Financial Results
for the Three Months Ended March 31, 2012 — Consolidated(Based on Japanese GAAP)May 9, 2012

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

Tsutomu Kamijo, President and Representative Director, Group CEO
Tatsuya Komatsu, Director of the Corporate Communications Department

Telephone
Scheduled dates:+81-3-5423-7407

Filing of quarterly financial report

May 14, 2012

Commencement of dividend payments-

Supplementary information to the quarterly earnings results

AvailableYes(mainly targeted at institutional
investors and analysts)

Quarterly earnings results briefing held

1. Consolidated Financial Results for the Three Months Ended March 31, 201 2(January 1 – March 31, 2012)(Amounts in million yen rounded down to the nearest million yen)

(1) Operating Results(Percentage figures represent year-over-year changes)
Net sales

Operating income

Ordinary income
million yen%

million yen%

million yen

Three months ended
March 31, 2012

97,388(35.1)(5,581)-(5,864)-(4,126)-

Three months ended
March 31, 2011

72,064(6.6)(3,338)-(4,098)-(6,291)-

Note: Accumulated other comprehensive income
Three months ended March 31, 2012 (891) million yen
Three months ended March 31, 2011 (6,127) million yen

Net income per
share

Diluted net income
per share

yen

yen

Three months ended
March 31, 2012(10.54)-Three months ended
March 31, 2011

(16.07)-1%

Net income
million yen%

(2) Financial Position

Total assets

Net assets

Shareholders’equity ratio

Net assets per
sharemillion yen

million yen%

yen

March 31, 2012

581,927

122,53720.6

305.71

December 31, 2011

550,784

124,775

22.4

314.87

Note: Shareholders’ equity
March 31, 2012:
119,705 million yen
December 31, 2011: 123,293 million yen

2. Dividends
Dividend per share
Record date or
periodEnd Q1End Q2End Q3Year-end

Full year

yen

yen

yen

yen

yen

Year ended
December 31, 2011—

Year ending
December 31, 2012

—

0.00

—

7.00

7.00

Year ending
0.00
—
7.00
7.00
December 31, 2012
(forecast)
Note: No changes were made to dividend forecasts in thethree months ended March 31, 2012.

3. Forecast of Consolida ted Earnings for the Year Ending December 31, 2012
(January 1 – December 31, 2012)(Percentage figures represent year-over-year changes)
Net
Net sales

Operating income

Ordinary income

Net income

incomeper share

million yen%

million yen%

Six months
ending June 30,
2012

230,000

19.7

1,300

(56.7)

Full year

510,000

13.5

20,0005.9

million yen%

million yen

100(95.0)(1,500)--17,000

1.1

6,300

99.1

16.09

Note: No changes have been made to earnings forecasts since the latest release.

2

%

yen

4. Other*For details, see "2. Other" on page 11.
(1) Changes to scope of consolidation: None
*Changes affecting the status of significant subsidiaries (scope of consolidation)(2) Changes in accounting policy, changes in accounting estimates, and retrospective restatement
1) Changes in accordance with amendments to accounting standards etc.: None
2) Changes other than 1) above: Yes
3) Changes in accounting estimates: None
4) Retrospective restatement: None
Note: For details, see (2) Changes in accounting policy, changes in accounting estimates, andretrospective restatement, in section “2. Other” on page 11 in the accompanying material.
(3) Number of shares issued and outstanding (common stock)1) Number of shares issued at end of period (treasury stock included):
March 31, 2012:
393,971,493 shares
December 31, 2011: 393,971,493 shares
2) Number of shares held in treasury at end of period:
March 31, 2012:
2,405,696 shares
December 31, 2011:
2,400,991 shares
3) Average number of outstanding shares during the period:
Three months ended March 31, 2012:
391,568,096 shares
Three months ended March 31, 2011:
391,590,749 shares*Quarterly review status
The quarterly financial results are not subject to quarterly reviews pursuant to the Financial
Instruments and Exchange Act. The quarterly review of the quarterly financial results hereinhad
not been completed as of the date of this document.
Appropriate Use of Earnings Forecasts and Other Important Information
This document contains projections and other forward-looking statements based on information
available to the Company as of the date of this document. Actual results may differ from thoseexpressed or implied by forward-looking statements due to various factors.

