
2008
2009

Interim––Year-end
7.0
7.0

Annual total
7.0
7.0

3. Management Policy
1) Fundamental Management Policy of the Sapporo GroupThe Sapporo Group’s management philosophy is “to make people’s lives richer
and more enjoyable,” and its business activities are based on the following
fundamental management policy: “The Sapporo Group strives to maintainintegrity in corporate conduct that reinforces stakeholder trust, and aims toachieve continuous growth in corporate value.”
2) Performance Indicator Targets
The Sapporo Group’s New Management Framework sets out the following
management goals to be achieved by the plan’s target year of 2016
Consolidated net sales
Consolidated operating income
D/E ratio
ROE¥600.0 billion¥40.0 billion
around 1:1
above 8%(2008: ¥414.5 billion)(2008: ¥14.6 billion)(2008: 1.6 times)(2008: 6.3%)

3) Medium- to Long-Term Group Management Strategy
In October 2007, the Sapporo Group announced a new plan, the Sapporo
Group’s New Management Framework, which sets out a target year of 2016—ayear that will mark 140 years since the Group was founded.
The basic strategies set out in the Sapporo Group’s New Management
Framework are as follows:(1) Create high-value-added products and services
The Group aims to maximize capital efficiency by focusing its management
resources on areas that offer the greatest competitive strengths while alsobuilding sustainable market advantages in each of its businesses. The Group will
foster common values that focus on “providing valuable products and services
that customers can identify with,” while also working to create high levels ofvalue-added.

17

(2) Form strategic alliances
Rather than focusing solely on its own operations, the Group plans to promotestrategic alliances with powerful partners that will enable it to enhance Group
strengths, complement its capabilities, and acquire know-how, so as to rapidly
develop competitive advantages on a large scale.
(3) Promote international expansion
The Group will work to expand the Alcoholic Beverages business as well as theSoft Drinks and Food Products in overseas markets. The Group will also be
implementing efforts aimed at building brands in overseas markets by utilizing
technological capabilities and business alliances.
(4) Expand group synergies
The Group will pursue further synergies among businesses by promoting flexible
collaboration and cooperation that is unconstrained by existing organizational
and Group company boundaries. The Group aims to maximize synergies,
addressing them from two separate perspectives: synergies in businessstrategies and operational synergies.
4) Issues to be Addressed
Our efforts to achieve management goals under the 2008–2009 Sapporo GroupManagement Plan reflect two crucial themes.
We formulated the 2009–2010 Sapporo Group Management Plan, a rolling twoyear plan that draws on the 2008–2009 Sapporo Group Management Plan, which
we announced last year as an action plan based on the Sapporo Group’s New
Management Framework.
(1) Measures toward achieving sustainable growth
To forge a path for future growth, take action that will lead to an expansion ofbusiness domains, the development of new business, and so on, over the
medium term.
(2) Utilization of strength to expand business and strengthen earnings base
Build a solid operating base that can generate stable earnings amid diversechanges. Accelerate earnings structure reform to ensure that this is achieved.
The Sapporo Group views CSR-focused management as a key strategy forsupporting the sustained growth of the Group. We will engage in efforts geared
toward addressing, in particular, the issue of consumer confidence in food safety,
drunken driving and other alcohol-related problems, and global warming andother environmental issues. At the same time, we will continue to build on our
CSR and compliance frameworks, the fundamental standards of corporate
behavior to which we consistently hold ourselves, and conduct in-house
education to ensure that these frameworks take firm root within the Sapporo
Group.

