Member of the Financial Accounting Standards Foundation

Consolidated Financial Statements for First Quarter Ended March 20, 2010
March 26, 2010
(First Section of the Tokyo Stock Exchange)(URL: http://www.milbon.co.jp)

Name of registrant: Milbon Co., Ltd.
Code Number:
4919
Representative:
Ryuji Sato, President
Officer in Charge of contact: Masahiro Murai, Executive Director
Scheduled filing date for quarterly report: April 30, 2010
Scheduled date for commencement of dividend payments:-

TEL: (06) 6928-2331(Amounts of less than one million yen are rounded off.)

1. Consolidated financial results for first quarter ended March 20, 2010 (December 21, 2009 – March 20, 2010)(1) Consolidated Operating Results (Accumulative)(Percentages show year-on-year changes.)
Net Sales

Operating income

Ordinary income

Net income

million yen%

million yen%

million yen%

million yen%

First quarter ended March 20, 2010

4,359

2.4

710

5.7

648

1.2

350

-4.5

First quarter ended March 20, 2009

4,257

-

672

-

640

-

366

-

Quarterly net income
per share

Quarterly diluted
earnings per share

yen

yen

First quarter ended March 20, 2010

27.94

-

First quarter ended March 20, 2009

29.25

-

(2) Consolidated Financial Conditions
Total Assets
million yen
20,411
20,353First quarter ended March 20, 2010
Year ended December 20, 2009
(Reference) Equity capital

Net assets
million yen
16,697
16,653Equity ratio (Ratio of
equity to total assets)
%
81.8
81.8

Net asset per shareyen
1,332.26
1,328.80

First quarter ended March 20, 2010, 16,697 million yen; fiscal year ended December 20, 2009, 16,653 million yen

2. Payment of Dividends(Record date)

End of 1st quarter

Dividends per share
End of 3rd quarterEnd of fiscal year

yen
27.00
-

yen
-

yen
28.00
-

yen
55.00
-

27.00

-

28.00

55.00

End of 2nd quarteryenYear ended December 20, 2009
Year ended December 20, 2010
Year ended December 20, 2010
(forecast)
Note: changes to dividends forecast for the current quarter: none

Annual

3. Financial Results Forecast for the Year Ending December 20, 2010 (December 21, 2009 – December 20, 2010)(In the case of “Full year”, “%” indicates the increase or decrease in comparison with the “Full year” in the previous fiscal year; in the case of “2ndquarter consolidated accumulative period”, “%” indicates the increase or decrease against the same quarter in the previous fiscal year.)

Sales

Operating income

million yen%
million yen%
million yen
2nd quarter consolidated
9,695
3.3
1,731
2.3
1,615
accumulative period
Full year
19,8603.5
3,620 10.4
3,370
Note: changes to figures contained in consolidated results forecasts for the current quarter: none

-1 -

%

million yen%

Net income
per share
million yen

-0.8

900

-1.4

71.81

8.6

1,910

7.0

152.40Ordinary income

Net income-

4. Others(1) Transfer of significant subsidiaries during the period (Transfer of specific subsidiaries involving changes in the scope of
consolidation); None
(2) Application of simplified accounting methods and accounting methods specific to the preparation of quarterly consolidated
financial statements; Yes(Note) For details see P.5 “Qualitative information and financial statements: 4. Others”(3) Changes in the accounting policies, procedures, and methods of presentation related to the preparation of quarterly
consolidated financial statements (changes to be described in the “Summary of Significant Accounting Policies for the
Preparation of Quarterly Consolidated Financial Statements”)
1) Changes due to amendment to the accounting standards, etc.; None
2) Changes other than those in 1) above;None(4) Number of shares outstanding (common shares)
1) Number of shares outstanding at term-end (including treasury stock)
First quarter ended March 20, 2010, 12,544,408 shares; Year ended December 20, 2009, 12,544,408 shares
2) Number of treasury shares at term-end
First quarter ended March 20, 2010, 11,585 shares; Year ended December 20, 2009, 11,617 shares
3) Average number of shares through accounting period (quarterly consolidated accumulative period)First quarter ended March 20, 2010, 12,532,794 shares; First quarter ended March 20, 2009, 12,532,990 shares* Proper use of earnings forecast and other matters(Caution in regard to descriptions concerning the future, etc.)
Statements about the future such as the earnings forecast shown here are based on information currently held by the Company
and on assumptions that the Company considers reasonable. Actual earnings may differ materially from the earnings forecast
due to various factors. For matters concerning earnings forecasts and the use of assumptions on which earnings forecasts are
premised, refer to the sub-section on p.5 (in Section 3 on qualitative information in the consolidated earnings forecast)concerning qualitative information and financial statements.

