Financial Results
for the Year Ended December 31 30, 2010 — Consolidated(Based on Japanese GAAP)
February 10, 2011

Company name

Sapporo Holdings Limited

Security code
Listings
URL

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

Representative
Contact

Takao Murakami, President and Representative Director, Group CEO
Yoichi Kato, Director and General Manager of the Corporate Planning
Department

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

Annual general meeting of shareholders

March 30, 2011

Filing of annual financial report

March 30, 2011

Commencement of dividend payments

March 31, 2011

1. Consolidated Financial Results for the Year Ended December 31, 2010
(January 1 – December 31, 2010)(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

Net income

million yen%

million yen%

million yen%

million yen%

Year ended
December 31, 2010

389,244

0.4

15,40319.4

14,32833.6

10,772

137.5

Year ended
December 31, 2009

387,534(6.5)

12,895(12.2)

10,7251.9

4,535(40.6)

Year ended
December 31, 2010

Net income per
share

Diluted net
income per
share

Return on
equityOrdinary
income to total
assetsOperatingincome to net
sales

yen

yen

%

%

%

27.50

26.44

8.9

2.9

4.0

3.9

2.1

3.3

Year ended
11.57
11.05
December 31, 2009
Note: Equity method investment gains or losses:
Year ended December 31, 2010: 610 million yen
Year ended December 31, 2009: 275 million yen

1(2) Financial Position
Total assets

Net assets

Shareholders’equity ratio

Net assets per
sharemillion yen

million yen%

yen

December 31, 2010

494,798

126,64525.3

319.32

December 31, 2009

506,874

118,59023.4

302.16

Cash flows fromoperating activities

Cash flows frominvesting activities

Cash flows fromfinancing activities

Cash and cash
equivalents at endof period

million yen

million yen

million yen

million yen

December 31, 2010

27,431(2,594)(18,119)

13,270December 31, 2009

12,454(32,227)

3,745

6,267

Note: Shareholders’ equity
December 31, 2010: 125,047 million yen
December 31, 2009: 118,371 million yen(3) Cash Flows

2. Dividends
Total

Dividend per share
Record date or
periodDividends

dividends

Payoutto net

paid

ratio

assetsEnd Q1End Q2End Q3Year-end

Full year(full year)(consol.)(consol.)

yen

yen

yen

yen

yen

million yen%%

Year ended
December 31, 2009

—

0.00

—

7.00

7.00

2,742

60.5

2.3

Year ending
December 31, 2010

—

0.00

—

7.00

7.00

2,741

25.5

2.3

Year ending
December 31, 2011
(forecast)

—

0.00

—

7.00

7.00

2

45.7

3. Forecast of Consolidated Earnings for the Year Ending December 31, 2011
(January 1 – December 31, 2010)(Percentage figures represent year-over-year changes)
Net
Net sales

Operating income

Ordinary income

Net income

incomeper share

million yen%

million yen%

million yen%

million yen%yen

Six months
ending June 30,
2011

205,000

15.7

1,700

41.0

100

(76.5)(2,600)——

Full year

482,000

23.8

18,00016.9

15,5008.2

6,000(44.3)

4. Other(1) Changes affecting the status of significant subsidiaries (scope of consolidation): None
(2) Changes in accounting principles, procedures, and methods of presentation used to prepare
the financial statements
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 at end of period (treasury stock included):
December 31, 2010: 393,971,493 shares
December 31, 2009: 393,971,493 shares
2) Number of shares held in treasury at end of period:
December 31, 2010: 2,367,424 shares
December 31, 2009: 2,218,784 shares

3

15.32

Reference:
1. Non-consolidated Financial Results for the Year Ended December 31, 2010
(January 1 – December 31, 2010)(1) Operating Results(Percentage figures represent year-over-year changes)
Net sales
million yen%

Operating income

Ordinary income

Net income

million yen%

million yen%

million yen%

Year ended
December 31, 2010

9,590

5.7

6,546

7.4

6,955

3.1

4,588

(26.0)

Year ended
December 31, 2009

9,072

(12.1)

6,092(23.6)

6,745(24.8)

6,202

42.2

Net income per
share

Diluted net income
per share

yen

yen

Year ended
December 31, 2010

11.72

-

Year ended
December 31, 2009

15.83

-

(2) Financial Position
Total assets

Net assets

Shareholders’equity ratio

Net assets per
sharemillion yen

million yen%

yen

December 31, 2010

313,052

134,97743.1

344.68December 31, 2009

324,652

133,23641.0

340.10Note: Shareholders’ equity
December 31, 2010: 134,977 million yen
December 31, 2009: 133,236 million yen

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. For the assumptions
underlying the forecasts herein and other information on the use of earnings forecasts, refer to“Outlook for the fiscal year ending December 31, 2010” on page12.

4

1. Operating results(1) Analysis of operating resultsa) Review of the fiscal year ended December 31, 2010
(1) Overview
Millions of yen, except percentages
Net sales

Operating income

Ordinary income

Net income

2010

389,244

15,403

14,328

10,772

2009

387,534

12,895

10,725

4,535

0.4

19.4

33.6

137.5

Change (%)

In 2010, the Japanese economy experienced a mild recovery from the outset of the year, but
a murky outlook marred by concern over economic downturn amid a subsequent easing of
the pace of global economic recovery and a decline in exports caused by rapid yen
appreciation resulted in ongoing weakness in consumer spending and downward pressure
on prices.
The industries in which the SAPPORO Group operates were variously affected. The softdrinks business saw demand increase in response to record summer heat, but demand did
not rise by as much as expected in the alcoholic beverage and restaurant industries, whichwere impacted heavily by lackluster consumer spending. In the real estate industry, Greater
Tokyo office vacancy rates appeared to bottom out during the latter half of the year, but
office rent levels were in continual decline throughout the year.
Amid such an environment, the Group worked on implementing its growth strategy andstrengthening existing operations, the two basic themes identified by the SAPPORO GroupManagement Plan 2010–2011.
Our growth strategy involved various initiatives aimed at laying the groundwork for the
future, including the following. We began constructing a brewery in Vietnam as part of ourbid to enter the Vietnamese beer market, we entered into a business and capital alliancewith Kyodo Milk Industry Co., Ltd., and we entered into a beer industry business alliancewith the South Korean Maeil Dairies Co., Ltd. Meanwhile, to strengthen existing businesses,
we pursued strategies that concentrated resources on certain brands and other areas ofstrength for our businesses. These efforts saw the Japanese Alcoholic Beverages businessachieve year-over-year unit sales growth for the first time in six years and also resulted in
year-over-year units sales growth in the International Alcoholic Beverages business and theSoft Drinks business and year-over-year sales growth in the Real Estate business.

5

As a result of these efforts, we achieved year-over-year growth in operating income in all
business segments, excluding the International Alcoholic Beverages business’s upfront
investment costs associated with its entry into Vietnam. We also achieved substantial
year-over-year gains in ordinary income and net income.

The Group’s 2010 consolidated results are summarized as follows.