3

1. Analysis of Operating Results

Consolidated Financial Results for the Three Months ended March 31, 2012
In the first quarter of 2012 (January 1 – March 31, 2012), the Japanese economy moved onto amoderate recovery trajectory as consumer spending rebounded in line with earthquake-recovery
efforts, corporate profits improved as a result of the strong yen readjustment and concerns about
the European debt crisis receded. These positives were, however, countered somewhat byconcerns about rising crude oil prices and ongoing electricity supply problems. As a result, theoutlook for a full-fledged economic recovery remains clouded with uncertainty.
In this environment, the Sapporo Group posted a sharp gain in sales as the Japanese Alcoholic
Beverages and the Restaurants businesses boosted sales over the previous year, when both weredirectly negatively affected by the impact of the earthquake and tsunami disaster. In addition, theFood & Soft Drinks business’ consolidation of the POKKA Group from April 2011 contributed
directly to year-over-year sales growth during the recently ended first quarter.
Group operating income was down year over year, as profit gains in the Restaurants businesswere offset by negative factors elsewhere, including a year-over-year increase in marketing costsat the Japanese Alcoholic Beverage business, as costs were brought forward; rising costs in theInternational Business segment due to its efforts to build business in the Vietnamese market; anincrease in goodwill amortization at the Food & Soft Drinks business; a first-quarter operating loss
at the POKKA Group; and a decrease in real estate sales at the Real Estate business.
As a result of the above factors, the Sapporo Group posted consolidated sales of ¥97.3 billion, a
35% increase from ¥25.3 billion in the first quarter of fiscal 2011. Despite higher sales, the Group
posted an operating loss of ¥5.5 billion (compared with a ¥3.3 billion loss a year earlier) and an
ordinary loss of ¥5.8 billion (compared with a ¥4.0 billion loss a year earlier). As a result, the firstquarter of fiscal 2012 produced a net loss of ¥4.1 billion (versus a ¥6.2 billion loss a year earlier).
On January 31, we acquired 51% of the outstanding shares of Silver Springs Citrus, the largest
maker of private-brand chilled drinks in the United States, from the Toyota Tsusho Group. The
company becomes a consolidated subsidiary of the Sapporo Group, with its business results
added to the balance sheet from the first quarter of fiscal 2012 and to the income statement fromthe second quarter. On March 1, the Sapporo Group acquired trust beneficiary rights thatamounted to a 15% interest in Yebisu Garden Place held by the joint holder in the complex. The
additional 15% ownership share is reflected in our consolidated balance sheet for the first quarterof fiscal 2011, but income items were added to the consolidated income statement only from March.
Regarding the management integration with the POKKA Corporation, on March 30 we established
POKKA SAPPORO FOOD & BEVERAGE LTD. to prepare for and execute the integration of
Sapporo Beverage and POKKA Corporation in January 2013.

4

Segment information is outlined below. As of the first quarter of fiscal 2012, we have changed
the names of reportable business segments as follows: “International Alcoholic Beverages” is now“International Business” and the Soft Drinks segment and the POKKA Group have been merged
into a single segment, which we call “Food & Soft Drinks”. The main changes from the previous
fiscal year are summarized below in (Notes).

Seasonal Factors
The Group’s operating results exhibit substantial seasonal variation because demand for the
products and services offered by the Japanese Alcoholic Beverages, International Business, Food
& Soft Drinks, and Restaurant businesses tends to be concentrated in the summer months. Sales
and profits consequently tend to be lower in the first quarter than in the other three quarters.

Japanese Alcoholic Beverages
Total domestic demand for beer and beer-type beverages in the first quarter of 2012 is estimatedto have increased by 2% year over year in reaction to the unsettled demand environment following
the Great East Japan Earthquake in March 2011. Sales volume of beer increased while sales of
happoshu fell. New-genre beer sales volume growth slowed but demand continued to surpass theprevious year’s level.
In this market environment, our Japanese Alcoholic Beverages business poured its resources
into the marketing of its three core brands—Yebisu, Sapporo Draft Beer Black Label, and Mugi to
Hop—while seeking sources of growth in the nonalcoholic beer and low-alcohol beveragecategories. We also strengthened our wine and liquor business, as well as our shochu business.
Throughout the segment, we pursued measures to raise our brand value by diversifying productofferings and “inspire excitement and joy in our customers”.
In the beer and beer-type beverages category, we launched a renewed Mugi to Hop in January
and followed this up with the launch of Mugi to Hop Black in March. The latter received strong
support from many customers who described its flavor as indistinguishable from black beer. As aresult of the above, total sales of our beer and beer-flavored beverages expanded by 3% year overyear, and sales growth stronger than the overall growth in demand noted above.
In the nonalcoholic beer category, we launched a renewed Sapporo Premium Alcohol Free inFebruary to favorable review from many beer-drinking customers.
In the low-alcohol or ready-to-drink (RTD) category, our tie-up with South Korea’s No.1 Foodmaker CJ (CheilJedang) Group led to the January launch of the jointly developed “CJ Oishii
Makgeolli Pink Grapefruits,” which has proven to be a big hit with women in particular. In February,
we launched the limited volume Sparkling Cassis and Peach version of our Sapporo Nectar Sourbeverage, and in March we launched a renewed version of Sapporo Nectar Sour Peach Sparklingand introduced the new Sapporo Nectar Sour Mix Sparkling. In addition, we introduced Sapporo