-2 -[Qualitative information and financial statements]
1. Qualitative information on consolidated operating results
Although there were signs of a partial recovery in the Japanese economy during the current 1st quarter
consolidated fiscal period under review against a backdrop of good exports to newly-developing countries and theeffects of the government’s economic stimulation measures, etc., the country continued to experience difficult
conditions, with personal consumption faltering because of uncertainty over the future in an environment ofongoing circumspection in regard to corporate employment and facility investment.
In terms of the beauty salon industry during the quarter under review, the number of customer visits decreased
due to the extension of the cycle of customer visits and the slower growth of average customer spending. This wasdue to consumers wanting to maintain their current standards of living and lessen expenses while the difficult
employment and income situation continues, and is estimated to have caused the continuation of the difficult
environment.
In this challenging market environment, the company group has worked on the promotion of its policies, making
its basic policy to support the “cultivation of professional designers with the ability to make compound proposals tocustomers” for the creation of hair design that will realize the “feminine images that women want to create”.
However, the group did not achieve sufficient results during the quarter under review and although sales weregreater than those for the same period of the previous year, they finished lower than initially planned.
At Milbon USA, Inc., a wholly owned subsidiary, sales finished lower than for the same period last year inassociation with the impact of the increasing severity of the straight perm market even though sales of the leading
high-priced straight brand product LISCIO, and the expansion of the number of salons already handling LISCIO
that will now also sell NIGELLE RX, a treatment that does not rinse away, and the salon treatment INPHENOM
progressed well.
Sales at Milbon Trading (Shanghai) Co., Ltd., a wholly owned subsidiary, finished higher than initially planned
due to good expansion in the number of salons selling hair coloring agents to customers acquired mainly for haircare products and because the creation of successful salons, which the company has worked on in Shanghai Cityand 3 provinces (Guangdong, Jiangsu and Zhejiang), has progressed steadily.
Milbon Korea Co., Ltd., a wholly owned subsidiary established in July 2009, started doing business from
December 2009.
Despite what has been a difficult environment, consolidated sales during the current 1st quarter consolidated fiscal
period under review increased 102 million yen to 4,359 million yen (an increase of 2.4% in comparison to the same
period last year).
Operating income finished at 710 million yen (an increase of 5.7% in comparison to the same period last year),ordinary income at 648 million yen (an increase of 1.2% in comparison to the same period last year) and quarterly
net income at 350 million yen (a decrease of 4.5% in comparison to the same period last year).
Breakdown of sales by product category is shown as follows:[Breakdown of consolidated sales by product category]
Product Category

1st Quarter, Previous Term
Sales amount(million yen)

Permanent wave products

Current 1st Quarter
Sales amount(million yen)

Ratio (%)

Increase/(decrease)
Sales amount(million yen)

Ratio (%)

446

10.5

416

9.6

-29

Hair care products

2,164

50.8

2,251

51.6

87

Hair coloring products

1,583

37.2

1,635

37.5

51

Others
Total

63

1.5

55

1.3

-7

4,257

100.0

4,359

100.0

102

(Permanent wave products)
A tendency to edge lower was apparent in the permanent wave products sector, but it is estimated that sales in theindustry overall have decreased due to the declining frequency of use of permanent products under the impact of
economic sluggishness.
In such circumstances, the Milbon Group made efforts towards promotional activities communicating the appealof permanent styles centered on PREJUME CMC WAVE, which the company launched in September last year, but
it was not possible to make up for declining sales of existing products and sales finished lower than for the same
period of the previous year in the permanent wave product sector overall.