Net Sales
Consolidated net sales totaled ¥389.2 billion, a ¥1.7 billion or essentially 0% increase from2009. The International Alcoholic Beverages business continued to reap strong sales inNorth America and the Soft Drinks business benefited from record summer heat andcontinued to post favorable performance thereafter. Both businesses consequently achieved
substantial year-over-year gains in net sales. The Real Estate business also contributedwith stable revenue growth.

Operating Income
Consolidated operating income increased by ¥2.5 billion or 19% to ¥15.4 billion. The
Japanese Alcoholic Beverages business achieved operating income growth on the back ofhigher beer unit sales and production cost reductions. The International Alcoholic
Beverages business achieved operating income growth thanks to increased unit sales inexisting businesses, but upfront investment associated with its entry into Vietnam resulted inan overall profit decline.
The Soft Drinks business posted operating income growth and also achieved operating
income growth as it continued to pursue a profitability strengthening program, whichenabled it to fully absorb upfront investment in its food operations.
The Restaurant business’s sales were down due to a demand slump and the closure of
unprofitable restaurants. It nevertheless achieved operating income growth by clamping
down on costs, including by negotiating reduced store rents, and by closing unprofitable
restaurants.
The Real Estate business endeavored to cut costs while maintaining or boosting rent
levels and occupancy rates and thus achieved operating income growth.

6Ordinary Income
Consolidated ordinary income grew ¥3.6 billion or 34% to ¥14.3 billion, largely as a result ofhigher income from investments in equity-method affiliates POKKA Corporation and Azumino
Food Co., Ltd.

Net Income
Consolidated net income increased ¥6.2 billion or 138% to ¥10.7 billion. The main factors
behind the increase were year-over-year growth in both consolidated operating income andconsolidated ordinary income and a gain on the sale of property, plant and equipment fromthe sale of the former Osaka plant site in 2010.

ROE
ROE increased markedly, from its 2009 level of 3.9% to 8.9% in conjunction with the 138%
increase in consolidated net income.

(2) Results by Business Segment
Millions of yen, except percentages
Net sales

Operating income

2009

2010

305,495

304,218

(0.4)

8,176

9,804

19.9

Japan

282,913

278,832

(1.4)

7,483

9,302

24.3

International

22,581

25,386

12.4

693

501

(27.7)

Soft Drinks

30,74534,438

12.0

301

526

74.8

Restaurants

28,026

27,050

(3.5)

(171)

108

—

Real Estate

23,26623,536

(1.2)

7,524

8,003

(6.4)

Alcoholic% change

2009

2010

% change

Beverages

Alcoholic Beverages

Alcoholic Beverages (Japan)
Despite record summer heat, total demand for beer and beer-type beverages in 2010
lingered at around 98% of 2009’s level, reflecting shifts in consumer spending toward otheralcoholic beverages and soft drinks, imported new-genre beverages’ expanding presence,and other factors.
While demand for conventional beer and happoshu (low-malt beer) continues to fall,7

new-genre beer shipments evidently increased by about 10%, highlighting consumers’continued shift into this lower-priced segment of the beer market.
In this adverse operating environment, our Japanese Alcoholic Beverages businessadopted the campaign slogan “Bringing more cheer to your ‘Cheers!’” (translated from theJapanese). Under this slogan, the business focused marketing activities on its core Yebisu,
SAPPORO Draft Beer Black Label, and Mugi to Hop brands while launching new productsthat offer new value propositions embodying SAPPORO beer’s unique qualities.
As a result, total unit sales of all SAPPORO beer products in 2010 were up 0.8% versus
2009.
In the beer category, SAPPORO Draft Beer Black Label enjoyed strong demand, particularly
from the household segment. Total unit sales for our Yebisu brand—now in its 120th
year—were up 3.0% year over year, reflecting the success of Yebisu Silk, now a year-roundproduct, through which we have tapped into new customer segments, particularly female
consumers. As a result, beer unit sales declined by only 2.8% year over year, outperforming
total beer demand, which was down approximately 4%.
Unit sales of our new-genre beer products were up 11.5% versus 2009, outstripping
growth in total demand for new-genre products. We enjoyed a 23.5% increase in unit salesof Mugi to Hop, now in its third year since launch, making 2010 the second consecutive yearof over-20% growth for the brand. New-genre beer sales also were boosted by the
September launch of SAPPORO Creamy White, a new product brewed with a proprietaryprocess that yields a creamy and long-lasting foam head.
In the low-alcohol category, our Nectar Sour Sparkling Peach carbonated beverageoutperformed its unit sales plan reflecting the excellent reaction to its flavor and originality,
particularly among female consumers.
The wine business’s revenues were down overall, partly owing to contraction of thedomestic wine market, but the business achieved its fourth consecutive year of earnings
growth. Among imported wines, the Yellow Tail series, which added Moscato to its lineup,
performed well. In the domestic wine category, the Grande Polaire series, a premium winethat uses 100% domestically grown grapes, enjoyed growth reflecting recognition of its highquality.
Shochu unit sales were up year over year amid a faltering barley-shochu market. In thepremium shochu category, shochu unit sales were boosted by increased recognition for
Waramugi, which won the major prize in the premium shochu category at the Fukuoka
Regional Tax Bureau’s sake and shochu awards. Mass-market shochu brands faced
increasingly stiff price competition. Although sales for the shochu business as a whole were8

down year over year, we have been working since 2008 to improve the business’s earnings
structure, primarily by culling or consolidating unprofitable products, and the businessproduced positive operating income as a result.
Overall, our Japanese Alcoholic Beverages business achieved operating income of ¥9.3
billion (up ¥1.8 billion or 24% from 2009) on sales of ¥278.8 billion (down ¥4.0 billion or 1%
from 2009), as increased beer and beer-type beverage unit sales and reduced
manufacturing costs offset an increase in depreciation charges due to the launch of our newsales and logistics system.

Alcoholic Beverages (International
North American beer demand remained relatively sluggish despite indications that
consumers might be starting to increase their spending. Industry-wide demand appears tohave contracted by around 1–2% versus 2009. The Asian beer market, however, is steadily
expanding in tandem with the region’s strong economic growth.
In this environment, the International Alcoholic Beverages business continued to actively
focus on sales to the premium market segment. Canadian subsidiary SLEEMAN Breweries’unit sales (excluding outsourced production of SAPPORO brand products) grew 5% from2009, their fourth consecutive year-over-year increase. SAPPORO USA’s SAPPORO brandunit sales rose 13% versus 2009. Unit sales outside of North America, which areconcentrated mainly in Asia, jumped by 24% versus 2009.
In December 2009, we reached a decision to enter the Vietnamese market. In partnershipwith the state-owned Vietnam National Tobacco Corp. (Vintaba), we commenced brewery
construction in July and we continue to formulate a marketing strategy and build a
distribution network in preparation for locally producing and selling beer in Vietnam. In the
Singaporean market, we began expanding sales channels in the household market incooperation with POKKA Corporation. We also announced our intention to make afull-fledged entry into beer sales in South Korea through both the household andcommercial-use markets.
As a result of these efforts, the International Alcoholic Beverages business achieved
operating income of ¥0.5 billion in 2010 (down ¥0.1 or 28% from 2009) on sales of ¥25.3
billion (up ¥2.8 billion or 12% from 2009), despite startup costs in Vietnam.

