Financial Results
For the Year Ended December 31, 2007—Consolidated
February 15, 2008

Company name

Sapporo Holdings Limited

Security code
Listings
URL
Representative
Contact

2501
Tokyo Stock Exchange (First Section); Sapporo Securities Exchange
http://www.sapporoholdings.jp/english/
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 28, 2008
March 31, 2008
March 31, 2008

1. Consolidated Financial Results for the Year Ended December 31, 2007
(January 1, 2007 – December 31, 2007)
1) Operating Results(amounts rounded down to the nearest million yen;percentage figures represent year-on-year changes)
Net salesYear ended
December 31, 2007
Year ended
December 31, 2006

Year ended
December 31, 2007
Year ended
December 31, 2006

Operating income

Ordinary income

Net income

million yen%

million yen%

million yen%

million yen%

449,011

3.2

12,362

43.5

8,118

38.6

5,508

135.6

435,090

(4.1)

8,612

(16.4)

5,857(11.3)

2,338(35.6)Net income
per share

Diluted
net income
per share

Return on
equityOrdinary
income tototal assets

Operatingincome to net
sales

yen

yen

%

%

%

14.10

13.76

4.6

1.4

2.8

6.38

5.88

2.1

1.0

2.0

Note: Equity method investment gains or losses:
Year ended December 31, 2007:(132) million yen
Year ended December 31, 2006:(49) million yen

12) Financial Position
Total assets

Net assets

Shareholders’equity ratio

Net assets per
sharemillion yen

million yen%

yenYear ended
December 31, 2007

561,858

125,18922.3

319.07

Year ended
December 31, 2006

589,597

113,49519.2

300.13

Note: Shareholders’ equity
Year ended December 31, 2007: 125,135 million yen
Year ended December 31, 2006: 113,493 million yen

3) Cash Flows
Cash flows from
Cash flows from
Cash flows fromoperating activities investing activities financing activities

Cash and cash
equivalents at
end of period

million yen

million yen

million yen

million yen

Year ended
December 31, 2007

30,690(13,495)(19,568)

5,881

Year ended
December 31, 2006

28,588(54,414)

9,351

8,282

2. Dividends
Dividend per share
Record dateYear ended
December 31, 2006
Year ended
December 31, 2007
Year ending
December 31, 2008
(forecast)Total
dividends
paid(annual)Payout ratio(consolidated)

Dividends to
net assets(consolidated)

InterimYear-end

Annual

yen

yen

yen

million yen

%

%

−

5.00

5.00

1,890

78.3

1.7

−

5.00

5.00

1,960

35.5

1.6

−

7.00

7.00

−

21.4

−

3. Forecast of Consolidated Earnings for the Year Ending December 31, 2008
(January 1, 2008 – December 31, 2008)

Net sales

Operating income(percentage figures represent year-on-year changes)
Net income
Ordinary income
Net income
per share

million yen%

million yen%

million yen%

million yen

Interim

208,000(1.6)(1,000)−(2,700)−

Full year

449,200

0.0

13,500

9.2

9,200

13.3

2

%

yen

6,900

−

17.59

12,800

132.4

32.64

4. Others
1) Changes affecting the status of significant subsidiaries (scope of consolidation): None
2) Changes in accounting principles, procedures, and method of disclosure used to prepare thefinancial results(1) Changes in accordance with amendments to accounting standards: Yes(2) Changes other than the above: None
3) Number of shares issued and outstanding (common stock)(1) Number of shares issued and outstanding at end of period (treasury stock included):Year ended December 31, 2007:
Year ended December 31, 2006:

393,971,493 shares379,617,498 shares(2) Number of shares held in treasury at end of period:
Year ended December 31, 2007:
Year ended December 31, 2006:

1,785,996 shares
1,458,776 shares

For reference: Overview of Financial Results on Non-Consolidated Basis
1. Non-Consolidated Financial Results for the Year Ended December 31, 2007
(January 1, 2007 – December 31, 2007)
1) Operating Results(percentage figures represent year-on-year changes)
Operatingrevenuemillion yen

Year ended
December 31, 2007
Year ended
December 31, 2006

Year ended
December 31, 2007
Year ended
December 31, 2006%

Operating income

Ordinary income

million yen

million yen%

million yen%%

Net income

5,462

9.3

1,906

0.0

2,970

(8.7)

2,019

−

5,000

58.0

1,906

135.4

3,252

43.1

(958)

−

Net income
per share

Diluted
net income
per share

yen

yen

5.17

−

(2.62)−

3

2) Financial Position
Total assets

Net assets

Shareholders’equity ratio

Net assets per
sharemillion yen

million yen%

yenYear ended
December 31, 2007

342,614

129,55837.8

330.35

Year ended
December 31, 2006

357,713

123,18534.4

325.75

Note: Shareholders’ equity
Year ended December 31, 2007: 129,558 million yen
Year ended December 31, 2006: 123,185 million yen

Appropriate Use of Earnings Forecasts and Other Important Information
For the assumptions underlying the forecasts given above and other relevant information,refer to pages 12 to 16 of the attached document.