-3 -(Hair care products)
In an environment where competition among hair care products for the public market and the pro-use market of
specialist products for beauty salons is becoming markedly more severe, the industry overall is estimated to havegrown slightly on account of efforts such as hair care centered on treatments that repair hair damage.
In such circumstances, the Milbon Group saw sales in the hair care product sector overall exceed those for thesame period of the previous year, but sales did not reach the level initially planned. This was partly because
although sales of DEESSE’S APROU, a treatment that does not rinse away and that was launched in March for thecreation of hair designs that will realize the “feminine images that women want to create”, progressed, the policy
promotion activities using QUFRA that was launched in February, which is centered on styling products, did notachieve sufficient results.
(Hair coloring products)
Due to the decline in the number of customers owing to the extension of the cycle of salon visits arising fromconsumers wanting to maintain their current standards of living and lessen expenses, as well as the increasing
severity of competition with general market products such as foam coloring agents that can be used casually athome, the industry overall is estimated to be on a downward trend.
In such circumstances, the Milbon Group saw sales in the hair coloring sector overall exceed those for the same
period of the previous year, including the steady market growth of FARGLAN, an acidic hair dye that is gentle on
the hair, released in April last year, but this did not lead to the invigoration of the market as a whole and sales did
not reach the level of the initial plan.
(Others)
There are no particular items to present.
2. Qualitative information on consolidated financial conditions(1) Assets, liabilities and net assets
Total assets at the end of the 1st quarter consolidated fiscal period increased by 57 million yen to 20,411 million
yen compared to the end of the previous consolidated fiscal year.
Current assets increased 120 million yen to 7,108 million yen compared to the end of the previous consolidated
fiscal year. Major variable factors included a decrease of 230 million yen in trade notes and accounts receivable,
but cash and deposits increased 218 million yen and goods and products increased 112 million yen.
Fixed assets decreased by 62 million yen to 13,303 million yen compared to the end of the previous consolidated
fiscal year. Major variable factors were a decrease of 107 million yen in tangible fixed assets in association withthe posting of depreciation expenses, etc., and an increase of 42 million yen in investment securities.
Current liabilities increased 14 million yen to 3,260 million yen compared to the end of the previous consolidated
fiscal year. Major variable factors were an increase of 476 million yen in notes and accounts payable, and adecrease of 475 million yen in accrued liabilities.
There was no great variation in mixed liabilities compared to the end of the previous consolidated fiscal year.
Net assets increased 43 million yen to 16,697 million yen compared to the end of the previous consolidated fiscal
year. Major variable factors were an increase of 25 million yen in net unrealized gains on other securities and anincrease of 18 million yen in foreign currency conversion adjustment.
As a result, the company’s equity ratio remains unchanged from the end of the previous consolidated fiscal yearat 81.8%. Net assets per share based on total outstanding shares as of the end of the accounting period increased
to 1,332.26 yen per share from 1,328.80 yen per share at the end of the previous consolidated fiscal year.
(2) Cash flows
Cash and cash equivalents (hereinafter referred to as “funds”) at the end of the 1st quarter consolidated fiscal
period increased 217 million yen compared to funds at the end of the previous consolidated fiscal year as a result of
the use of funds acquired through operating activities in the payment of corporate taxes, etc., and the payment ofdividends. The balance of funds at the end of the 1st quarter consolidated fiscal period was 1,883 million yen.
(Cash Flows from Operating Activities)
Funds from operating activities were 667 million yen. This was mainly the result of 652 million yen
recorded in net income before taxes and other adjustments, an increase in accounts payable of 434 million yen
and payment of corporate and other taxes of 544 million yen.

-4 -(Cash Flows from Investing Activities)
Funds used for investing activities were 138 million yen. The funds were mainly used for the acquisition of
tangible fixed assets worth 62 million yen and intangible fixed assets worth 73 million yen.
(Cash Flows from Financing Activities)
Funds used as a result of financing activities were 319 million yen.
payments of 319 million yen.