5Triangle Ginger Highball Strong in February. These new product launches demonstrate ourrelentless effort to satisfy customers demand for a wide variety of alcoholic beverages. As a result,
we achieved year-over-year growth in sales.
In the wine and liquor business, demand for our everyday imported and domestic wines
continued to grow, as did sales of our premium domestic wine Grand Polaire. Overall, the wine andliquor business achieved growth in both sales and profits. Our western spirits business alsoachieved higher sales volumes for products offered under our tie-up with Bacardi, the world’s No.1
seller of rum.

The shochu business also posted year-over-year gains in both sales and profits, as itstrengthened its product lineup with the launch in March of Imo Shochu Kokuimo into the blended
shochu market.
Overall, the Japanese Alcoholic Beverages business posted sales of ¥51.7 billion (up ¥2.5 billion,
or 5%, year over year) in the first quarter of 2012. The higher sales were accompanied byincreased spending on marketing as we diversified product offerings. As result, the businessposted an operating loss of ¥4.8 billion (versus a ¥4.0 billion loss posted in the first quarter of2011).

International Business
In North America, many uncertainties continue to cloud the prospects for a full-fledged recovery,
and we assume that total demand in the North American beer market was largely flat during thefirst quarter of 2012. The Asian beer market, meanwhile, continues to grow steadily, supported by
fast-growing economies in the region.
In this environment, our International Business segment continued marketing activities targetingthe premium beer market, where it has core strengths. Canadian subsidiary SLEEMAN
BREWERIES achieved a 10% year-over-year increase in unit sales (excluding outsourced
production of Sapporo brand products), extending its growth streak to six years. Sapporo USA,however, saw its sales of Sapporo brand beers fall 14% year over year, largely reflecting a reversalof the gains made a year earlier when an April price hike triggered a demand rush in the firstquarter. We made a full-scale entry into the North American soft drinks market at the end ofJanuary, when we took a 51% equity stake in the United States’ largest maker of private-branddrinks, Silver Springs Citrus, Inc.
In Vietnam, our local subsidiary SAPPORO VIETNAM started production of locally produced
beer at its new brewery in Long An, which the company completed in November. The Vietnam
subsidiary is beginning a full-scale entry into the local market as it seeks to build the market
recognition for the Sapporo Premium brand. From April, it launched a full-fledged marketing
campaign, including TV commercials. In Korea at the end of January, we took a 15% equity stake6

in a company established by our local partner, Maeil Dairies Co., Ltd. The resulting joint venture
provides the structure needed to accelerate sales of Sapporo brand beers to the household andcommercial markets in South Korea. In Oceania, we worked at strengthening sales via a brewing
and sales licensing agreement entered into back in October 2011 with CoopersBrewery ofAustralia. In Singapore, we continue to work with the POKKA Group to expand sales channels in
the local household market. Thanks to the efforts outlined above, we achieved 95% growth involume sales of beer in Asia and other markets outside the United States.
As a result of the above activities, the International Business segment achieved solid sales gains
on local-currency bases and managed to overcome the dilutive impact of yen appreciation to post
sales of ¥5.8 billion (up ¥0.4 billion, or 7%, year over year). The segment’s operating loss, however,expanded to ¥0.4 billion (versus ¥0.1 billion a year earlier), owing to expenses to establish apresence in the Vietnamese market.

Food & Soft Drinks
Sapporo Beverage Co., Ltd.
Domestic demand for soft drinks declined year over year in January but was up in both February
and March. The soft drinks market was brisk in March, even after discounting the rebound from lastyear’s post-disaster lull. The major drink makers that suffered the most in the post-disaster market
all posted solid gains, and we estimate that total domestic demand increased by 7% year over year
in March alone and 4% in the first quarter of 2012.
In this environment, our Soft Drinks business continued to adhere to its policy of “growthaccompanied by earnings quality” while concentrating management resources on growing andstrengthening key brands in order to strengthen its foundations ahead of the creation of the new
integrated company. It also stepped up efforts under the select-and-focus approach (i.e.,
selectively focusing resources on key areas) to lower operating costs by implementing thoroughcost reductions designed to strengthen profitability.
Specific measures include collaboration between our Ribbon brand soft drink and Akagi Nyugyothat led to a Ribbon Napolin Ice candy with sales limited to Hokkaido. A TV ad campaign conductedin cooperation with a TV station since April is raising the public’s awareness of this new regional
offering. We refreshed our Gabunomi series in the latter half of March, launching a giveaway
campaign with purchases of Gabunomi Milk Coffee, helping to expand sales channels and solidify
the series market position. Sales of Gerolsteiner (naturally carbonated water from Germany) werestrong, surpassing the previous year level and our targets. We plan to use giveaway campaigns
from April as we step up trial offers and repeat purchase promotions. Although, on the face of itsales declined 9% year over year due to the dropoff from last year’s surge in demand for bottled
water following the earthquake and tsunami disaster, the Oishii Tansansui lineup of bottled soda
waters also turned in a strong sales performance.