4

Results of Operations and Financial Statements
1. Results of Operations
1) Analysis of Results of Operationsa) Review of the Fiscal Year Ended December 31, 2007
(1) Overview(millions of yen, except percentages)
Net sales

Operating

Ordinary

incomeincomeNet income

2007

449,011

12,362

8,118

5,508

2006

435,090

8,612

5,857

2,338

3.2

43.5

38.6

135.6

Change (%)

Although corporate performance in Japan was relatively strong through fiscal 2007,
growth in personal spending eased off, and signs of a slowdown in economic activity havespread. The impact of the subprime mortgage crisis in the US was felt during the second
half of the year, and the future remains uncertain as sharp fluctuations occur in exchange
rates, stock prices, oil prices, and other indicators.
The discovery of numerous cases of false food labeling has affected the alcoholic beverages,
soft drinks, and restaurants industries, in which Sapporo Group companies operate, andthe stance of companies in these industries toward the safety and reliability of food hascome under increased scrutiny. Intensifying competition between companies amid
floundering aggregate demand, in addition to the rising trend in the cost of raw
ingredients and materials, is putting a squeeze on corporate earnings.
In the real estate industry, however, demand for offices in central Tokyo is vibrant andrents remain on an upward trend, but disparities between areas are widening as excess
supply emerges in regional areas.
Under these circumstances, during the second year of the Group’s medium-term
management plan, embarked on in 2006, we focused on accelerating reforms to theGroup’s earnings structure and promoting sustained growth toward the future.

5

With regard to earnings structure reforms, following on from last year we revised all
aspects of our cost structure, and we successfully minimized the impact of the rising costof raw ingredients and materials through concerted corporate effort.
To promote sustained growth into the future, we launched high value-added products in
our Alcoholic Beverages and Soft Drink businesses, and performance was strong in the

shochu business—in which 2007 marked our second year—as well as in the Alcoholic
Beverages business in Canada. In the Real Estate business, the development of properties
held by the Group is progressing favorably, and we are cultivating promising growth
opportunities in many other areas as well.
The following presents a review of the Group’s consolidated performance for fiscal 2007.
Net Sales
Consolidated net sales were up ¥13.9 billion, or 3%, year over year to ¥449.0 billion. This
results reflects the following..
In the domestic Alcoholic Beverages business, happoshu sales volume declined, but
growth in the Overseas Alcoholic Beverages business, including the contribution to sales
from Canada’s Sleeman Breweries, which was included in consolidated results as of fiscal
2007, meant that net sales increased. In the Soft Drink business, on the other hand, thelarge decline in sales volume for Fujiya brand beverage products resulted in a sizeable
drop in earnings. Finally, solid performance was exhibited by the Restaurants and Real
Estate businesses.
Operating Income
Consolidated operating income rose ¥3.7 billion, or 44%, year over year to ¥12.3 billion.
This results reflects the following.
Sales volumes declined in the domestic alcoholic beverages market, and the impact of therising cost of raw ingredients and materials was also felt, but production streamlining
and efforts to reduce costs, with a focus on sales promotion expenses, saw us successfully
realize income growth. And the addition of Sleeman Breweries’ earnings in the Overseas
Alcoholic Beverages business resulted in substantial income growth for the Alcoholic
Beverages business as a whole.
In the Soft Drink business, we worked to improve earnings by reducing costs, such as

6

transportation expenses and sales promotion expenses, and reviewing sales deals but
were unable to cover the decline in sales volumes and increases in the cost of raw
ingredients and materials, resulting in a decline in income.
In the Restaurants business, although we shouldered increased costs associated with the
opening of new establishments and a rise in personnel expenses due to the difficulty ofrecruiting new staff, growth in revenue from new establishments in addition to continuing
favorable performance of existing restaurants resulted in higher earnings.
Earnings in the Real Estate business were also up owing to the maintenance of highoccupancy rates and revised rents for properties in the Tokyo area and the contributions
to revenue of properties developed during fiscal years 2006 and 2007.
Ordinary Income
Consolidated ordinary income came to ¥8.1 billion, representing year-over-year growth of¥2.2 billion, or 39%.
A rise in borrowings during the year in conjunction with M&As and increases in interest
rates on funds borrowed resulted in an increase in financial expenses of ¥1.1 billion.
Net Income
Consolidated net income was up ¥3.1 billion, or 136%, year over year to ¥5.5 billion.
We recorded a once-off depreciation charge in the Alcoholic Beverages business, made in
conjunction with the decision to stop production at the Osaka plant, as well as an
impairment loss in the Real Estate business in conjunction with the decision to transfer
the Sapporo Factory facility and its business to a newly formed company. These items
were offset, however, by the deferral of income taxes.
ROE
Although equity capital rose owing to the exercise of conversion rights on yen-dominatedconvertible bonds issued in 2004, the 136% year-over-year rise in net income saw ROE
rise to 4.6% from the previous year’s 2.1%.

7

(2) Segment Information(millions of yen ,except percentages)
Net sales
2007

2006

Operating income
Change

2007

2006

(%)

Alcoholic

Change(%)

343,670

326,419

5.3

7,854

4,183

87.7

(Japan)315,892

321,128

(1.6)

6,189

3,798

62.9

(Overseas)

27,777

5,291

424.9

1,664

385

332.3

Soft Drinks

52,23958,730(11.1)

(839)

(426)

—

Restaurants

28,95426,995

7.3

656

457

43.4

Real Estate

24,147

22,827

5.8

7,073

6,413

10.3

Beverages

Alcoholic Beverages

Alcoholic Beverages (Japan)
Despite net sales in the Japanese Alcoholic Beverages business declining ¥5.2 billion, or
2%, year over year to ¥315.8 billion, operating income advanced ¥2.3 billion, or 63%, to¥6.1 billion.
Although a large number of new products were launched by companies operating in theJapanese beer market, total demand was stagnant through the first three quarters.
Following a comeback during the fourth quarter, however, it is estimated that total
annual demand recovered to 99.7% of its previous level.
Against this backdrop, demand for Yebisu brand products, our premium beer offering in
the Japanese alcoholic beverages market, rose 18% year over year, cementing the brand’s
leading share in this category. Strong results were also realized with commercial-use kegs,
allowing us to outperform total demand.
Net sales in the wine category exceeded the previous year’s, assisted by strong growth intotal demand for domestic and imported wines and the effects of price increases onimported wines.
The shochu category, in which we marked our second year, enjoyed growth in revenues of¥2.5 billion owing to net increases in sales during the first quarter and strong sales