This was mainly the result of dividend

3. Qualitative information on consolidated earnings forecast
There have been no changes in the business forecast for the full term since the previous forecast (announced on
January 20, 2010).
4. Others(1) Transfer of significant subsidiaries during the period (Transfer of specific subsidiaries involving changes in the scopeof consolidation); None
(2)

Application of simplified accounting methods and accounting methods specific to the preparation of quarterly
consolidated financial statements
1) Simplified accounting methods(Valuation methods for inventories)
The calculation of inventories at the end of the 1st quarter consolidated fiscal period is calculated by omitting
a physical inspection and using a rational method of calculation based upon the physical inspection amount for
the end of the previous consolidated fiscal year.
(Calculation methods for depreciation expenses for fixed assets)
Fixed assets using a fixed percentage depreciation method are calculated by dividing the amount ofdepreciation expenses for the consolidated fiscal year proportionally between the respective accounting periods.
2) Accounting methods specific to the preparation of quarterly financial statements
None

(3)

Changes in the accounting policies, procedures and methods of presentation related to the preparation of quarterly
consolidated financial statements
None

-5 -

5. Quarterly Financial Statements(1) First Quarter Balance Sheetst

End of 1 quarter consolidated fiscal
period under review(as of March 20, 2010)(Unit: thousand yen)
Condensed consolidated balance sheet
for previous consolidated fiscal year
(as of December 20, 2009)

AssetsCurrent assets
Cash and bank deposits
Trade notes and accounts receivable
Goods and products
Work in progress
Raw materials and inventory goods
OthersLoan loss reserves
Total current assets

1,884,584
2,573,899
1,759,255
15,441
572,669
310,745-8,227
7,108,368

1,666,170
2,804,683
1,646,427
17,417499,852
362,286-9,017
6,987,821

3,552,268

3,627,958

1,228,717

1,306,380

4,763,766
712,219
276,121
10,533,094
340,806

4,763,766
709,139
233,024
10,640,269
318,593

1,350,550
1,116,660-37,755
2,429,456
13,303,356
20,411,724

1,307,670
1,164,694-65,160
2,407,204
13,366,068
20,353,890

Fixed assets
Tangible fixed assets
Buildings and other structures(netamount)Machinery, equipment and vehicles fortransportation (net amount)
Land
Construction in progress
Others (net amount)
Total tangible fixed assets
Intangible fixed assets
Investments and other assets
Investment in securities
OthersLoan loss reserves
Total investments and other assets
Total fixed assets
Total assets-6 -End of 1st quarter consolidated fiscal
period under review(as of March 20, 2010)(Unit: thousand yen)
Condensed consolidated balance sheet
for previous consolidated fiscal year
(as of December 20, 2009)

Liabilities
Current Liabilities
Notes and accounts payable
Accrued expenses payable
Corporate taxes payable
Reserve for returned goods
Reserve for bonuses
OthersTotal current liabilities

1,429,393
895,141
269,556
11,285245,314410,032
3,260,724

953,356
1,370,388
571,930
31,72062,685
256,617
3,246,698

39,000414,972
453,972
3,714,696

39,000414,633
453,633
3,700,331

2,000,000
199,120
14,637,152-38,406
16,797,865

2,000,000
199,120
14,637,996-38,572
16,798,543-46,015-54,822-100,837
16,697,028
20,411,724-71,571-73,412-144,984
16,653,559
20,353,890

Fixed Liabilities
Reserve for loss on guarantees
OthersTotal fixed liabilities
Total liabilities
Net Assets
Shareholders’ equity
Capital stock
Capital surplus
Retained earnings
Treasury stock
Total shareholders’ equity
Valuation and translation adjustments
Net unrealized gains on other securities
Foreign currency translation adjustments
Total valuation and translation adjustments
Total net assets
Total liabilities and net assets-7 -(2) First Quarter Consolidated Statement of Earnings[1st quarter consolidated fiscal period]
Previous 1 quarter consolidated
fiscal period(December 21, 2008 March 20, 2009)
4,257,295
1,442,954(Unit: thousand yen)
1 quarter consolidated fiscal
period under review(December 21, 2009 –March 20, 2010)
4,359,837
1,450,340