7

On the cost front, our efforts to optimize our production structure, reduce losses from waste andspoilage, and achieve cost-structure reforms throughout the value chain via a rigorous
select-and-focus approach progressed as planned despite rising materials procurement costs.

POKKA GroupOur estimate of total domestic demand for soft drinks in 2011 is stated at the beginning of theprevious section. In addition, we estimate that total demand for lemon-based products (flavorings)
increased 2% year over year while demand for instant soups appears to have declined by 6%.
In this environment, the POKKA Group’s Domestic Beverage & Food business endeavored tostrengthen and cultivate brand power by focusing investments on core brands and newer growthbrands.
POKKA’s domestic soft drinks business announced a renewal of the Kireto Lemon lineup andlaunched a new TV commercial. It also bolstered the Pokka Coffee lineup and announced therelease of Aromax Kyokugen no Kaori Black, a limited edition product sold only in the Tokai region(centered on Nagoya City). The investment in the Kireto Lemon TV commercial was started in
March in an attempt to expand the usual demand period.
POKKA’s domestic Food business worked to expand sales of POKKA Lemon 100 by proposing
recipes linked to nutrition education activities and strengthening sales of perishables. It also
strengthened the lineups for its Jikkuri Kotokoto soup series and the Kongari Pan series of instantcups of soup. Meanwhile, the Kantanbimi Korean soup lineup was bolstered by enhancing thesoup ingredient lineup and marketing two new ingredients, Dashi no Moto and Namuru no Moto.
At Pokka’s Domestic Restaurants business, the core Café de Crié coffee shop chain continued topost favorable results by aggressively introducing new menu items on a detailed cyclical basis andby conducting effective store remodeling and new outlet openings.
The Overseas Beverage & Food business posted solid results in the domestic Singapore market
and with its exports to other countries.

It also made steady progress in improving its COGS ratio

and lowering distribution costs.
POKKA’s Overseas Restaurants business enjoyed steady growth in Hong Kong, but results in
Singapore were stuck at the previous year’s level.

POKKA Group Overview
POKKA Group results were added to our consolidated income statement from April 1, 2011.
We therefore provide the previous-year data for reference.
As a result of the above, the Food & Soft Drinks segment sales increased to ¥28.7 billion
because of the consolidation of the POKKA Group from April 2011, resulting in ayear-over-yearincrease of ¥22.0 billion or 330%. However, increased goodwill amortization and a first-quarter8

operating loss at the POKKA Group led to an operating loss of ¥1.2 billion in the first quarter of2012 (compared with a break-even result a year earlier).

Restaurants
In the first quarter of 2012, Japan’s restaurant industry enjoyed a mild recovery as thedeterioration in consumer sentiment that took hold following the 2011 disaster began to dissipate.
However, consumers continued to cut back on spending and have become increasingly more
conscious about Food safety. Overall, the business environment remained quite severe.
In such an environment, our Restaurants business sought to attract customers back to existing
stores by holding a Yebisu Beer campaign in February that included declaring February 25 asYebisu Day. From March, the business stepped up marketing to corporations as part of its effort toawaken demand for reserved parties.
The Restaurants business also continued to revitalize existing outlets by switching them to otherformats. During the first quarter, it converted two outlets into Yebisu Bar shops and another into our
Betsukai Pub format, a Japanese-style pub officially recognized by and featuring fare from the townof Betsukai in Hokkaido.
In addition, the Restaurants business continued efforts to improve its profit structure. In the firstquarter of 2012 it achieved cost reductions through the use of a distribution system with a single
center for serving the Tokyo metropolitan logistics network and by strengthening shift management
to control personnel costs.
Meanwhile, we opened new Yebisu Bar outlets in Akasaka and the Kurobei Yokocho dining
section of Tokyo Station. We also opened the first outlet of a new restaurant format specializing inroast beef—The Kitchen Ginza Lion—in the Lumine Ikebukuro complex.
Including taking over the management of a Food service operation in a research facility, ourRestaurants business opened six new outlets during the first quarter of 2012 while closing fiveoutlets, bringing the total number of outlets operating at the end of the first quarter to 192.
As a result of the above, the Restaurants business recorded first-quarter sales of ¥5.4 billion (up¥0.6 billion, or 14%, year over year). The segment’s operating loss of ¥0.2 billion is smaller than the¥0.7 billion loss recorded a year earlier.