18

3.Consolidated Financial Statement(1)Consolidated Balance Sheets(in millions of yen, except percentages)
December 31, 2007 (A)AmountAssetsI Current assets
1 Cash and cash equivalents
2 Notes and accounts receivable - trade
3 Marketable securities
4 Inventories
5 Deferred tax assets
6 Refundable income taxes
7 Other
8 Allowance for doubtful receivables
Total current assets
II Fixed assets
1 Property, plant and equipment(1) Buildings and structures
Accumulated depreciation(2) Machinery and vehicles
Accumulated depreciation(3) Land(4) Construction in progress(5) Other
Accumulated depreciation
Total property, plant and equipment
2 Intangible assets(1) Goodwill(2) Other
Total intangible assets
3 Investments and other assets(1) Investment securities(2) Long-term loans receivable(3) Deferred tax assets(4) Other(5) Allowance for doubtful receivables
Total investments and other assets
Total fixed assets
Total assets
Liabilities
I Current liabilities
1 Notes and accounts payable
2 Short-term bank loans and current
portion of long-term debt
3 Liquor taxes payable
4 Income taxes payable
5 Accrued bonuses
6 Deferred tax liabilities
7 Deposits received
8 Other
Total current liabilities
II Long-term liabilities
1 Bonds
2 Long-term bank loans
3 Deferred tax liabilities
4 Employees' retirement benefits
5 Directors' and corporate
auditors' severance benefits
6 Dealers' deposits for guarantees
7 Other
Total long-term liabilities
Total liabilities

21,723(17,265)

Amount% of total

6,511
69,685
13
24,041
2,290
133
15,317(275)
117,717399,169(192,925)
209,050(157,096)

December 31, 2008 (B)21.0

358,590(177,716)
180,772(134,476)

206,244
51,954
71,153
4,694
4,458
338,504
27,614
5,754
33,36837,393
10,2297,541
19,339(2,235)72,267444,141
561,858

22,49462,25839
21,4096,267
2,969
14,147(167)
129,418

20,045(16,047)(B) - (A)% of total

Amount24.5

15,982(7,426)26(2,632)
3,976
2,836(1,170)108
11,700180,873(25,370)

46,29678,893
9,145(5,658)
7,740
4,450

60.2

3,998
319,207

5.9

17,018
3,948
20,966

12.9
79.0
100.0

26,460
10,4805,039
17,523(1,809)57,693397,868
527,286

60.5

(459)
(19,296)4.0(10,595)(1,805)(12,401)

11.0
75.5
100.0

(10,933)250(2,502)(1,815)426(14,574)(46,272)(34,572)

26,121

23,82964,41563,516(898)

38,140
2,749
1,056
0
48,72542,292
223,501

35,585724
1,350−
46,83541,361
213,203(2,554)(2,025)294(0)(1,890)(930)(10,297)

39.8

69,71074,3396,182
15,135(2,292)

40.4

53,84371,892
12,3037,531(15,866)(2,446)
6,121(7,603)

115

52

(62)

31,903
15,782
213,168
436,66937.9
77.7

32,023
19,573
197,220
410,424

37.4
77.8

119
3,791
(15,947)(26,245)

53,88646,31014,292(848)
113,641

9.6
8.2
2.5
(0.1)
20.2

53,88646,325
19,972(1,058)
119,126

10.2
8.8
3.8
(0.2)
22.6

−
15
5,679
(209)
5,485

1 Unrealized holding gain on
securities

9,640

1.7

3,046

0.6

(6,594)2 Foreign currency translation
adjustments

1,853

0.4

(5,536)(1.0)(7,389)11,493

2.1(2,490)(0.4)(13,984)53
125,189
561,858

0.0
22.3
100.0

226
116,862
527,286

0.0
22.2
100.0

172
(8,326)(34,572)

Net Assets
I Shareholders' equity
1 Common stock
2 Capital surplus
3 Retained earnings
4 Treasury stock, at cost
Total shareholders' equity
II Valuation and translation
adjustments

Total valuation and translation
adjustments
III Minority Interests
Total net assets
Total liabilities and net assets

19

(2)Consolidated Statements of Income(in millions of yen, except percentages)
Fiscal year ended(B) - (A)
December 31, 2008 (B)Fiscal year ended
December 31, 2007 （A)AmountI Net sales
II Cost of sales% of total

449,011305,078
143,933

Gross profit

Amount

100.0
67.9
32.1

% of total

Amount414,558
288,146
126,411

100.0
69.5
30.5

(34,453)(16,931)(17,521)111,726
14,68527.0
3.5(19,844)
2,322

1,730

0.4

(576)