2,814,340
2,142,329
672,0102,909,497
2,199,038
710,458

689
192
7,718
25,204
10,39344,198

358
192
9,511
4,753
14,815362
74,994
3
75,360640,848

76,532
1
76,534
648,739

15,00015,000

4,024
4,024

746
746
655,101
338,61279
179
259
652,503
260,089-50,053

42,239288,558
366,543

302,328
350,175

st

Sales
Cost of Products/Merchandise Sold
Total sales revenues
Marketing and Administrative Expenses
Operating incomestNon-operating Income
Interest income
Dividends income
Rent from company housing
Profit on surrender of insurance
OthersTotal non-operating income
Non-operating Expenses
Interest expense
Sales discount
OthersTotal non-operating expenses
Ordinary income
Extraordinary Profit
Release of loan loss reserves
Total extraordinary profits
Extraordinary Loss
Loss on disposal of fixed assets
Loss on retirement of fixed assets
Total extraordinary losses
Net income before taxes and other adjustments
Corporate, inhabitant and enterprise taxes
Adjustment for difference of tax allocation between
financial accounting and tax accounting
Total corporate and other taxes
Quarterly net income-8 -(3) Quarterly Consolidated Statement of Cash Flows(Unit: thousand yen)
1st quarter consolidated fiscal
period under review(December 21, 2009 –March 20, 2010)

Previous 1st quarter consolidated
fiscal period(December 21, 2008 March 20, 2009)
Cash flows from operating activities
Quarterly net income before tax and income
adjustment
Depreciation and amortization expense
Increase (decrease) in loan loss reserves
Increase (decrease) in the provision for bonuses
Increase (decrease) in provision for returned productadjustment
Change in allowance for retirement benefits for
employees
Decrease (increase) in the prepaid pension cost
Interest and dividends received
Interest paid
Foreign exchange loss (gain)
Profit or loss on disposal of fixed assets
Loss from the sale/disposition of fixed assets
Decrease (increase) in accounts receivable – trade
Decrease (increase) in inventories
Increase (decrease) in accounts payable related to
procurement transactions
OthersSubtotalInterest and dividends received
Interest paid
Payment of retirement benefits for directors
Payment of corporate and other taxes
Cash flows from operating activities
Cash flows from investing activities
Payment due to the purchase of investment securities
Sale of investment securities
Payment due to the acquisition of tangible fixed
assetsIncome due to disposal of tangible fixed assets
Payment due to the acquisition of intangible fixed
assetsPayment due to loans
Collection of the loan payment
Expenditure due to deposit of fixed term deposits
Payment due to the placement of guarantee money
Collection of guarantee money
Payment into insurance reserve fundCancellation/withdrawal from insurance reserve fund
OthersCash flows from investing activities
Cash flows from financing activities
Payment due to the repayment of long-termborrowing
Net decrease (increase) in treasury stocks
Payment of dividends
Cash flows from financing activities
Effect of exchange rate fluctuations on cash and cash
equivalents
Increase (decrease) in cash and cash equivalents
Outstanding balance of cash and cash equivalents at the
beginning of current term
Outstanding balance of cash and cash equivalents at
end of current quarter-9 -655,101

652,503

255,301-15,000
171,412

225,781-28,762
182,611682-20,434-

303

14,549-881
362
23,480746
467,006-484,217

11,095
-550
68
79
179
231,088-179,295

516,530

434,541-151,960
1,453,113982-362-696,013
757,720-103,896
1,405,313
648-194,441-544,161
667,358-499,966
400,000--344,333-62,480-

253-37,189-73,555-13,000
20,104-33,107698-2,72462,861-972-447,629

-350
5,088
-829
-5,9352,642-1,903-1,533-138,601-8,988--492-332,359-341,840

65-319,878-319,813-35,1118,599-66,860

217,543

1,010,784

1,666,170

943,923

1,883,713

(4) Notes concerning the assumption of the business as a going concern
None(5) Notes in cases of extreme variation in the amount of shareholders’ equity
None-10 -