Real Estate businessConditions in Japan’s real estate industry remain challenging, with a large increase of new officesupply in the Tokyo rental office market contributing to high vacancy rates and a continued decline,
albeit moderate, in office rents.
Amid this environment, on January 1, 2012, we changed the name of our consolidated realestate subsidiary Yebisu Garden Place Co., Ltd., to Sapporo Real Estate Co., Ltd., as part of ourplan to raise the Sapporo brand value and strengthen Group synergies while continuing efforts to9raise occupancy rates and rent levels at Group properties.
In March, we acquired the trust beneficiary rights amounting to a 15% interest in Yebisu Garden
Place held by the joint holder in the complex, giving us 100% ownership.

We will now be able toaccelerate efforts to enhance the value of the property and are considering a renewal project
before the complex’s 20th anniversary in 2014.
Among recently acquired properties, the Storia Shirokanedai rental apartment building in Tokyo’s
Minato Ward, which we acquired in February 2011, is contributing to segment profits from the startof this fiscal year.
As result of the above and a year-over-year decrease in property sales, Real Estate segment
sales in the first quarter of 2012 totaled ¥5.3 billion (down ¥0.3 billion or 6% year over year).
Operating income came to ¥2.0 billion (down ¥0.2 billion or 11%).

(2) Review of Consolidated Financial Condition
Consolidated assets as of the end of the first quarter on March 31, 2012, totaled ¥581.9 billion, a¥31.1 billion increase from the end of the previous fiscal year on December 31, 2011. The increase
is attributable to an increase in land holdings accompanying the acquisition of an additional 15%
equity interest in Yebisu Garden Place, which more than offset a decrease in notes and accounts
receivable.
Consolidated liabilities totaled ¥459.3 billion, a ¥33.3 billion increase from December 31, 2011,reflecting increases in long-term bank loans and the issuance of corporate bonds and commercial
paper, which were partially offset by decreases in liquor taxes payable and notes and accounts
payable.
Consolidated net assets totaled ¥122.5 billion, a ¥2.2 billion decline from December 31, 2011. The
decline is largely attributable to the distribution of year-end dividends for the previous fiscal year
and the booking of a net loss for the first quarter. These asset-reducing factors were partially offset
by increases in unrealized gains on securities and in the foreign currency translation adjustment
account.
(3) Consolidated Earnings Forecast
The consolidated earnings forecast for the full fiscal year to December 31, 2012, is unchanged
from the forecast announced by the Company on February 10, 2012.
2. OtherUse of accounting methods specific to quarterly consolidated financial statements(Calculation of tax liabilities)
The Company calculates tax liabilities by producing a reasonable estimate of the effective tax rate
after applying tax-effect accounting to income before taxes and minority interests for the fiscal year,
which encompasses the three months ended March 31, 2012, and then multiplying income (loss)
before taxes and minority interests by this estimated effective tax rate.

10(2) Changes in accounting policy, changes in accounting estimates, and retrospective restatement(Changes in accordance with amendments to accounting standards, etc.)(Method of accounting for sales)
Sapporo Beverage Co., Ltd., and Pokka Corporation, both subsidiaries of the Company, are to bemerged on January 1, 2013.
In line with this merger, the reportable segments for Soft Drinks and POKKA Group presented in
the consolidated accounts for the fiscal year ending December 31, 2011, have been integrated intoa single segment called “Food & Soft Drinks” from the first quarter of the fiscal year ending
December 31, 2012. In addition, a portion of the sales incentives paid to business partners(wholesalers and retail outlets) on the sales price of flavored-water drinks and food products, whichto date have been accounted for under selling, general and administrative expenses, are excluded
from reported sales from the first quarter of the fiscal year ending December 31, 2012.
These changes to accounting methods are applied retroactively to the Company’s financial
statements for the first quarter of the fiscal year ending December 31, 2011, and the consolidated
financial statements for the full year ending on the same date.
As a result, sales, gross profit, and selling, general and administrative expenses on the revised
financial statements for the first quarter of the fiscal year ending on December 31, 2011, have eachbeen reduced by ¥903 million from the amounts reported before the retroactiv e application of the
new accounting method. Operating income is unaffected by the change.
(3) Additional information(Application of accounting standard for accounting changes and error corrections)
The Company has adopted the Accounting Standard for Accounting Changes and Error
Corrections (ASBJ Statement No.24, December 4, 2009) and its associated Guidance on
Accounting Changes and Error Corrections (ASBJ Guidance No. 24, December 4, 2009) in regards
to accounting changes and the revision of errors on past accounts being carried out from the startof the first quarter of the fiscal year ending December 31, 2012.