8performance throughout the second half of the year.
The significant decline in sales volume in the happoshu category, however, combined with
our inability to attain sales volume targets in the new genre category, owing to changes in
the market environment, meant that net sales in the Japanese Alcoholic Beverages
business as a whole fell below those of the previous year.
With regard to costs, however, although increases in prices of materials—primarily
consisting of aluminum cans—and raw ingredients put upward pressure on the cost of
goods sold, the implementation of measures on factory production lines to reduce initialcosts, efforts to curtail advertising and sales promotion expenses, and other cost-reduction
initiatives in all areas of our operations saw operating income outperform the previous
year’s figure.

Alcoholic Beverages (Overseas)
Net sales in the Overseas Alcoholic Beverages business surged ¥22.4 billion, or 425%,
year over year to ¥27.7 billion. As a result, operating income in the Overseas Alcoholic
Beverages business also increased, jumping ¥1.2 billion, or 332%, to ¥1.6 billion.
With regard to the North American beer market, amid estimates that total demand is
growing slightly, competition in the market as a whole is intensifying. However, demandremains solid and continues to grow for certain premium category products, such asimported beers and craft beers. The beer market overall is also expanding in Asian
countries and other markets outside of North America.
Against this backdrop, we engaged in aggressive sales efforts in the premium market andother markets exhibiting growth. In the fiscal year under review, we incorporated
Canada’s Sleeman Breweries results into our consolidated accounts for the first time,
Sapporo USA turned in a solid performance with sales volume at 108% of the previous
year’s level, and sales volume from exports to other countries also rose to 117% of theprevious year’s level.
Soft Drinks
Net sales in the Soft Drink business declined ¥6.4 billion, or 11%, year over year to ¥52.2
billion, and we realized an operating loss of ¥0.8 billion, representing a year-over-year
decline in income of ¥0.4 billion.

9

The Soft Drink business, assisted by the effects of favorable weather, enjoyed strong levelsof product shipments from the beginning of the year, which continued throughout.
Although no new large products were launched, demand for mineral water products, both
domestic and imported, continued on the previous year’s growth track. The addition of
product items under major brands in each of the carbonated beverages and tea drinks
categories also contributed, and total demand is now estimated to be at around 104% of
the previous year’s level.
Against this backdrop, we worked to develop and strengthen our Ebisu Sabo andGabunomi product lines, core brands in the Soft Drink business, and strived to reachmore customers. With regard to differentiated products, we released the Hop Kenkyusho
series of beverages, which represent the results of joint development efforts with Sapporo
Breweries. We also worked to cement the market presence of products through initiatives
led by the release of Cranberry Original as a key item in the health product category.
However, the large decline in demand for Fujiya brand beverage products resulted insales volume underperforming the previous year’s figure.
With regard to costs, although we worked to reduce transportation expenses, sales
promotion expenses, and vending machine costs, we were unable to cover the decline ingross profit due to lower sales and the rising cost of raw ingredients and materials.
Restaurants
Net sales in the Restaurants business rose ¥1.9 billion, or 7%, year over year to ¥28.9
billion, and operating income advanced ¥0.1 billion, or 43%, to ¥0.6 billion.
Year-over-year performance growth in the Restaurants business continued throughout the
beginning of the year, led by fast food establishments, but a stream of false food labelingincidents and price hike announcements in the second half of the year produced concernsthat consumers may be turning away from the restaurant market, and signs of aslowdown intensified. With regard to the izakaya dining format, although small
businesses continue to be driven out of the industry and numbers of large izakaya chain
stores are rising, the trend is toward existing stores consistently underperforming year
over year.
Against this backdrop, our Restaurants segment worked to differentiate itself in terms of
cuisine and service, and achieved growth in net sales by aggressively opening new
establishments.

10With regard to existing establishments, the strong performance of beer halls combinedwith high rates of growth in sales at existing new-format stores, such as Kakoiya, toproduce a fourth consecutive year of growth in net sales.
We also opened 12 restaurants with floor areas of around 4,575 m2, the largest of any new
restaurants opened in the past 10 yeas. The costs associated with these openings resulted
in increases in expense accounts. Conversely, we closed six aging restaurants for which we
did not perceive the possibility of recovery through refurbishment or reformatting. At theend of the year, therefore, we had 201 establishments in operation.
Real Estate
Net revenue in the Real Estate business rose ¥1.3 billion, or 6%, year over year to ¥24.1
billion, and operating income was up ¥0.6 billion, or 10%, to ¥7.0 billion.
Vacancy rates and rent levels for office buildings, particularly in central Tokyo, continued
to improve, and the office leasing market performed favorably.
Against this backdrop, we maintained high occupancy rates at Yebisu Garden Place andother existing lease properties in the Tokyo area, and we also succeeded in raising rents
for resident tenants. Development properties that went into operation during the second
half of 2006 (such as Strata Ginza and the Frontier building within the Sapporo Factory
facility) and those that opened their doors during 2007 (student-targeted rental
condominiums in Sendai and Fukuoka and commercial rental property facilities around
Sapporo Garden Park in Sapporo City) contributed greatly to the increase in net revenue.