5,888
10,526

1.4
2.5

(662)
2,408

26,035

6.3

18,43918,592

4.5

3,098

17,9704.3

17,74810,354
24
7,640

2.5
0.0
1.8

15,64022
2,131

III Selling, general and administrative
expenses
1 Sales incentives and commissions
2 Advertising and promotion expenses
3 Salaries
4 Provision for accrued bonuses
5 Retirement benefit expenses
6 Other
Operating income
IV Non-operating income
1 Interest income
2 Dividend income
3 Rental income
4 Foreign exchange gain
5 Gain (loss) on transactions related togift coupon

35,862
17,371
19,973688
2,869
54,805131,570
12,362

29.3
2.8

431
594
387
304

402
566
43
53
93

−
587

21,076
18,236
19,068813
2,718
49,814

6 Other
V Non-operating expenses
1 Interest expense
2 Loss on disposal of inventories
3 Equity in loss of affiliates
4 OtherOrdinary income
VI Extraordinary gains

2,306

4,280
858
132
1,280

1 Gain on sales of property, plantand equipment

6,769

25,8922 Gain on sales of investment
securities

766

20

3 Reversal of provision for doubtfulreceivables

27

10

4 Compensation income from store closures−

111

5 Subsidy for installation of vending
machine

32

6,550
8,118

7,596

0.5

1.5
1.8

1.7

570
3,714
1,102
1
1,070

−

VII Extraordinary losses
1 Loss on disposal of property,
plant and equipment
2 Loss on impairment of property,
plant and equipment
3 Depreciation expenses resulting fromrevision of residual value
4 Provision for gift voucher redemptions
5 Loss on revision of retirement benefit plan
6 Early retirement benefits
7 Business reorganization costs
8 Amortization of goodwill
9 Devaluation of marketablesecurities and investments

1,300

5,835

6,939

8,206

6,583

−

−
−
−
−
276

746
1,307
305
1,443
−

393

Income before income taxes and minority
interests
Current income taxes
Reversal of prior period income taxes
Deferred income taxes
Minority loss
Net income

3,040
308
(8,634)

15,493

3.5

221

0.0

(5,285)
1
5,508

(1.2)
0.0
1.2

20

746

519
−
9,835

(3)Statement of Changes in Shareholders’ Capital
Fiscal year ended December 31, 2007 (January 1, 2007 – December 31, 2007)(millions of yen)
Shareholders' capital
Common stock Capital surplus
Balance as of December 31,
2006
Changes during period
Issuance of new shares
Cash dividends
Increase in retained
earnings due to increase in
number of consolidated
subsidiaries
Net income
Purchase of treasury stock
Disposition of treasurystock
Net change in items otherthan shareholders’ capitalduring period
Total changes during period
Balance as of December 31,
2007

50,06642,484

3,820

3,820

Retainedearnings

Treasury stock

10,472

(571)

Total
shareholders'
capital102,451(1,890)7,640(1,890)

202

202

5,508
(284)

5,508
(284)

7

12

5

3,820

3,825

3,820

(277)

11,18953,88646,31014,292(848)

113,641

Valuation and translation adjustments
Net unrealized
gains (losses) onother securities
Balance as of December 31,
2006
Changes during period
Issuance of new shares
Cash dividends
Increase in retained
earnings due to increase in
number of consolidated
subsidiaries
Net income
Purchase of treasury stock
Disposition of treasurystock
Net change in items otherthan shareholders’ capitalduring period
Total changes during period
Balance as of December 31,
2007

11,318Foreigncurrency
adjustments(276)

Total valuationand translation
adjustments
11,041

Minority
interests

Total net assets

2

113,495
7,640(1,890)
202
5,508
(284)
12

(1,677)

2,129

452

51

503

(1,677)