11

4. Consolidated Financial Statements(1) Consolidated Balance Sheets(millions of yen)

AssetsI Current assets
1 Cash and cash equivalents
2 Notes and accounts receivable - trade
3 Merchandize and finished products
4 Raw materials and supplies
5 Other
6 Allowance for doubtful receivables
Total current assets
II Fixed assets
1 Property, plant and equipment(1) Buildings and structures
Accumulated depreciation
Buildings and structures, net(2) Machinery and vehicles
Accumulated depreciation
Machinery and vehicles, net(3) Land(4) Construction in progress(5) Other
Accumulated depreciation
Other, net
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) Other(4) Allowance for doubtful receivables
Total investments and other assets
Total fixed assets
Total assets

12

December 31, 2011

March 31, 2012

AmountAmount9,204
79,34017,113
10,948
12,798(386)
129,018

9,738
60,736
20,77911,37015,984(300)
118,310376,200(201,765)
174,435
203,307(163,080)
40,226
83,8262,058
39,300(25,467)
13,832
314,379

387,329(203,853)
183,476
208,298(167,074)
41,224
115,287
2,442
39,417(25,671)
13,746356,177

40,147
8,844
48,99239,9098,403
48,31331,208
10,142
18,454(1,411)
58,39434,3199,886
16,425(1,504)
59,126

421,766

463,616

550,784

581,927

Liabilities
I Current liabilities
1 Notes and accounts payable - trade
2 Short-term bank loans
3 Current portion of long-term debt
4 Liquor taxes payable
5 Income taxes payable
6 Accrued bonuses
7 Deposits received
8 Other
Total current liabilities
II Long-term liabilities
1 Bonds
2 Long-term bank loans
3 Employees' retirement benefits
4 Directors’ and corporate auditors’ severance benefits
5 Dealers' deposits for guarantees
6 Other
Total long-term liabilities
Total liabilities
Net Assets
I Shareholders' equity
1 Common stock
2 Capital surplus
3 Retained earnings
4 Treasury stock, at cost
Total shareholders' equity
II Accumulated other comprehensive income
1 Unrealized holding gain on securities
2 Deferred hedge gains (losses)
3 Foreign currency translation adjustments
Total accumulated other comprehensive income
III Minority Interests
Total net assets
Total liabilities and net assets

13(millions of yen)
December 31, 2011
Amount(millions of yen)March 31, 2012
Amount32,35457,37010,00032,535
2,985
2,118
15,301
59,923
212,589

30,17567,651
10,00021,8501,289
4,402
14,561
79,356229,287

32,000106,798
7,452
53
32,62334,492
213,418
426,008

42,000112,697
7,396
46
33,08734,874230,102459,389

53,88646,31028,741(1,197)
127,741

53,88646,31021,911(1,198)120,9101,993(8)(6,432)(4,447)
1,482
124,775
550,784

4,242
3(5,451)(1,205)
2,832
122,537
581,927

(2) Consolidated Statements of Income

I Net sales
II Cost of sales
Gross profit
III Selling, general and administrative expenses
1 Sales incentives and commissions
2 Advertising and promotion expenses
3 Salaries
4 Provision for bonuses
5 Retirement benefit expenses
6 Other
Total selling, general and administrative expenses
Operating loss
IV Non-operating income
1 Interest income
2 Dividend income
3 Foreign exchange gain
4 Gain (loss) on gift voucher redemptions
5 Other
Total non-operating income
V Non-operating expenses
1 Interest expense
2 Equity in loss of affiliates
3 Other
Total non-operating expenses
Ordinary loss
VI Extraordinary gains
1 Gain on sales of property, plant and equipment
2 Gain on sales of investment securities
3 Reversal of provision for doubtful receivables
4 Settlement received
Total extraordinary gains
VII Extraordinary losses
1 Loss on disposal of property, plant and equipment
2 Loss on impairment property, plant and equipment
3 Loss on devaluation of investment securities
4 Effect of adoption of new accounting standards for asset
retirement obligations
5 Loss on phased acquisition
6 Disaster losses
Total extraordinary losses
Loss before income taxes and minority interests
Income taxes
Loss before minority interests
Minority interests in losses
Net lossThree months ended
March 31, 2011
Amount72,06449,382
22,681(millions of yen)Three months ended
March 31, 2012
Amount97,38862,812
34,576