9Soft Drinks
Our estimates indicate that the soft drink market expanded by around 3% in 2010, despite ayear-over-year decline in the first half in the wake of the economic downturn. A major factor
behind the full-year increase was record-high temperatures in July through September,which spurred demand, particularly for sports drinks.
Against this background, the Soft Drink business embarked on a growth strategy basedon brand-building and pursued measures designed boost its operating margin.
The business continued to tighten the focus of its marketing investment and sales efforts
on its core brand products, thereby strengthening and developing its brands. For the Ribbon
and Gabunomi series, we actively carried out promotional campaigns and in-store measuresdesigned to boost sales. For Gerolsteiner naturally carbonated water from Germany, we
carried out sample distribution in major cities, ran television commercials, and conducted
other promotions. Also boosted by growth in sales of new products, such as Sonomama
Zukuri, which offers all-natural fruit juice flavors, the Soft Drinks unit sales were up 2%
versus 2009.
We continued to implement cost-structure reforms throughout the value chain in the aim oflaying a stable earnings foundation for the business. Specifically, we worked to derivesynergies from our alliance with POKKA Corporation, optimize production operations, reduce
procurement costs, and reduce losses from waste and spoilage. These efforts enabled us tomaximize profit.
In our food business, we continued to grow sales of SAPPORO Potekaru non-fried potato
chips, including by expanding sales coverage to include all of Japan except Okinawa
Prefecture and expanded the lineup to seven flavors.
As a result, the Soft Drinks business achieved net sales of ¥34.4 billion in 2010 (up ¥3.6
billion or 12% from 2009).

Restaurants
The Japanese restaurant industry has entered a phase of intensifying price competition as
increasingly frugal consumers dine out less often.
In response, our Restaurants business has been working to attract customers back to its
existing locations through differentiation strategies centering on campaigns featuring various
SAPPORO beer brands, celebrating the 111th anniversary of the company’s founding, andoffering seasonal menus. We also stepped up marketing to corporate customers amid signsof a recovery in the corporate events market segment. And as part of ongoingprofit-structure reforms in 2010, we clamped down on costs, including by negotiating10

reduced store rents, and closed 14 unprofitable locations.
During the period, we tapped further into group synergies by opening a second Yebisu Bar
location and a Brasserie Ginza Lion beer hall together at the Kasumigaseki Common Gate
complex in January. In July, we opened another Brasserie Ginza Lion beer hall in Tokyo
Station’s Yaesu underground shopping area, and in October we opened a Ginza Lion within
the New Chitose Airport in Hokkaido. We consequently had a total of 202 locations
operating at the end 2010.
As a result, the Restaurants business achieved net sales of ¥27.0 billion in 2010 (down¥0.9 billion or 3% versus 2009) and operating income of ¥0.1 billion (up ¥0.2 billion versus2009).

Real Estate
In the Greater Tokyo office leasing market, occupancy rates appeared to stop falling to adegree in the latter half of 2010, but rents remained in a downtrend throughout the year.
The Real Estate business endeavored to maintain occupancy rates and rent levels for its
existing office buildings while making additional cost cuts but was adversely affected byfalling rents for offices in the Greater Tokyo area. Real estate development activities during
2010 included completion of the Shinjuku Square office building in June and continued workon an extension to our Pal Urayasu fitness facility in Urayasu, Chiba.
In April, we acquired the recently built Shibuya Sakuragaoka Square office building, which
operated at high occupancy.
Real Estate business earnings for 2010 were also boosted by a number of properties
acquired and/or opened in 2009, including the Rose City Higashi Sapporo rental housing
complex, the Ebisu Square office building, and the MLB cafe Tokyo, a commercial property
in Ebisu.
Overall, the Real Estate business booked sales of ¥23.5 billion in 2010 (up ¥0.2 billion or
1% versus 2009) and operating income of ¥8.0 billion (up ¥0.4 or 6% billion versus 2009).

11b) Outlook for the fiscal year ending December 31, 2010
(1) Overview
Millions of yen, except percentages

Net sales

Operating

Ordinary

incomeincomeNet income

2011 forecast

482,000

18,00015,5006,000

2010 results

389,244

15,403

14,328

10,772

23.8

16.9

8.2

(44.3)

Projected

increase(%)

In 2011, in accord with the SAPPORO Group Management Plan 2011-2012, a rolling two-year
plan, the Group will focus on three key scenarios aimed at shifting into a new growthtrajectory: enhancing the existence value of new businesses, building uniquecompetitiveness in existing businesses, and management structure strengthening to ensure
execution of growth strategies. We regard the coming two years particularly as a time forcompleting our shift into our new growth trajectory in the aim of generating dynamic future
growth for the SAPPORO Group.
We intend to make POKKA Corporation a consolidated subsidiary, as announced in apress release on February 10,2011. The expected impact on our consolidated results fromthe fiscal second quarter onward has been incorporated into the figures below.

Net Sales
We project 2011 consolidated net sales of ¥482.0 billion, a ¥92.7 billion or 24% increase
from 2010.
In the Alcoholic Beverages business, we aim to expand domestic sales by pursuing astrategy focused on growing existing brands while also laying the foundations for growth in
the non-alcoholic beer and low-alcohol beverages markets, which we expect to expand.
Overseas, we will pursue further market penetration of our brands in the US and Canada
and pursue sales growth in the Asian region, particularly in the Vietnamese market, which
we have just entered.
In the Soft Drinks business, we expect to achieve sales growth by pursuing marketingstrategies focused primarily on developing and strengthening existing brands. In the
Restaurants business, we will pursue an expansion strategy focused on oursmall-to-medium-sized formats Yebisu Bar and Brasserie, but we expect sales to decline
because we will also close unprofitable locations.

12In the Real Estate business, we will pursue growth and expansion by maintaining andboosting occupancy rates, raising rents, acquiring new properties, and redeveloping existing
ones.
Other businesses: In our food operations, which we shifted out of the Soft Drinks businessfrom 2011, we completed expansion of our sales areas and product lineup in 2010, and now
intend to expand sales.

Operating Income
We project 2011 consolidated operating income of ¥18.0 billion, ¥2.5 billion or 17% increase
from 2010. In the Alcoholic Beverages business, we hope to secure stable operating incomein the domestic market as a result of increased net sales as well as ongoing cost control.
Overseas, we will incur upfront investment costs as we continue to put our Vietnam brewery
into operation, which we expect to result in lower operating income year over year, despite
earnings growth from existing overseas business on the back of expanding unit sales.
In the Soft Drinks and Restaurant businesses, we expect to increase operating income bycontinuing to implement measures to strengthen profitability.
In the Real Estate business, we project operating income growth on the back of full-year
contributions from properties acquired last year as well as cost reductions.
Other businesses: We expect our food operations to post operating income growth due to
net sales expansion.