11b) Outlook for the Year Ending December 31, 2008
(1) Overview(millions of yen, except percentages)
Net sales

Operating

Ordinary

incomeincomeNet income

Forecast for 2008

449,200

13,5009,200

12,8002007

449,011

12,362

8,118

5,508

0.0

9.2

13.3

132.4

Change (%)

The four Group strategies for growth set out in the Sapporo Group’s New Management

Framework, released in 2007, will form the underlying basis of our operations in 2008. In
the Restaurants and Real Estate businesses, in particular, we plan to utilize theknow-how offered by strategic partners with whom we formed alliances during 2007 toenhance Group strengths and complement our own capabilities as we strive to enhancethe value of our operations.
With regard to the Japanese Alcoholic Beverages market, we are committed to pursuing
flavor as well as safety and reliability in all of our processes through efforts focusing
primarily on 100% cooperative contract production of malt and hops, and we will be
employing our unique technologies to provide consumers with new value.
Net Sales
The Group anticipates net sales of ¥449.2 billion, representing a year-over-year increaseof ¥0.1 billion. This outlook is based on the following.
With regard to the Alcoholic Beverages business, we will be aiming to raise earnings in
the Japanese market, primarily through the unique value offered by the Sapporo Group.
Overseas, in addition to sales growth at Canada’s Sleeman Breweries, we will be working
towards further expanding revenue in the US market. In the Restaurants business, weplan to raise earnings by working to further invigorate existing establishments andopening additional large stores. In the Soft Drink business, however, we expect sales fallas changes to accounting methods take effect and we place a priority on restructuring
operations together with strategic alliance partners. We also expect lower revenues in theReal Estate business in connection with the divestiture of some assets.

12

Operating Income
The Group anticipates consolidated operating income ¥13.5 billion, representing a
year-over-year increase of ¥1.1 billion, or 9%.
With regard to the Alcoholic Beverages business, the rising cost of raw ingredients andmaterials is affecting both the Japanese and overseas markets. However, we anticipate
revenue growth on the back of price revisions in the Japanese beer and beer-type
beverages market as well as higher profit margins, resulting from improvements in the
product mix, and efforts to further reduce costs. In the Soft Drink business, we will bepromoting efforts aimed at the early improvement of our earnings ratio. In the
Restaurants business, we expect earnings to rise owing to anticipated increases in net
sales and efforts to limit cost increases. In the Real Estate business, the revision of rents
on existing properties and efforts to streamline costs are expected to cover the reduction
in revenue resulting from the divestiture of some assets, and we therefore anticipate
higher earnings for the segment.
Ordinary Income
With the expected increase in operating income, we anticipate consolidated ordinary
income of ¥9.2 billion, a year-over-year increase of ¥1.0 billion, or 13%.
Net Income
We expect to post an extraordinary gain due to the divestiture of certain assets held by
our Real Estate operations. We therefore anticipate consolidated net income of ¥12.8
billion, representing year-over-year growth of ¥7.2 billion, or 132%.
ROE
Given the anticipated rise in net income, we expect ROE to improve from 4.6% for theyear under review to 9.8%.

13

(2) Outlook by Segment(millions of yen, except percentages)
Net sales
2008

2007

Operating income
Change

2008

2007

(%)
Alcoholic

Change(%)

351,800

343,670

2.4

8,700

7,854

10.8

(Japan)323,200

315,892

2.3

7,500

6,189

21.2

(Overseas)

28,60027,777

3.0

1,200

1,664

(27.9)

Soft Drinks

43,60052,239(16.5)

(500)

(839)

—

Restaurants

30,10028,954

4.0

800

656

22.0

Real Estate

23,70024,147

(1.9)

7,400

7,073

4.6

Beverages

Alcoholic Beverages

Alcoholic Beverages (Japan)
With sluggish growth in total demand for alcoholic beverages in Japan expected, owing to
a decline in the drinking-age population and the impact of price increases, competition
between product categories should intensify.
In the beer and beer-type beverages market, although a decline in total demand andchanges in the composition of demand across categories due to the impact of prices
increases are expected, the market for functional beverages and premium beers should
continue to expand.
Against this backdrop, we will be implementing marketing efforts geared to respond tochanges in the market environment and diversifying customer needs, and aiming toincrease earnings by providing value that is uniquely characteristic of Sapporo. In
practical terms, we will be working to bolster the Yebisu brand, the premier name in thepremium category, and to enhance the brand strengths of Draft One in the low-pricecategory. We will also be releasing new functional products in response to increased
health awareness, and overall, we aim to achieve sales volumes that exceed total demand.
We will also continue to place priority on the safety and reliability of foods, working under
the slogan (translated from Japanese): “Flavor and confidence; Sapporo Breweries iscommitted to pure quality.”
With regard to costs, we expect the cost of raw ingredients and materials to continue to14

rise. However, in addition to revising prices of beer and beer-type beverages in April, we
will be terminating production at the Osaka plant in March and further reviewing our
production systems as well as streamlining the use of sales promotion expenses andimplementing other internal measure. Through these efforts, we aim to achieve operating
income that exceeds the previous year’s result.