3,597
4,758
4,077
1,149
743
11,69426,020(3,338)

6,927
6,685
6,470
1,472
882
17,71840,157(5,581)

96
55
54
124
93
423

69
35
296
131
327
860

831
282
68
1,182
(4,098)

860
14
269
1,143
(5,864)

0
0
26
261
288

3
0
4

79
489

135
34
251

1,084
566
1,907
4,128
(7,937)(1,635)(6,302)(11)(6,291)420(6,280)(2,104)(4,176)(49)(4,126)(6,302)(4,176)

(453)
12
722
(106)
174
(6,127)(2,250)
11
1,029
(6)
3,284
(891)

(6,074)
(53)

(884)
(7)

Net income before minority interests
Other comprehensive income*1
Unrealized holding gain on securities
Deferred hedge gains
Foreign currency translation adjustments
Share of other comprehensive income of associates accounted for using equity method
Total other comprehensive income
Comprehensive income*2(Breakdown)Comprehensive income attributable to owners of the parent
Comprehensive income attributable to minority interests14(3) Notes on the Going-concern Assumption
Not applicable(4)Segment Information
1. Sales, income, and loss by reportable segment
Three months ended March 31, 2011 (January 1, 2011 – March 31, 2011)(millions of yen)
Reportable segments
Japanese
Alcoholic
Beverages

International

Food&
Restaurants
Soft Drinks

Real
Estate

Total

Total

Other *1

Amounts
reported onthestatements
of income *2

Adjustments

Net sales(1) Operating revenues

49,251

5,461

6,679

4,760

5,709

71,862201(2) Intra-group sales and transfers

1,039

-

30

-

540

1,611

7

50,291

5,461

6,710

4,760

6,249

73,474208(4,019)

(147)

88

(723)

2,244

(2,558)

(175)

Total
Segment income (loss)

72,064
1,618
73,682(2,734)-72,064(1,618)(1,618)72,064(604)(3,338)-Notes:(1) The POKKA Group segment was not included in reportable segments as it comprises affiliated POKKA Group companies to which the equity method was applied in thethree months ended March 31, 2011.
(2) "Other" comprises businesses, such as food businesses, that are not included in reportable segments.
(3) Segment income and losses are adjusted based on operating income reported on the quarterly consolidated statements of income for the corresponding period.

2. Reconciliation and main components of differences between income and loss of reportable segments and figures on the statement of income (information ondifferences)(millions of yen)Segment income (loss)

AmountTotal for reportable segments(2,558)

Total other losses(175)

Unallocated corporate costs

(585)
(18)

Intra-segment sales
Operating income on the statement of income(3,338)

3. Impairment loss on fixed assets or goodwill by reportable segment
Material impairment loss on fixed assets

There were no material impairment losses.
Material change in amount of goodwill
Effective March 29, 2011, the Company made POKKA CORPORATION a consolidated subsidiary through an
additional acquisition of shares and categorized it into the Food&Soft Drinks segment. POKKACORPORATION had been an affiliated company under the equity method since September 30, 2009. As aresult, goodwill increased by 18,525 million yen in the three months ended March 31, 2011.
Material negative goodwill gains
There were no material gains on negative goodwill.

15

Segment Information
1. Sales, income, and loss by reportable segment
Three months ended March 31, 2012 (January 1, 2012 – March 31, 2012)(millions of yen)
Reportable segments
Japanese
Alcoholic
Beverages

International

Food&
Restaurants
Soft Drinks

Real
Estate

Total

Total

Other *1

Amounts
reported onthestatements
of income *2

Adjustments

Net sales(1) Operating revenues

51,7895,868

28,713

5,424

5,368

97,164

223(2) Intra-group sales and transfers

1,156

5

36

-

602

1,801

8

52,946

5,873

28,749

5,424

5,971

98,966232(4,877)(412)(1,299)

(291)

2,008

(4,872)

(88)

Total
Segment income (loss)

97,3881,810
99,198(4,960)-97,388(1,810)(1,810)(97,388)(620)(5,581)-

Notes:(1) "International Alcoholic Beverages" is renamed "International Business" in fiscal 2012.
(2) "Other" comprises businesses, such as food businesses, that are not included in reportable segments.
(3) Segment income and losses are adjusted based on operating income reported on the quarterly consolidated statements of income for the corresponding period.