Ordinary Income
We project 2011 consolidated ordinary income of ¥15.5 billion, a ¥1.1 billion or 8% increase
from 2010, by virtue of growth in consolidated operating income.

Net Income
We project 2011 consolidated net income of ¥6.0 billion, a ¥4.7 billion or 44% decline from2010. The main factor underlying this change is nonrecurrence in 2011 of gains on sales ofproperty, plant and equipment booked in 2010.

ROE
We expect ROE to decrease to 4.8% in 2011 from 8.9% in 2010 as a result of the projected
decrease in consolidated net income reflecting nonrecurrence of gains on sales of property,
plant and equipment.

13

(2) Outlook by Segment
Millions of yen, except percentages
Net sales
2010

2011

279,311286,700

25,386

Operating income% change

2010

2011

% change

2.6

9,234

9,800

6.1

29,200

15.0

502

100

(80.1)

33,94637,400

10.2

1,287

700

(45.6)—

78,900

—

—

2,300

—

Restaurants

26,42925,500

(3.5)

150

400

166.6

Real Estate

23,53623,000

(2.3)

8,003

8,300

3.7

634

1,300

104.8

(733)

(400)

—

Japanese
Alcoholic
Beverages
International
Alcoholic
Beverages
Soft Drinks
POKKA
Group

Other

Changes to Presentation of Segment Information due to Adoption of New AccountingStandard
From the first quarter of fiscal 2011, the Company adopted the Accounting Standard forDisclosures about Segments of an Enterprise and Related Information (and its associatedGuidance). In accordance with the standard and guidance, the Company identifies
segments using a simplified method based on the management approach. The expected
impact on Pokka Group results from the fiscal second quarter onward has been
incorporated into the figures below.

Japanese Alcoholic Beverages
We expect the Japanese Alcoholic Beverages business’s operating environment to remain
adverse as the drinking population declines, consumer preferences grow increasingly
diverse, and deflationary pressure weighs on the economy.
In such an environment, we will cultivate a market presence based on SAPPORO’s uniquequalities, further enhance profitability, and work to raise our corporate value and brand value.
We also hope to go beyond providing mere satisfaction to inspire excitement and joy amongcustomers through our products.
In the beer sector, we will focus on our three core brands, Yebisu, SAPPORO Draft Beer

14

Black Label, and Mugi to Hop, as we did in 2010, and work to enhance our presence in amarket that is becoming increasingly polarized between premium and low-price products. By
doing so, we aim to achieve a second consecutive year of beer unit sales growth andincrease our market share.
In the expanded non-alcoholic beer beverages category, we will launch a new productnamed SAPPORO Premium Alcohol Free, to appeal to untapped market needs in terms oftaste and quality perception. With regard to low-alcohol products, which strongly substitutefor household beers, we will continue developing products that embody SAPPORO’s uniquequalities as we lay the groundwork for growth in this expanding area.
Both the wine and shochu businesses are now income generators, and this year we willconduct active marketing programs aimed at growing them into diversified flagshipbusinesses.
Cost-wise, we will continue to strengthen the Japanese Alcoholic Beverages’ earnings
base by continuing to implement effective procurement policies in response to fluctuations iningredient and raw material prices, enhance production operations’ flexibility, and further
improve cost-effectiveness, particularly with respect to sales promotion expenditures.

International Alcoholic Beverages
Uncertainty about whether the economy will revert to a full-fledged recovery continues toovershadow the North American region. We therefore expect total demand in the North
American beer market to be largely flat. In this environment, our International Alcoholic
Beverages business aims to continue solidifying its North American market position bycapitalizing on its strengths in the premium beer category.
In the Canadian market, SLEEMAN Breweries will continue executing aggressive marketinginvestments to maintain and enhance the value of its core premium brands. Including salesof its growing value brands, the company aims to achieve unit sales growth that exceeds
total demand growth.
In the US market, where SAPPORO USA is our core subsidiary, we aim to achieve unit
sales growth in excess of the total demand growth rate. To do so, we will continue to target
the American-Japanese segment, as we have done until now, while also strengthening ourpresence in the wider American market and the American-Asian market also.
Outside of North America, we aim to boost sales by actively engaging in growth markets in
Asia and elsewhere while also bolstering our foundations and further developing ourbusiness in the International Alcoholic Beverages business with an eye on opportunities totap into new markets.

15

In the Vietnamese market specifically, our currently under-construction brewery isscheduled for completion in

Autumn 2011, and we will continue to prepare for ourfull-fledged entry into the market, including by continuing to formulate a marketing strategy
and build a distribution network.
At the end of 2010, we announced our intention to re-enter the South Korean market. We
have entered into a business alliance with Maeil Dairies Co., Ltd., a major South Korean
milk producer, and begun selling beer to the household and commercial-use markets
through Maeil’s sales network.
In Singapore, we began expanding sales channels into the household market incooperation with POKKA Corporation in 2010, and we will continue strengthening ourbusiness foundations in Singapore in 2011.

Soft Drinks
Although signs of economic recovery are emerging, consumer sentiment is recovering only
slowly and preference for low prices remains firmly entrenched. We therefore expect total
demand in the soft drinks industry to fall slightly again in 2011. In this environment, we havedesignated 2011 as a period for transitioning to a new growth process in the Soft Drinks
business in the aim of fulfilling our management vision. We intend to expand and bolster thebusiness by pursuing strategies focused acutely on strengthening brands and earnings
quality.
Specifically, we will continue to concentrate marketing investment and sales efforts oncore brands, including Gerolsteiner (naturally carbonated water from Germany), theGabunomi series, and the Ribbon series. We will also continue to evolve our innovativevalue propositions in the aim of communicating SAPPORO’s unique qualities to customers
through our products with even greater verve.
In terms of costs, we will pursue efforts to strengthen profitability through a rigorous
select-and-focus approach (i.e., selectively focusing resources on key areas). We will work
to derive synergies from our alliance with POKKA Corporation, implement comprehensive
reforms in procurement, production, logistics, and supply-chain management, and reduce
operating costs.

16

Restaurants
The Japanese restaurant industry has entered a phase of intensifying price competition as
increasingly frugal consumers dine out less often. We thus expect the operating
environment to remain adverse.
In this environment, we will continue to conduct various promotional campaigns aimed at
attracting customers back to our Restaurants business’s existing locations. As part of ourongoing profit-structure reforms, we will continue to close unprofitable locations, reduce
fixed costs, such as rents, and control personnel expenses through tighter work-shift
management.
New restaurant openings will focus on the Yebisu Bar format and the small-scale
Brasserie format. We will also endeavor to open restaurants at facilities managed by the
SAPPORO Group and at vacated commercial premises where we are able to keep
store-opening costs down.

Real Estate
We expect office leasing market conditions to remain adverse, but the rental housing market
should pick up to a degree.
In response, our Real Estate business will seek to maintain earnings by increasing
occupancy rates and raising rents at existing buildings, most notably Yebisu Garden Place,while also benefiting from income generated over the full year by Shibuya Sakuragaoka
Square, a Shibuya area office building that we acquired in 2010. We will also endeavor toenhance profitability by continuing to raise the occupancy rate at Shinjuku Square, aShinjuku area office building that we developed in 2010.