Alcoholic Beverages (Overseas)
In the alcoholic beverages market overseas, we anticipate the cost of goods sold to riseowing to the impact of the global surge in raw materials prices, and the US dollar is
expected to be weaker, in comparison to the previous year, against both the yen and theCanadian dollar owing to the impact of the subprime mortgage crisis. Against thisbackdrop, total demand is expected to be flat or rise only slightly in the North American
beer market, our main focus in the segment. However, we will continue utilizing ourstrengths in the premium category to further cement our position in this market.
In the Canadian market, Sleeman Breweries will be executing aggressive marketinginvestments to maintain and enhance the value of its core premium brands—Sleeman,
Unibroue, and Okanagan Spring—and aiming to achieve sales volumes that exceed total
demand.
In the US market, building on our efforts to expand the Sapporo brand thus far, ledprimarily by Sapporo USA, this year we will begin exporting Yebisu beer, targeting sales
in the high-end market. Through these efforts we aim to achieved sales volumes thatexceed total demand.
With regard to exports to other countries and local production, we aim to increase sales
through the aggressive introduction of keg beers while bolstering our operating base andfurther developing our business in the Overseas Alcoholic Beverages segment with a viewto expanding into new regions.
Soft Drinks
In the Soft Drink business, we will be switching to a brand strategy that aims to createhigh-value-added brands that manifest our meticulous approach to ingredients, one of theGroup’s key strengths, and working to establish a meaningful presence in the market. In
addition to more rigorously focusing our product lineups, we will also be working toharness the underlying strength of fruit juices in particular, offering new value throughfunctional fruit juice beverages.

15With regard to costs, although we anticipate increases due to rising prices of raw
ingredients and materials, we aim to improve operating income by driving throughearnings structure reforms and streamlining measures as part of our operating strategy,
and pursuing low-cost operations.
Restaurants
In the Restaurants business, we will be aimed to achieve a fifth consecutive year of net
sales growth through efforts to differentiate existing establishment by improving quality
and to raise spending per customer. Nasu Mori no Beer En, a huge new restaurant facility
in Nasu, will open its door in April, and we will also be working to expand net sales
through other new store openings with a focus on the Tokyo area. We also aim to improve
our earnings ratios by working to limit increases in expenses attributable to new store
openings during the period.
Real Estate
The real estate industry is expected to remain stable, led by the office leasing market.
With regard to our Real Estate operations, Sapporo Toshi Kaihatsu Co., Ltd., a newcompany formed with capital investments from local companies in Hokkaido, will open its
doors in March and our business alliance with the Morgan Stanley Group pertaining to
the Yebisu Garden Place facility will begin in April. Working on this basis, we willcontinue working to maintain high occupancy rates and raise rents on existing rental
properties while also bolstering efforts to acquire and develop new properties from outside
the group and to enhance the value of our existing business.
2) Financial Conditiona) Assets, Liabilities, and Net Assets
The balance of total consolidated assets at the end of 2007 was ¥561.8 billion, ¥27.7
billion lower than a year prior. The decline was attributable to a reduction in cash anddeposits, a reduction in notes and accounts receivable, and a decline in fixed assets due todepreciation and impairment losses.
Liabilities stood at ¥436.6 billion, a year-over-year fall of ¥39.4 billion attributable to a
reduction in short-term bank loans and the current portion of long-term debt as well as adecline in long-term debt.
The balance of net assets was ¥125.1 billion, a year-over-year increase of ¥11.6 billion

16

attributable to a rise in paid-in capital and capital surplus, due to the exercise of
conversion rights on convertible bonds, as well as an increase in retained earnings.
b) Cash FlowsThe consolidated balance of cash and cash equivalents at the end of 2007 stood at ¥5.8
billion, a year-on-year decline of ¥2.4 billion. Although we made payments for thepurchase of property, plant and equipment, these were covered with cash flows fromoperating activities. The repayment of long-term debt also had a notable effect.
The following presents consolidated cash flow figures for the fiscal year under review
together with an overview of factors that affected each category.

Cash Flows from Operating Activities
Net cash provided by operating activities was ¥30.6 billion. This result is primarily
attributable to income before income taxes and minority interests of ¥0.2 billion,
depreciation and amortization of ¥24.5 billion, a once-off depreciation charge on fixed
assets of ¥6.5 billion, impairment losses of ¥6.9 billion, and a decrease in notes andaccounts receivable of ¥4.3 billion, which were offset by a ¥3.0 billion reduction in notes
and accounts payable and a ¥3.1 billion decline in deposits received.

Cash Flows from Investing Activities
Net cash used in investing activities was ¥13.4 billion. This primarily reflects outflows of¥17.8 billion for the acquisition of property, plant and equipment and ¥2.0 billion for thepurchase of intangibles, which were offset by income of ¥7.2 billion on the disposal ofproperty, plant and equipment and ¥2.8 billion on the sale of investment securities.

Cash Flows from Financing Activities
Net cash used in financing activities was ¥19.5 billion. This primarily reflects outflows of¥50.3.billion for repayment of long-term debt and ¥10.0 billion for the redemption ofbonds, which were offset by ¥24.0 billion in proceeds from long-term debt and ¥19.9
billion in proceeds from the issuance of bonds.

17

Cash Flow Indicators
Year end:
2005
Equity ratio (%)

2006

2007

19.8

19.2

22.1

42.8

43.5

62.3

Cash flow to interest-bearing debt (%)

652

943

796

Interest coverage ratio (times)

10.9

9.1

7.2

Equity ratio based on market
capitalization (%)

Equity ratio: Equity capital / Total assets
Equity ratio based 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 base on consolidated figures.
2. Market capitalization is based on the number of shares issued and outstanding (i.e., 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 2007 and 2008
The Sapporo Group views the appropriate return of profits to shareholders as a key
management policy. When setting dividend levels, our basic policy is to maintain a stabledividend payment with due consideration given to operating performance and financial
condition.
In accordance with the Group’s new management plan, internal reserves will be allocatedto strategic investments with the potential to produce new growth as well as efforts tostrengthen the Group’s financial base, the ultimate objective being to maximize corporate
value.
Dividends for 2007 and 2008
InterimYear-end