2. Reconciliation and main components of differences between income and loss of reportable segments and figures on the statement of income (information ondifferences)(millions of yen)Segment income (loss)
Total for reportable segments
Total other losses
Unallocated corporate costs
Intra-segment sales
Operating income on the statement of income

Amount(4,872)
(88)
(647)
27
(5,581)16

3. Change in reportable segments

Sapporo Beverage Co., Ltd. and POKKA Corporation, Pokka Sapporo Food & Beverage Ltd.
were established on March 30, 2012 to promote the scheduled integration of the Company’s two
consolidated subsidiaries on January 1, 2013.
In conjunction with this, the Company integrated “Soft Drinks” and “POKKA Group” businesses,
each of which were individual reportable segment in the fiscal year ended December 31, 2011,
and renamed the resulting business the “Food & Soft Drinks” segment effective the first quarterof the fiscal year ending December 31, 2012.
Until now, sales incentives paid to business partners (wholesalers and retailers) have beenrecorded under sales, general and administrative expenses. Effective the first quarter of the
fiscal year ending December 31, 2012, the Company has switched to a new accounting method
whereby a certain amount of these sales incentives, whose value depends on the sales price ofsoft drinks and other non-alcoholic beverages, is deducted from net sales.

Segment Information for the three months ended March 31, 2011 has been adjusted to conformto the current presentation. Net sales from the “Food & Soft Drinks” segment for the threemonths ended March 31, 2011 was also recalculated to reflect the new segmentation

4. Impairment loss on fixed assets or goodwill by reportable segment
Major impairment losses related to fixed assets
Not applicable

Material change to the amount of goodwill
In the International Business segment, the Company acquired the shares of Silver Springs Citrus,
Inc. on January 31, 2012 and made it a consolidated subsidiary. In conjunction with theacquisition, goodwill increased by 421 million yen during the first quarter of the fiscal year ending
December 31, 2012.

Material Gain on negative goodwill
Not applicable17

5.Notes on Significant Changes in the Amount of Shareholder’s Equity
Not applicable

6. Subsequent Events
Not applicable

7. Notes on business combination
Three months ended March 31, 2012 (January 1, 2012 – March 31, 2012)

Business combination through acquisition
1. Overview of business combination
1) Name and business of acquired company
Name: Silver Springs Citrus, Inc.
Business: Manufacturing and sales of PB chilled beverages for major food supermarkets
Commissioned manufacturing of chilled beverages for major beverage manufactures

2) Main reason for the business combination
The goal of the Sapporo Group stated in the "Sapporo Group Management Plan
2011-2012," a two-year rolling plan with the "New Management Framework" covering the period
until 2016, which will be the 140th anniversary of Sapporo Holdings, is to solidify the Group's
growth trajectory. Under the management plan, Sapporo International (“SI”) aims to expand its
business area from its International Alcoholic Beverages business to its overall International
Business, positioning North America, as an operational base, and fast-growing Asia as a priority
area. Through the agreement, SI has acquired a business base for its beverage businesses inNorth America, where it has a competitive advantage in the Alcoholic Beverages business, andlaunched business expansion in North America. The agreement enables SI to accumulate theknow-how and knowledge to establish a foundation for its beverage businesses in North America,
where it already has an operational base for its Alcoholic Beverages business. In addition, by
securing steady profit from Silver Springs Citrus, SI aims to stimulate further growth of its
international business.

3) Date of business combination
January 31, 2012

4) Legal form of business combination
Cash payment in exchange for shares

185) Name of company after business combination
Silver Springs Citrus, Inc.

6) Percentage of voting rights acquired
Percentage of voting rights held before the business combination: -%Percentage of voting rights acquired on the date of business combination: 51%
Percentage of voting rights held after the business combination: 51%

7) Primary reason for deciding on the acquiring company
The Company was decided on as the acquiring company because it proposed to buy the equity
in exchange for cash.

2. Period for which earnings of the acquired company were included in the quarterly consolidated
statements of income
The fiscal year end date of the acquired company is September 30, which is three months
different from that of the Company. The Company’s consolidated statements of income for thethree months ended March 31, 2012 does not include the earnings of the acquired company
because the acquisition date is deemed to be January 1, 2012.

3. Acquisition cost and breakdown
Acquisition price: 1,835 million yen
Costs incurred directly in the acquisition: 0 million yen
Acquisition cost: 1,835 million yen

4. Amount of goodwill, reason for its recognition, amortization method, and amortization period
1) Amount of goodwill: 421 million yen
2) Reason for its recognition: The acquired company’s future business activities are expected togenerate profit in excess of its net assets.
3) Amortization method and amortization period: 5 years with the straight-line method19