(2) Review of Consolidated Financial Condition(a) Consolidated Financial Condition
Consolidated assets totaled ¥494.7 billion at December 31, 2010, a ¥12.0 billion decrease
from December 31, 2009. The decrease was attributable to a reduction in property, plantand equipment due to the sale of real estate holdings, partially offset by an increase incurrent assets comprising an increase in cash and cash equivalents.
Consolidated liabilities totaled ¥368.1 billion, a ¥20.1 billion decrease from December 31,
2009, largely due to reductions in bank loans and deposits received.
Consolidated net assets totaled ¥126.6 billion, an ¥8.0 billion increase from December 31,
2009. The increase was largely attributable to growth in retained earnings and an increase17

minority interests, partially offset by a decrease in the foreign currency translation
adjustment account balance as a result of yen appreciation.

(b) Consolidated Cash Flows
Consolidated cash and cash equivalents (collectively, “cash”) totaled ¥13.2 billion at
December 31, 2010, a ¥7.0 billion or 112% increase from December 31, 2009. The increase
resulted from positive cash provided by operating activities and proceeds from the sale ofproperty, plant and equipment, partially offset by the repayment of bank loans.

Following are consolidated cash flow figures for 2010 and an overview of factors that
affected each category.

Cash flows from operating activities
Operating activities provided net cash of ¥27.4 billion, a ¥14.9 billion or 120% increase from2009. Major sources of operating cash flow included ¥17.7 billion in income before taxes
and minority interests and ¥22.5 billion in depreciation and amortization. Major uses ofoperating cash flow included a ¥7.8 billion reduction in deposits received.

Cash flows from investing activities
Investing activities used net cash of ¥2.5 billion, a ¥29.6 billion or 92% decrease from 2009.
Major investment outflows included ¥2.8 billion spent to purchase investment securities and¥17.5 billion spent to acquire property, plant and equipment, partially offset by ¥23.7 billion
in proceeds from sales of property, plant and equipment.

Cash flows from financing activities
Financing activities used net cash of ¥18.1 billion (versus a net cash inflow of ¥3.7 billion in2009). Major financing inflows included ¥15.6 billion in proceeds from long-term bank loansand ¥11.9 billion from the issuance of bonds. Major outflows included ¥16.3 billion in
repayments of short-term bank loans, ¥16.2 billion in repayments of long-term bank loans,and ¥10.0 billion in bond redemptions.

18

Cash Flow Indicators
As of December 31,
2006
Equity ratio (%)
Equity ratio based onmarket capitalization (%)

2007

2008

2009

2010

19.2

22.3

22.1

23.4

25.3

43.5

62.8

41.5

33.9

29.1

9.4

8.0

9.9

18.4

7.8

Cash flow tointerest-bearing debt
(years)Interest coverage ratio (%)
9.1
7.2
6.0
3.5
7.6
Equity ratio: Total net assets / Total assets
Equity ratio based on market capitalization: Market capitalization / Total assets
Cash flow to interest-bearing debt: Interest-bearing debt / Cash flow
Interest coverage ratio: Cash flow / Interest expense
Notes:
1. All of the above indicators are calculated based on consolidated financial
statement data.
2. Market capitalization is calculated based on the number of shares issued andoutstanding, excluding treasury stock.
3. “Cash flow” is operating cash flow.
4. Of the debt carried on the consolidated balance sheet, interest-bearing debt is total
debt on which interest is currently payable.
(3) Dividend Policy and Dividends for 2010 and 2011
Providing fair returns to our shareholders is a key management policy of our Group. Ourbasic policy is to pay stable dividends to the extent permitted by our operating performanceand financial condition.
We also aim to maximize corporate value by internally retaining funds to strengthen our
financial base and strategically invest in growth businesses in accord with our Management
Plan.
In accordance with these policies, we plan to pay annual dividends for 2010 of ¥7 pershare.
For 2011, we plan to again pay annual dividends of ¥7 per share by steadily carrying out
our Management Plan while also making strategic investments and strengthening ourfinancial foundation.

19

Dividends for 2010 and 2011 (yen per share)
InterimYear-end

Total

2010

0.00

7.0

7.0

2011

0.00

7.0

7.0

2. Management Policy(1) Fundamental Management Policy
The SAPPORO Group’s management philosophy is “to make people’s lives richer and moreenjoyable.” In conducting its business activities, the SAPPORO Group strives to maintainintegrity and corporate conduct that reinforces stakeholder trust and aims to achieve
continuous growth in corporate value. This is our fundamental management policy.

(2) Operating Performance Targets
The SAPPORO Group’s New Management Framework’s management targets for 2016 are as
follows.
Consolidated net sales:¥600 billion

Consolidated operating income:¥40 billion yen

Debt/equity ratio:around 1.0

ROE:

above 8%(3) Medium- to Long-Term Management Strategies
In October 2007, we unveiled the SAPPORO Group’s New Management Framework withtargets for 2016, the 140th anniversary of the Group’s founding.
The New Management Framework’s basic strategies are as follows.
1) Create High-Value-Added Products and Services
In all of our businesses, we will build sustained market advantages and pursue maximal
capital efficiency by concentrating management resources in market segments where
we are most competitive. We will create high value-added, placing priority on “providing
valuable products and services that customers can identify with” as a shared Groupvalue.
2) Form Strategic Alliances
Instead of single-mindedly operating our businesses on a stand-alone basis, we will
form strategic alliances with strong partners to amplify our strengths, complement ourfunctional capabilities, and gain access to know-how in the aim of expeditiously gaining
competitive advantages on a large scale.

203) Promote International Expansion
We will pursue overseas expansion of not only alcoholic beverage operations but also
soft drink and food operations also. We aim to build brands in overseas markets bycapitalizing on operational alliances and proprietary technological capabilities.
4) Expand Group Synergies
We will pursue greater inter-business synergies through flexible coordination andcooperation that transcends individual Group companies and organizationalframeworks. We aim to maximize both operational and strategic synergies.

(4) Issues to be Addressed
We formulated the SAPPORO Group Management Plan 2011-2012, a revision of the
SAPPORO Group Management Plan 2010-2011 as a two-year rolling plan that takes into
account internal and external environmental changes.
Under the SAPPORO Group Management Plan 2011-2012, we will undertake the following
initiatives.
We have pursued various growth strategies in recent years, including the launch of a foodbusiness, our strategic alliance with POKKA Corporation, and our entry into the Vietnamese
beer market. We will implement various measures under these strategies to enhance thepresence of our businesses and produce definitive results. We will also continue to lay thegroundwork for future growth.
We also plan to strengthen our core business through measures based on maximizing
existing strengths to further reinforce our Group’s foundations.
Finally, we will bolster our management structure to enable speedy, functional
management of our businesses, which are expanding and diversifying as we execute ourgrowth strategy.
We regard management rooted in corporate social responsibility (CSR) as a key strategy
conducive to our Group’s sustained growth. We will conduct programs targeted at specificissues, such as food safety, drunken driving and other alcohol-related problems, theenvironment, and climate change. Additionally, we will continue to build CSR andcompliance programs as the foundation that always governs our corporate behavior, andimplant CSR and compliance within our corporate culture through in-house education.