Total

2007

—

5.0

5.0

2008

—

7.0

7.0

18

2. Management Policy
1) Fundamental Management Policy of the Sapporo GroupThe Sapporo Group’s management philosophy is “to make people’s lives richer and moreenjoyable,” and its business activities are based on the following fundamental
management policy: “The Sapporo Group strives to maintain integrity in corporate
conduct that reinforces stakeholder trust, and aims to achieve continuous growth incorporate 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 (for reference, 2007 figures are given
in parentheses):• Consolidated net sales: ¥600.0 billion (2007: ¥449.0 billion)• Consolidated operating income: ¥40.0 billion (2007: ¥12.3 billion)• D/E ratio: 1:1 (2007: 1.7 times)• ROE: above 8% (2007: 4.6%)
3) Medium- to Long-Term Group Management Strategy
In October of last year, the Sapporo Group announced a new plan, titled the Sapporo

Group’s New Management Framework, which sets out a target year of 2016—a year thatwill mark 140 years since the Group was founded.
The New Management Framework specifies two business domains for the Group to
develop its activities through the utilization of the assets and strengths at its disposal: (i)the creation of value in food, and (ii) the creation of comfortable surroundings. In addition
to pursuing further growth and improved profitability, the Group will strive to unearth
new business opportunities in these two domains and create new business that willsustain growth through the next generation.
We will also be implementing a number of Group strategies for growth, including thecreation of high-value-added products and services, the formation of strategic alliances,the promotion of international expansion, and the expansion of Group synergies.

19Moving forward, based on the Sapporo Group’s New Management Framework, we will
strive enhance the Group’s corporate value through the implementation of an aggressive
management style under which we plan to review the allocation of management resources
and carry out strategic investments to enhance competitiveness, while also engaging insound management that focuses on long-term goals.
4) Issues to be Addressed
The basic strategies set out in the Sapporo Group’s New Management Framework are as
follows:a) Group strategies for growth(1) Create High-Value-Added Products and Services
The Group aims to maximize capital efficiency by focusing its management resources onareas that offer the greatest competitive strengths while also building 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 of value-added.
(2) Form Strategic Alliances
Rather than focusing solely on its own operations, the Group plans to promote strategic
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 not only the Alcoholic Beverages business but the Soft
Drinks and Food Products businesses, as well as, 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 business strategies and operational synergies.

20b) Overall Strategy to Enhance the Sapporo Group’s Corporate Value(1) CSR Strategy
CSR-focused management is positioned as one of the key strategies for supporting thesustained growth of the Sapporo Group. And based on the Sapporo Group CSR Policy, theGroup will work to ensure continuous understanding of and adherence to the rationale,
objectives, and practices that CSR-focused management entails within the Group, andimplement concrete measures that meet the requirements of the business.
(2) Corporate Governance
Adhering to the Group’s basic policy on the development of a group governance framework,
Sapporo will bolster management monitoring functions to improve transparency andachieve management goals with the aim of continuously enhancing the corporate value ofthe entire Group.
Sapporo will develop new internal control systems to act as the fundamental basis forGroup governance and establish them firmly within the organization.
(3) Human Resources Strategy
Sapporo will foster interaction and exchange among people within and external to theGroup and provide career-development support with the aim of developing humanresources able to contribute to the creation of value.
Towards the creation of value, Sapporo will work to instill vibrancy and abundant
motivation into the organization by providing opportunities for Group personnel to utilize
and experience the skills and abilities they have acquired.
(4) Financial Strategy
The Group plans to execute strategic investments in areas of potential future growth,with due consideration given to the business domain and basic strategies.
To build solid financial foundations that support the Group's future business activities
and enable it to respond and adapt to changes in the market environment, such as futureinterest rate fluctuations, Sapporo will work to reduce financial liabilities and strengthen
the capital base with the aim of raising the Group’s market valuation.

21

3.Consolidated Balance Sheets(amounts in millions of yen)
As of December 31, 2006
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 current assets
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% of total

8,916
73,61562
24,4032,068
45
19,084(224)
127,972

402,617(181,947)
212,681(157,171)

21,982(17,209)

2 Goodwill
3 Other
Total intangible assets(3) Investments and other assets
1 Investment securities
2 Long-term loans receivable
3 Deferred tax assets
4 Other investments and other assets
5 Allowance for doubtful receivables
Total investments and other assets
Total fixed assets
Total assets－
9,899
23,45033,34942,082
10,450
1,675
19,940(2,602)
71,547
461,624589,59722% of total

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

55,51071,332
4,442

1 Goodwill (including consolidation
adjustments)

Amount21.7

220,669

4,772
356,727

Year onyear

As of December 31, 2007

21,723(17,265)

21.0

Amount(2,404)(3,930)
(49)
(361)
222
87
(3,766)(51)(10,254)206,244(14,425)

51,954
71,153
4,694(3,556)
(179)
252

60.5

4,458
338,504

5.7

27,614－
5,754
33,368

12.1
78.3
100.0

37,393
10,2297,541
19,339(2,235)72,267444,141
561,858

60.2

(314)
(18,223)

5.9

27,614(9,899)(17,695)
18

12.9
79.0
100.0

(4,689)
(221)
5,866
(601)
366
720
(17,483)(27,738)

As of December 31, 2006
Amount% of total

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

Year onyear

As of December 31, 2007
Amount% of total

Amount28,92926,121(2,808)104,00738,276
1,525
764－
52,147
43,233
268,885

64,41538,140
2,749
1,056
0
48,72542,292
223,501(39,592)
(136)
1,223
292
0
(3,422)(940)(45,384)