2,129

452

51

11,693

9,640

1,853

11,493

53

125,189

21

Statement of Changes in Shareholders’ Capital
Fiscal year ended December 31, 2008 (January 1, 2008 – December 31, 2008)(millions of yen)
Shareholders' capital
Common stock Capital surplus
Balance as of December 31,
2007
Changes during period
Cash dividends
Net income
Purchase of treasury stock
Disposition of treasurystock
Net change in items otherthan shareholders’ capitalduring period
Total changes during period
Balance as of December 31,
2008

53,88646,310Retainedearnings
14,292

Treasury stock

Total
shareholders'
capital(848)

113,641(262)(1,960)
7,640
(262)

52

68

(1,960)
7,640
15

-

15

5,679

(209)

5,485

53,88646,325

19,972(1,058)

119,126

Valuation and translation adjustments
Net unrealized
gains (losses) onother securities
Balance as of December 31,
2007
Changes during period
Cash dividends
Net income
Purchase of treasury stock
Disposition of treasurystock
Net change in items otherthan shareholders’ capitalduring period
Total changes during period
Balance as of December 31,
2008

9,640

Foreigncurrency
adjustments
1,853

Total valuationand translation
adjustments
11,493

Minority
interests

Total net assets

53

125,189(1,960)
7,640
(262)
68

(6,594)(7,389)(13,984)

172(13,811)(6,594)(7,389)(13,984)

172(8,326)

3,046(5,536)(2,490)226

116,86222

(4)Consolidated Statements of Cash Flows

I Cash flows from operating activities
1 Income before income taxes and minority interests
2 Depreciation and amortization
3 Depreciation expenses resulting from revision of residual value
4 Loss on impairment of property, plant and equipment
5 Goodwill amortization expense
6 Amortization of goodwill
7 Decrease in employees’ retirement benefits
8 Decrease in allowance for doubtful receivables
9 Interest and dividend income
10 Interest expense
11 Gain on sales of property, plant and equipment
12 Loss on sales and disposal of property, plant and equipment
13 Gain on sales of investment securities
14 Loss on devaluation of investment securities
15 Decrease in notes and accounts receivable - trade
16 Decrease in inventories
17 Decrease in notes and accounts payable
18 Decrease in liquor taxes payable
19 Decrease in deposits received
20 Increase in other current liabilities
21 Other
Sub total
22 Interest and dividends received
23 Interest paid
24 Income taxes paid
Net cash provided by (used in) operating activities
II Cash flows from investing activities
1 Payments for time deposits
2 Proceeds from time deposits
3 Purchases of investment securities
4 Proceeds from redemption and sale of investment securities
5 Purchases of affiliates securities
6 Purchases of property, plant and equipment
7 Proceeds from sales of property, plant and equipment
8 Purchases of intangibles
9 Increase in long-term loans receivable
10 Collection of long-term loans receivable
11 OtherNet cash provided by (used in) investing activities
III Cash flows from financing activities
1 Net increase (decrease) in short-term bank loans
2 Proceeds from long-term debt
3 Repayment of long-term debt
4 Proceeds from issuance of bonds
5 Redemption of bonds
6 Net increase (decrease) in commercial paper
7 Cash dividends paid
8 Purchase of treasury stock
9 Proceeds form sales of treasury stock
10 Proceeds from minority shareholders
Net cash provided by (used in) financing activities
IV Effect of exchange rate changes on cash and cash equivalents
V Net increase (decrease) in cash and cash equivalents
VI Cash and cash equivalents at beginning of period
VII Cash and cash equivalents of additional consolidated
subsidiaries
VIII Cash and cash equivalents at end of period

23

Fiscal year ended
December 31, 2007
Amount(in millions of yen)
Fiscal year ended
December 31, 2008
Amount221
24,526
6,583
6,939
869
276
(1,166)(295)(1,026)
4,280(6,769)
1,300
(766)
393
4,387
777
(3,015)(207)(3,159)327
1,810
36,288991(4,237)(2,350)30,69017,97021,604
−
8,206
867
−
(7,603)
(523)
(969)
3,714
(25,892)
5,835
(20)
746
5,760
1,056
(1,447)(2,287)(1,854)4,805
253
30,225974(3,743)(5,164)
22,291