21

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 Marketable securities
4 Merchandize and finished products
5 Raw materials and supplies
6 Deferred tax assets
7 Refundable income taxes
8 Other
9 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) Deferred tax assets(4) Other(5) Allowance for doubtful receivables
Total investments and other assets
Total fixed assets
Total assets

22

December 31, 2010

December 31, 2009

AmountAmount13,39061,352
2
12,4129,756
2,810
10,173(161)
109,737

6,387
60,12047
13,258
9,689
2,787
1,236
8,941
(192)
102,277

357,769(185,485)
172,284
180,519(142,521)
37,997
77,583
3,563
20,400(15,201)
5,199
296,629

361,276(184,898)
176,378
182,373(138,387)
43,98684,384
8,487
19,784(15,182)
4,601
317,838

14,128
10,331
24,45914,926
6,967
21,89438,027
10,3962,649
14,493(1,594)
63,972
385,061494,798

35,39011,072
4,824
15,339(1,763)64,863
404,596506,874

(millions of yen)

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 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
Net Assets
I Shareholders' equity
1 Common stock
2 Capital surplus
3 Retained earnings
4 Treasury stock, at cost
Total shareholders' equity
II Valuation and translation adjustments
1 Unrealized holding gain on securities
2 Deferred hedge gains (losses)
3 Foreign currency translation adjustments
Total valuation and translation adjustments
III Minority Interests
Total net assets
Total liabilities and net assets

23

December 31, 2010

December 31, 2009

AmountAmount24,34828,08920,00034,253
1,818
2,055
19,21837,259167,043

20,18536,735
10,00035,242843
1,638
27,08437,523
169,252

35,843
97,402
13,4557,190
42
31,935
15,239201,109368,152

43,843106,216
12,0977,487
45
32,011
17,330219,032
388,284

53,88646,31528,317(1,190)127,32953,88646,31820,286(1,131)
119,360

2,985(7)(5,258)(2,281)
1,597
126,645494,7982,637
0(3,627)(988)
218
118,590
506,874(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 income
IV Non-operating income
1 Interest income
2 Dividend income
3 Foreign exchange gain
4 Gain (loss) on gift voucher redemptions
5 Equity in income of affiliates
6 Other
Total non-operating income
V Non-operating expenses
1 Interest expense
2 Other
Total non-operating expenses
Ordinary income
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 Reversal of removal costs
Total extraordinary gains
VII Extraordinary losses
1 Loss on disposal of property, plant and equipment
2 Loss on sales of property, plant and equipment
3 Impairment loss
4 Loss on devaluation of investment securities
5 Loss on sale of investment securities
6 Business structure improvement expenses
7 Loss on devaluation of inventories
Total extraordinary losses
Income before income taxes and minority interests
Current income taxes
Deferred taxes
Total income taxes
Minority interests in gains (losses)
Net income

24Year ended December 31,
2010
Amount389,244
261,211
128,032(millions of yen)
Year ended
December 31, 2009
Amount387,534
267,690
119,843

20,38917,19619,1801,245
2,865
51,752
112,629
15,403

18,972
16,717
18,906931
3,119
48,299106,947
12,895

485
572
11
677
610
581
2,939

398
536
50
532
275
431
2,226

3,646
366
4,013
14,328

3,623
773
4,396
10,725

16,575657
61
569
17,864

948
19
-

1,723
8,409
2,374
1,245
12
664
14,43017,762
3,170
3,822
6,993
(3)
10,772

1,523
925
24
125
2,818
8,874
912
3,437
4,350
(11)
4,535

967

(3) Consolidated Statements of Cash Flows(millions of yen)
Year ended
December 31, 2010
AmountI Cash flows from operating activities
1 Income before income taxes and minority interests
2 Depreciation and amortization
3 Loss on impairment of property, plant and equipment
4 Amortization of goodwill
5 Increase (decrease) in employees’ retirement benefits
6 Increase (decrease) in allowance for doubtful receivables
7 Interest and dividend income
8 Interest expense
9 (Gain) loss on sales of property, plant and equipment
10 (Gain) loss on sales and disposal of property, plant and equipment
11 (Gain) loss on sales of investment securities
12 (Gain) loss on devaluation of investment securities
13 (Increase) decrease in notes and accounts receivable - trade
14 (Increase) decrease in inventories
15 (Increase) decrease in other current assets
16 Increase (decrease) in notes and accounts payable - trade
17 Increase (decrease) in liquor taxes payable
18 Increase (decrease) in deposits received
19 Increase (decrease) in other current liabilities
20 Other
Sub total
21 Interest and dividends received
22 Interest paid
23 Income taxes paid
24 Income taxes refunded
Net cash provided by (used in) operating activities
II Cash flows from investing activities
1 Purchases of investment securities
2 Proceeds from redemption and sale of investment securities
3 Purchases of affiliates' securities
4 Purchases of newly consolidated subsidiaries
5 Purchases of property, plant and equipment
6 Proceeds from sales of property, plant and equipment
7 Purchases of intangibles
8 Increase in long-term loans receivable
9 Collection of long-term loans receivable
10 OtherNet cash provided by (used in) investing activities
III Cash flows from financing activities
1 Net increase (decrease) in short-term bank loans
2 Proceeds from long-term bank loans
3 Repayment of long-term bank loans
4 Proceeds from issuance of bonds
5 Redemption of bonds
6 Cash dividends paid
7 Purchase of treasury stock
8 Proceeds from sale of treasury stock
9 Other
Net cash provided by (used in) financing activities
IV Effect of exchange rate changes on cash and cash equivalents
V Net increase (decrease) in cash and cash equivalents
VI Cash and cash equivalents at beginning of period
VII Cash and cash equivalents at end of period

25

17,76222,504
2,374
1,172
(296)
(197)
(1,058)
3,646(16,575)
10,133(644)
1,245(1,597)
571

Year ended
December 31, 2009
Amount4,275(942)(7,866)610(4,127)30,9901,134(3,616)(2,289)1,211
27,431

8,874
22,546
925
1,032
(43)
(23)
(935)
3,623
(948)
1,523
(19)
244
2,667
(980)
5,976
(3,884)(433)(19,751)(4,402)(1,835)
14,156932(3,544)(1,951)
2,862
12,454(2,812)790(760)(1,608)(17,527)
23,746(2,047)(21)665(3,018)(2,594)(1,468)56(8,042)(18,398)
1,439(3,429)(755)
207(1,835)32,227(16,365)
15,600(16,287)
11,952(10,000)(2,741)
(74)
13
(215)
(18,119)
285
7,002
6,267
13,270(6,398)50,000(17,254)(19,710)(2,739)
(119)
39
(71)
3,745
77
(15,949)
22,217
6,267