45.6

39.8

49,72082,305
9,984
16,301

69,71074,3396,182
15,13519,990(7,966)(3,802)(1,166)

118
33,657
15,128207,216
476,101115
31,903
15,782
213,168
436,669(2)(1,753)
653
5,952(39,432)

23

35.2
80.8

37.9
77.7

As of December 31, 2006
AmountNet Assets
I Shareholders' equity
1 Common stock
2 Capital surplus
3 Retained earnings
4 Treasury stock, at cost
Total shareholders' equity

Year onyear

As of December 31, 2007

% of total

Amount% of total

Amount50,06642,484
10,472(571)
102,451

8.5
7.2
1.8
(0.1)
17.4

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

9.6
8.2
2.5
(0.1)
20.2

3,820
3,825
3,820
(277)
11,1891 Unrealized holding gain on
securities

11,318

1.9

9,640

1.7

(1,677)

2 Foreign currency translation
adjustments

(276)

(0.1)

1,853

0.4

2,129

11,041
2
113,495
589,597

1.8
0.0
19.2
100.0

11,493
53
125,189
561,858

2.1
0.0
22.3
100.0

452
51
11,693(27,738)

II Valuation and translation
adjustments

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

24Consolidated Statements of Income(amounts in millions of yen)
Fiscal year ended
Year onDecember 31, 2007
year

Fiscal year ended
December 31, 2006
Amount% of total

435,090
300,121
134,968

I Net sales
II Cost of sales
Gross profit

Amount

100.0
69.0
31.0

% of total

Amount449,011305,078
143,933

100.0
67.9
32.1

13,921
4,956
8,964

131,570
12,362

29.3
2.8

5,215
3,749

2,306

0.5

(89)

6,550
8,118

1.5
1.8

1,399
2,261

III Selling, general and administrative
expenses
1 Sales incentives and commissions
2 Advertising and promotion expenses
3 Provision for doubtful receivables
4 Salaries
5 Provision for accrued bonuses
6 Retirement benefit expenses
7 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
6 Other
V Non-operating expenses
1 Interest expense
2 Loss on disposal of inventories
3 Equity in loss of affiliates
4 OtherOrdinary income

36,837
18,832
24
16,964441
2,808
50,446

126,355
8,612

29.0
2.0

35,862
17,371－
19,973688
2,869
54,805

398
516
383
－

431
594
387
304

211
885

－
587

2,396

3,041
951
49
1,109

5,151
5,857

25

0.5

1.2
1.3

4,280
858
132
1,280

Fiscal year ended
December 31, 2006

Fiscal year ended
December 31, 2007

Year onyear

AmountAmount% of total

Amount

7,596

1.7

4,953

15,493

3.5

10,970221

0.0(3,756)(5,285)
1
5,508

(1.2)
0.0
1.2

(6,927)(0)3,170% of total

VI Extraordinary gains
1 Gain on sales of property, plantand equipment
2 Gain on sales of investment
securities

69

6,769

2,221

766

3 Reversal of provision for doubtfulreceivables

66

27

4 Gain on sale of consolidated
subsidiary101－

5 Subsidy for installation of vending
machine88

32

6 Adjustments of gain on sales ofproperty, plant and equipment forprior periods
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 Amortization of goodwill
5 Devaluation of marketablesecurities and investments

95

2,642

－

2,519

1,300

1,785

6,939

－

6,583

－

276

217

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

0.6

1,728
－
(86)

4,522

1.0

3,977

0.9

1,641
2
2,338

26

0.4
0.0
0.5

393

3,040
308
(8,634)

Statement of Changes in Shareholders’ CapitalYear ended December 31, 2006

(January 1, 2006 – December 31, 2006)(millions of yen)
Shareholders' capital

Common stock Capital surplus
Balance as of December 31,
2005
Changes during period
Issuance of new shares
Cash dividends*
Decrease 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,
2006

46,59539,010

3,470

3,470

Retainedearnings

Treasury stock

9,962

(461)

Total
shareholders'
capital95,107(1,826)

6,940(1,826)

(1)

(1)

2,338
(117)

2,338
(117)

6

11

4

3,470

3,474

509

(110)

7,344

50,06642,484

10,472(571)

102,451

Valuation and translation adjustments
Net unrealized
gains (losses) onother securities
Balance as of December 31,
2005
Changes during period
Issuance of new shares
Cash dividends*
Decrease 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,
2006

16,502Foreigncurrency
adjustments(198)

Total valuationand translation
adjustments
16,303

Minority
interests

Total net assets－

111,4106,940(1,826)
(1)
2,338
(117)
11

(5,184)(77)(5,261)

2(5,259)(5,184)(77)(5,261)

2

2,084

11,318(276)

11,041

2

113,495* Appropriation approved by the annual shareholders’ meeting held in March 2006.

27

Statement of Changes in Shareholders’ CapitalYear 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

125,18928

Consolidated Statements of Cash Flows(millions of yen)

I Cash flows from operating activities
1 Income before income taxes and minority interests
2 Depreciation and amortization
3 Depreciation expenses resulting fromrevision 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
8Decrease in allowance for doubtful receivables
9 Interest and dividend income
10 Interest expense
111Gain 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 Gain on sale of consolidated subsidiary
16 Decrease in notes and accounts receivable
17 Decrease in inventories
18 Decrease in notes and accounts payable
19 Decrease in liquor taxes payable
20 Increase (decrease) in deposits received
21 Increase (decrease) in other current liabilities
22 Other
Sub total
23 Interest and dividends received
24 Interest paid
25 Income taxes paid
26 Income taxes refundable
Net cash provided by (used in) operating activities
II Cash flows from investing activities