(629)
607
(250)
2,804
(87)
(17,815)7,206(2,067)(74)414(3,601)(13,495)(593)
866(1,166)152(52)(22,791)
49,082(4,551)(525)
251(3,816)
16,856(4,999)24,001(50,335)
19,925(10,000)
4,000(1,888)(284)
12−(19,568)(43)(2,416)
8,282(4,816)
20,357(35,684)3,843−(4,000)(1,963)
(262)
68
250
(22,207)(604)
16,335
5,881

15

−

5,881

22,217

4.Segment Information
1. Segment Information by Business(millions of yen)
Fiscal year ended December 31, 2007 (January 1, 2007 ‒ December 31, 2007)
Alcoholic
Beverages

Soft
DrinksRestaurants

Real
EstateTotal

Corporate andeliminations

Consolidated

I Net sales and operating income (loss)
Net sales(1) Operating revenues(2) Intra-group sales and343,670
6,323

52,239330

28,954−

24,1472,639

449,0119,293(9,293)449,011−

349,993
342,139
7,854

52,56953,408(839)

28,95428,298656

26,787
19,714
7,073

458,305
443,560
14,744(9,293)(6,912)(2,381)

449,011436,648
12,362334,827
15,525204
13,988

9,618
425
570
394

14,542
799
214
1,706

187,815
7,776
5,950
3,458

546,804
24,526
6,939
19,54815,053−−−561,858
24,526
6,939
19,548−transfers
Total
Operating expenses
Operating income (loss)
II Assets, depreciation andamortization, impairment andcapital expenditures
Identifiable assets
Depreciation and amortization
Loss on impairment
Capital expenditures(millions of yen)
Fiscal year ended December 31, 2008
Alcoholic
Beverages

Soft
DrinksRestaurants(January 1, 2008 ‒ December 31, 2008)
Real
EstateTotal

Corporate andeliminations

Consolidated

I Net sales and operating income (loss)
Net sales(1) Operating revenues(2) Intra-group sales and324,720
6,263

36,848321

29,537−23,451
2,373

414,558
8,958(8,958)414,558−

330,983
322,373
8,610

37,17036,950220

29,53728,987550

25,824
18,212
7,612

423,516
406,522
16,993(8,958)(6,649)(2,308)414,558
399,872
14,685

307,517
14,125
6,619
15,09917,536
272
1,250
998

14,738779
320
856

172,5636,427
16
12,419512,355
21,6038,206
29,374

14,9301−
4527,286
21,6048,206
29,378−transfers
Total
Operating expenses
Operating income (loss)
II Assets, depreciation andamortization, impairment andcapital expenditures
Identifiable assets
Depreciation and amortization
Loss on impairment
Capital expenditures

Notes:(1) Segment classifications reflect the similarity of constituent businesses and take into account standard industry
classifications in Japan.
(2) Main products in each segment
Business Segment
Main Products
Alcoholic beverages
Beer, happoshu and other beverages, wine, whiskey, shochu and other products,
distribution, brewing equipment, and agribusiness
Soft drinks
Soft drinks and other non-alcoholic beverages
Restaurants
Operation of beer halls and restaurants
Real estate
Real estate leasing, real estate sales, operation of commercial facilities,
utility supplies, and fitness clubs(3) Unallocated operating expenses included in "Corporate and Eliminations": 2,477 million yen at December 31, 2007, and2,344 million yen at December 31, 2008.These are operating expenses incurred by Sapporo Holdings (as parent company).
(4) Unallocated assets included in "Corporate and Eliminations" amounted to 21,013 million yen and 29,131 million yen at
December 31, 2007 and 2008, respectively, and consisted principally of cash and cash equivalents and marketablesecurities, long-term investments, and assets of general administration divisions.
(5) Depreciation and amortization, loss on impairment, and capital expenditures include long-term prepaid expenses andtheir write-offs. Depreciation and amortization for the year ended December 31, 2007, does not include 6,583 million yen in
depreciation expenses, resulting from revision of residual value, that were recorded in extraordinary losses.
(6) Change in accounting methods(January 1 to December 31, 2007)
Not applicable24