(4) Statements of Changes in Shareholders' Equity(millions of yen)

Shareholders’ Equity
Common stock
Balance at end of previous period
Balance at end of period
Capital surplus
Balance at end of previous period
Changes during period
Disposition of treasury stock
Total changes during period
Balance at end of period
Retained earnings
Balance at end of previous period
Changes due to change in accounting policies applied to foreignsubsidiaries
Changes during period
Cash dividends
Net income
Total changes during period
Balance at end of period
Treasury stock
Balance at end of previous period
Changes during period
Purchase of treasury stock
Disposition of treasury stock
Total changes during period
Balance at end of period
Total shareholders' equity
Balance at end of previous period
Changes due to change in accounting policies applied to foreignsubsidiaries
Changes during period
Cash dividends
Net income
Purchase of treasury stock
Disposition of treasury stock
Total changes during period
Balance at end of period

26

Year ended
December 31, 2010
AmountYear ended
December 31, 2009
Amount53,88653,88653,88653,88646,31846,325(2)(2)
46,315(7)(7)
46,31820,286

19,972-(1,477)(2,742)
10,772
8,030
28,317(2,743)
4,535
1,791
20,286(1,131)(1,058)

(74)
16
(58)
(1,190)

(119)
46
(73)
(1,131)

119,360

119,126(2,742)
10,772
(74)
13
7,968
127,329(1,477)(2,743)
4,535
(119)
39
1,711
119,360

Valuation and translation adjustments
Unrealized holding gain on securities
Balance at end of previous period
Changes during period
Net change in items other than shareholders' equity during period
Total changes during period
Balance at end of period
Deferred hedge gains (losses)
Changes during period
Net change in items other than shareholders' equity during period
Total changes during period
Balance at end of period
Foreign currency translation adjustments
Balance at end of previous period
Changes during period
Net change in items other than shareholders' equity during period
Total changes during period
Balance at end of period
Total valuation and translation adjustments
Balance at end of previous period
Changes during period
Net change in items other than shareholders' equity during period
Total changes during period
Balance at end of period
Minority interests
Balance at end of previous period
Changes during period
Net change in items other than shareholders' equity during period
Total changes during period
Balance at end of period
Total net assets
Balance at end of previous period
Changes due to change in accounting policies applied to foreignsubsidiaries
Changes during period
Cash dividends
Net income
Purchase of treasury stock
Disposition of treasury stock
Net change in items other than shareholders' equity during period
Total changes during period
Balance at end of period

27

2,637

3,046

347
347
2,985

(408)
(408)
2,637

0
(8)
(8)
(7)

0
0
0

(3,627)(5,536)(1,631)(1,631)(5,258)

1,909
1,909
(3,627)(988)(2,490)(1,292)(1,292)(2,281)

1,501
1,501
(988)

218

226

1,378
1,378
1,597

(7)
(7)
218

118,590

116,862(2,742)
10,772
(74)
13
86
8,054
126,645-(1,477)(2,743)
4,535
(119)
39
1,494
3,205
118,590

5.Segment Informationa. Segment Information by Business

Alcoholic
Beverages(millions of yen)
Year ended December 31, 2009 (January 1, 2009 – December 31, 2009)
Corporate and
Real
Soft
Consolidated
Total
Restaurants
eliminations
EstateDrinks

Net sales(1) Operating revenues(2) Intra-group sales and transfers
Total

305,495

30,74528,02623,266

387,534

－

5,740

304

－

2,289

8,334

(8,334)

387,534－

311,235

31,05028,02625,556395,868(8,334)

387,534

303,059

30,74828,19818,032

380,038(5,400)374,638

8,176

301

(171)

7,524

15,829(2,933)

12,895

290,323
15,21919,337384

13,669776

175,904
6,160

499,235
22,5417,639
5506,874
22,546

Loss on impairment

398

－

925

－

925

10,053

－
1,466

527

Capital expenditures875

11,073

23,46816

23,484

Operating expenses
Operating income (loss)
II Assets, depreciation andamortization, impairment andcapital expenditures
Identifiable assets
Depreciation and amortization

Alcoholic
Beverages

Year ended December 31, 2010 (January 1, 2010 – December 31, 2010)
Corporate and
Real
Soft
Consolidated
Total
Restaurants
eliminations
EstateDrinks

Net sales(1) Operating revenues(2) Intra-group sales and transfers
Total

304,218

34,43827,05023,536389,244

－

5,501

310

－

2,280

8,092

(8,092)389,244－309,719

34,74927,05025,817397,336(8,092)389,244

299,915

34,223

26,942

17,814

378,894(5,052)373,841

9,804

526

108

8,003

18,442(3,039)15,403

266,355
15,44525,172677

12,525680

179,889
5,693

483,942
22,496

10,855
7494,798
22,504

Loss on impairment

1,593

155

2,374

－

2,374

9,158

－
1,368

625

Capital expenditures318

11,71922,564

6

22,571

Operating expenses
Operating income (loss)
II Assets, depreciation andamortization, impairment andcapital expenditures
Identifiable assets
Depreciation and amortization

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 new-genre beverages, wine, whiskey, shochu and other products,
distribution, brewing equipment, etc.

Soft Drinks

Soft drinks, other non-alcoholic beverages, and snack foods

Restaurants

Operation of beer halls and restaurants

Real Estate

Real estate leasing, real estate sales, operation of commercial facilities,
utility supplies, and operation of fitness clubs(3) Unallocated operating expenses included in "Corporate and eliminations": 2,979 million yen at December 31, 2009, and 3,044 million yen at
December 31, 2010. These are operating expenses incurred by the Company.
(4) Unallocated assets included in "Corporate and eliminations" amounted to 21,582 million yen and 25,357 million yen at December 31, 2009
and 2010, respectively, and consisted principally of cash and cash equivalents and marketable securities, long-term investments, andassets of general administration divisions.
(5) Depreciation and amortization, loss on impairment, and capital expenditures include long-term prepaid expenses and their write-offs.
(6) Changes in Accounting Policies
Year ended December 31, 2009 (January 1, 2009 – December 31, 2009)
1) Measurement of Inventories
The Company adopted the Accounting Standard for the Measurement of Inventories (ASBJ Statement No. 9, July 5, 2006) and switchedfrom the conventional cost method of measurement to a cost method that involves reducing book values to reflect diminished profit potential.
Due to this change, in the fiscal year ended December 31, 2009, operating income in the Alcoholic Beverages business was ¥606 million
lower, and in the Soft Drinks business, ¥222 million lower, than the amounts that would have resulted with the previous method.