29

Fiscal year ended
December 31, 2006

Fiscal year ended
December 31, 2007

AmountAmount3,977
21,929221
24,526

－
1,785
－
－
(893)
(273)
(915)
3,041
(69)
2,519
(2,221)
217
(101)
1,655
620
(5,264)(514)
5,237(1,874)124
28,981882(3,152)(408)
2,285
28,588

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)－30,6901 Payments for time deposits
2 Proceeds from time deposits
3 Purchases of investment securities
4 Proceeds from sales of investment securities
5 Purchases of affiliates securities
6 Purchases of newly consolidated subsidiaries
7 Purchases of property, plant and equipment
8 Proceeds from sales of property, plant and equipment
9 Purchases of intangibles
10 Increase in long-term loans receivable
11 Collection of long-term loans receivable
12 OtherNet cash provided by (used in) investing activities
III Cash flows from financing activities
1 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
Net cash provided by (used in) financing activities
IV Effect of exchange rate changes on cash and cash equivalents
V Net decrease in cash and cash equivalents
VI Cash and cash equivalents at beginning of year
VII Cash and cash equivalents of additional consolidated
subsidiaries
VIII Cash and cash equivalents at end of year

30

Fiscal year ended
December 31, 2006

Fiscal year ended
December 31, 2007

AmountAmount(1,253)
1,238
(947)
2,776
(894)
(31,176)(18,516)
69(3,299)(29)499(2,882)(54,414)

(629)
607
(250)
2,804
(87)
－
(17,815)7,206(2,067)(74)414(3,601)(13,495)

30,526
9,200(48,321)29,885(10,000)(4,999)24,001(50,335)
19,925(10,000)－(1,831)
(117)
11
9,351
7
(16,466)
24,7484,000(1,888)(284)
12(19,568)(43)(2,416)
8,282

0

15

8,282

5,881

4.Segment Information
1. Segment Information by Business(millions of yen)

Fiscal year ended December 31, 2006
Soft
Drinks326,419
6,129

58,730313

26,995－22,827
2,675

116
6

332,549
328,365
4,183

59,04459,471(426)

26,99526,538457

25,502
19,0896,413

350,890
13,472
1,659
20,224

16,590285－
1,019

13,960
647
125
1,108

192,874
7,522
－
8,437

Restaurants

Real
Estate(January 1, 2006 – December 31, 2006)

Alcoholic
Beverages

Corporate andeliminations

Consolidated

435,090
9,125－(9,125)435,090
－

123
118
5

444,215
433,581
10,634(9,125)(7,104)(2,021)

435,090
426,477
8,612

－
0
－
－

574,316
21,9291,785
30,79015,280－－－589,597
21,9291,785
30,790

Other

Total

I Net sales and operating expenses
Net sales(1) Operating revenues(2) Intra-group sales andtransfers
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, 20(January 1, 2007 – December 31, 2007)

Alcoholic
Beverages

Soft
DrinksReal
EstateTotal

343,670
6,323

52,239330

28,954－

24,147
2,639

349,993
342,139
7,854

52,56953,408(839)

28,95428,298656

334,827
15,525204
13,988

9,618
425
570
394

14,542
799
214
1,706

Restaurants

Corporateandeliminations

Consolidated

449,0119,293－(9,293)449,011－

26,787
19,714
7,073

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

449,011436,648
12,362

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

546,804
24,526
6,939
19,54815,053－－－561,858
24,526
6,939
19,548I Net sales and operating expenses
Net sales(1) Operating revenues(2) Intra-group sales andtransfers
Total
Operating expenses
Operating income (loss)
II Assets, depreciation andamortization, impairment andcapital expenditures
Identifiable assets
Depreciation and amortization
Loss on impairment
Capital expenditures

31

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" : 2,118 million yen at December 31, 2006,
2,477 million yen at December 31, 2007.
These are principally operating expenses incurred by Sapporo Holdings (as parent company) for each of theoperating companies.
(4) Unallocated assets included in "Corporate and eliminations" amounted to 21,522 million yen
and 21,013 million yen at December 31, 2006 and 2007, respectively, and consisted principally of cash and cash
equivalents, marketable securities, long-term investments, and assets of general administration divisions.
(5) Depreciation and amortization, loss on impairment, and capital expenditures include long-term prepaid expenses
and the corresponding write-offs.
Depreciation and amortization does not include the 6,583 million yen recorded as "Depreciation expenses resulting
from revision of residual value" under extraordinary losses.
(6) Change in accounting methods

January 1, 2006 – December 31, 2006
Under the Medium-Term Management Plan for the period from 2006 to 2008, announced in February
2006, the operating base of the fitness clubs business was to be bolster through the utilization of realestate held by the Group. Accordingly, the fitness clubs business was transferred from the Other
segment into the Real Estate as of 2006.
As a result of this change, net sales in the Real Estate segment rose by 709 million yen and operating
revenues in that segment by 90 million yen. Consequently, net sales and operating
revenues for the Other segment declined by the same amount.

January 1, 2007 – December 31, 2007
No applicable information
2. Segment Information by Geographic Area
Sales and assets in Japan constituted more than 90% of the consolidated sales and assets for each of the years ended
December 31, 2006 and 2007. Accordingly, geographical segment information has not been disclosed.
3. Overseas Sales
Overseas sales constituted less than 10% of the consolidated sales for each of the years ended December 31, 2006 and 2007.
Accordingly, overseas sales have not been disclosed.
Transactions with related parties(January 1, 2006 – December 31, 2006)
No applicable information(January 1, 2007 – December 31, 2007)
No applicable information

32