282) Unification of Accounting Policies Applied to Foreign Subsidiaries for Consolidated Financial Statements
The Company adopted the Practical Solution on Unification of Accounting Policies Applied to Foreign Subsidiaries for Consolidated
Financial Statements (ASBJ Practical Issues Task Force Report No. 18, May 17, 2006).
Due to this change, operating income in the Alcoholic Beverages business was ¥376 million lower in the fiscal year ended December 31,
2009, than it would have been under the previous method.
3) Accounting Standard for Lease Transactions
Effective the fiscal year ended December 31, 2009, lease transactions have been accounted for in the same manner as purchase and saletransactions due to adoption of the Accounting Standard for Lease Transactions (ASBJ Statement No.13 (June 17, 1993; 1st Committee,
Business Accounting Council; revised March 31, 2007) and its accompanying Guidance on Accounting Standard for Lease Transactions(ASBJ Statement Guidance No.16; January 18, 1994, Accounting System Committee, Japanese Institute of Certified Public Accountants;
revised March 30, 2007). For finance leases for which ownership of the leased assets does not transfer to the lessees and entered into on
or before December 31, 2008, the Company uses the conventional method, which accounts for such leases in the same manner as
operating leases.
Effects of this change on each segment are not significant.
Additional information
Change in Useful Life of Property, Plant and Equipment
The Company and its subsidiaries in Japan have reviewed the useful lives of property, plant and equipment following the 2008 revision ofJapan’s Corporation Tax Act, and effective the fiscal year ended December 31, 2008, began using new useful lives for depreciation ofmachinery assets.
Due to this change, in the fiscal year ended December 31, 2009, compared with what they would have been under the previous accounting
method, operating income in the Alcoholic Beverages business was ¥1,553 million lower; in the Soft Drinks business, higher byapproximately ¥0 million; and in the Real Estate business, ¥1 million lower. By the same comparison, operating loss in the Restaurants
business was higher by ¥14 million.
Year ended December 31, 2010 (January 1, 2010 – December 31, 2010)

1) Adoption of Partial Amendments to Accounting Standard for Retirement Benefits (Part 3)
Effective the fiscal year ended December 31, 2010, the Company adopted the Partial Amendments to Accounting Standard
for Retirement Benefits (Part 3) (ASBJ Statement No. 19, July 31, 2008).
This change did not affect operating income, ordinary income, or net income.
2) Change in accounting standard for recognizing revenues from and costs of completed construction
For recognition of revenues associated with construction work, the Company has adopted the Accounting Standard forConstruction Contracts (ASBJ Statement No. 15, December 27, 2007) and its associated Guidance on the AccountingStandard for Construction Contracts (ASBJ Statement No. 18, December 27, 2007). All construction contracts, including
those in existence at the beginning of the quarter, for which certain elements were determinable with certainty at end of thefirst quarter (March 31, 2010) were accounted for with the percentage-of-completion method. The effect of this change on
profit and loss was minor.
b. Segment Information by Geographic Area
Year ended December 31, 2009 (January 1, 2009 – December 31, 2009) andyear ended December 31, 2010 (January 1, 2010 – December 31, 2010)
Sales in Japan constituted more than 90% of consolidated sales.
Accordingly, geographical segment information has not been disclosed.

c. Overseas SalesYear ended December 31, 2009 (January 1, 2009 – December 31, 2009) andyear ended December 31, 2010 (January 1, 2010 – December 31, 2010)
Overseas sales constituted less than 10% of consolidated sales.
Accordingly, overseas sales have not been disclosed.

29Reference Information
Property Leasing
Year ended December 31, 2010 (January 1, 2010 – December 31, 2010)
The Company and certain of its subsidiaries hold office buildings and commercial facilities forlease (including land) in the Tokyo metropolitan and other areas.
Net leasing income on those properties in the year ended December 31, 2010, was ¥609.8
million (leasing income was mainly recorded as operating revenues; leasing expenses weremainly recorded as operating expenses).
The carrying value of those properties on the consolidated balance sheets, change in carrying
value from 2009 to 2010, and the total fair value appear in the following table.
(millions of yen)
Carrying value of properties for lease on consolidated balance sheets
Fair value at
end of 2010
End of 2009
Change in 2010
End of 2010
165,537
8,064
173,601
313,812
Notes:
1. Carrying values on the consolidated balance sheets represent acquisitions costs net ofaccumulated depreciation and impairment losses.
2. The value for “Change in 2010” mainly represents an increase due to property acquisitions(¥13,268 million) net of a decrease due to depreciation charges (¥5,107 million).
3. The fair value at the end of 2010 is mainly based on property valuations performed by thirdparty real estate appraisers.
Additional information
Effective the fiscal year ended December 31, 2010, the Company adopted the AccountingStandard for Disclosures about Fair Value of Investment and Rental Property (ASBJ Statement
No. 20, November 28, 2008) and its associated Guidance on the Accounting Standard forDisclosures about Fair Value of Investment and Rental Property (ASBJ Statement No. 23,
November 28, 2008).
Information Omitted from Disclosure
The Company has omitted information on the following from this document because it was judged
not to be of material relevance: lease transactions, financial instruments, marketable securities,
derivative transactions, retirement benefits, stock options and similar instruments, tax-effectaccounting, business combinations, and related parties.

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Notes on the Going-concern Assumption
Not applicable
Subsequent Events
Year ended December 31, 2009
Not applicableYear ended December 31, 2010
Acquisition of POKKA Corporation’s shares
The Company’s board of directors met on February 10, 2011, and agreed to make POKKA
Corporation a consolidated subsidiary by acquiring additional shares in that company. POKKA
Corporation has been an equity-method affiliate of the Company since the end of September
2009.
Objective of Share Acquisition
The Company’s management vision, which it aims to fulfill by 2016, identifies the food value
creation business as a business domain for the Group. Acquiring shares in POKKA
Corporation is a step toward forming a food value creation group that boasts outstanding
competitiveness in the alcoholic beverages, soft drinks, food, and restaurant industries bothin Japan and abroad.
Share Acquisition
1. Name of company being acquired
POKKA Corporation
2. Business lines and size of company being acquired
Company name: POKKA Corporation
Business lines: Soft drinks and foodstuffs business, restaurants business, confectionary
business, logistics business, other businesses
Employee headcount: 2,473 (March 31, 2010)
Consolidated net sales: ¥97,121 million (fiscal year ended March 31, 2010)
Consolidated total assets: ¥58,527 million (March 31, 2010)
3. Party from which shares will be acquired
Advantage Partners MBI Fund III LP
4. Acquisition date
March 29, 2011 (subject to change)
5. Number of shares to be acquired
6,077,969 (64.1% of issued shares)
6. Percentage of ownership after acquisition
85.5%
7. Acquisition price¥21,273 million
8. Source of funds for acquisition
Own capital and external borrowings

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9. Outlook
The Company will promptly establish a committee to prepare for business integrationand commence discussions focusing on reorganization of the Group’s internal businessand organizational structure, the management structure and name of the holding
company, and other relevant matters.
Convertible Warrant Bonds issued by Subsidiaries
On February 10, 2011, the Company will cancel the business alliance that it had previously
entered into with YK, Crescent Partners and GK, CRPBH, the fund that manages CrescentPartners.
Consequently, all SAPPORO Beverage Co., Ltd.-issued convertible warrant bonds held byCrescent Partners and CRPBH will be converted to equity shares, upon which the Company
intends to purchase all of those shares.

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