Annual Report 2011 [PDF:6.13MB]

Transcription

Profile
Shiseido commenced operations as Japan’s first Westernstyle pharmacy in Tokyo’s Ginza district in 1872, a time when
Chinese herbal remedies were the mainstream in Japan. The
name Shiseido derives from a Chinese expression meaning
“praise the virtues of the great Earth, which nurtures new life
and brings forth new values.” In line with this expression,
Shiseido remains committed to its founding spirit of serving
customers and contributing to society by bringing together
all things on Earth to create new value.
Contents
Our Mission, Values and Way·············································· 4
Shiseido’s Management Structure······································ 46
Shiseido’s Histor y of Creating Value·································· 6
Board of Directors, Corporate Auditors and
Corporate Officers··················································· 47
Financial Highlights····························································· 8
Corporate Governance················································ 50
Risk Management························································ 55
Message from the President & CEO·································· 10
Feature: T
he Growth Strategies of
the New Three-Year Plan··································· 16
Brand/Line Over view·························································· 24
Review of Operations
Domestic Cosmetics Business···································· 26
Global Business··························································· 29
Initiatives Based on Our Way·············································· 32
Main Subsidiaries and Affiliates································· 58
Financial Section·································································· 59
Six-Year Summar y of
Selected Financial Data·········································· 60
Management’s Discussion and Analysis···················· 61
Consolidated Financial Statements···························· 76
Notes to the Consolidated
Financial Statements··············································· 82
Independent Auditors’ Report···································· 103
Toward Consumers····················································· 33
Investor Information···························································· 104
Toward Business Partners·········································· 37
Corporate Information························································· 105
Toward Employees······················································ 38
Toward Society and the Earth···································· 40
Forward-Looking Statements
Environmental Data···················································· 44
In this annual report, statements other than historical facts are forward-looking statements that
reflect the Company’s plans and expectations. These forward-looking statements involve risks,
uncertainties and other factors that may cause actual results and achievements to differ from
those anticipated in these statements.
Social Data··································································· 45
Our Mission, Values and Way
1. We consistently strive to research, develop, manufacture and sell safe and excellent products and services that deliver
true satisfaction from the standpoint of consumers.
2. We sincerely strive to enhance satisfaction and trust at all points of contact with consumers.
3. We continually strive to increase the value of all of the Shiseido Group’s brands. 1. We select business partners properly, and engage in fair, transparent and free competition and appropriate business
transactions.
2. We do not provide or accept gifts or entertainment that may cause suspicion regarding our fairness.
3. We respect all of our business partners who share our aims, and work together with them toward sustained growth.
1. We strive to continuously enhance the Shiseido Group’s corporate value by making full use of its tangible, intangible,
financial and other assets.
2. We comply with rules concerning corporate governance and internal controls, and follow proper accounting procedures.
3. We place importance on dialogues with shareholders and investors, and strive to earn their trust.
1. We respect the character and individuality of everyone in the work place, in all their diversity, and strive to develop and
grow together.
2. We work conscientiously and maintain a clear distinction between professional and private matters.
3. We strive to create a safe, healthy work environment and enhance employees’ comfort and sense of fulfillment.
1. We abide by the laws of each country and region in which we operate, and maintain sound ethical behavior as well as
respect human rights.
2. We promote environmental initiatives in line with our own stringent standards, and consider biodiversity as we aim for a
sustainable society in which humanity and the Earth coexist beautifully.
3. We engage in a broad dialogue with society and strive to cooperate in solving social challenges.
4
SHISEIDO ANNUAL REPOR T 2011
Our Mission sets out a universal raison d’être that is core to Shiseido, and our
corporate message – This moment. This life. Beautifully. – symbolizes our mission. We
created it to communicate throughout society our aim of being even more customer-oriented
in order to respond sincerely to the desire among people worldwide to be beautiful.
Over its history, Shiseido has done much to help people live beautifully. As we move
into the future, we will satisfy customers even more by providing appealing products and
attentive services while fulfilling our responsibilities to society. We want to assist society,
customers and all people in experiencing This moment. This life. Beautifully.
5
Shiseido’s History of Creating Value
Building New
Business Models
139 Years of Evolution
After opening Japan’s first Western-style pharmacy in
Japan’s first network of voluntar y chain stores.
1872, Shiseido entered the cosmetics business by launch-
Individualized beauty consultation at sales counters that
ing the lotion Eudermine. Since then, we have constantly
started with the introduction of Miss Shiseido. These are
evolved through unique initiatives such as research and
but a few examples of forward-looking new business models
development akin to that of the pharmaceutical industr y
that Shiseido has built to exceed customer expectations.
and serving customers with a spirit of omotenashi (hospi-
Our will and passion in taking on challenge after challenge
tality) to give people health and beauty.
generates growth for Shiseido.
1937
1923
Launched member organization Hanatsubaki
Club with the goal of
popularizing proper cosmetics techniques
Initiated Shiseido chain stores,
Japan’s first voluntary chain
store system
1934
Introduced Miss Shiseido, the predecessor to
modern beauty consultants
1957
Established Taiwan Shiseido Co., Ltd. and
began full-scale overseas operations
1872
1918
1897
Launched Cold Cream, Japan’s
first true beauty cream
Entered the cosmetics business by
launching Eudermine lotion
6
1932
1959
1976
Launched Deluxe, the highestgrade cosmetics of their day
Launched MG5, the first true
cosmetics for men in Japan
Launched Inoui, a brand created
for global development
Nurturing Diversity on
a Global Level
Continuously Innovating
to Create Sublime Beauty
Shiseido has successively developed operations in
We complement brand assets that we originate and
countries and regions worldwide since establishing a
refine, including clé de peau Beauté and the global brand
subsidiar y in Taiwan in 1957. By flexibly responding to
, by adding energetic brands such as NARS
customer and market changes, we have made steady
and Bare Escentuals. Our tradition of continuously innovat-
progress in globalization. One of our greatest strengths is
ing to create unique value is the source of the sublime
the diversity engendered by our global progress. An orga-
beauty we create.
nization that recognizes individuality and embraces differences in values is the foundation for creating new value.
2006
Expanded R&D operations to five regions
around the world with the establishment of
Shiseido Southeast Asia Research Center
1981
2010
2006
Constructed a new factory in Vietnam as a
base for the masstige market
Opened the first Shiseido Life
Quality Beauty Center
Began sales of cosmetics in Beijing, China
2011
1996
2005
Launched top-end prestige
brand clé de peau BEAUTÉ
Launched MAQUILLAGE,
the first mega line
1994
2000
Launched China-only
brand AUPRES
Acquired the U.S. makeup
brand NARS
2010
Acquired U.S. company Bare
Escentuals, Inc.
7
Financial Highlights
Shiseido Company, Limited, and Subsidiaries
For the years ended March 31, 2009, 2010 and 2011
Percent change
Thousands of U.S.
dollars (Note 1)
Millions of yen
2011/2010
2009
2010
2011
2011
Operating Results:
Net sales
Operating income
Net income
+4.1%
−11.7 −62.0 ¥690,256
¥644,201
¥670,701
$8,066,158
49,914
50,351
44,458
534,672
19,373
33,671
12,791
153,830
Financial Position:
Total assets
Net assets
−4.5%
−12.1 ¥606,569
¥775,446
¥740,184
$8,901,792
351,951
365,208
321,191
3,862,790
Please refer to page 60 for an in-depth six-year summary of selected financial data.
Operating Income /
Operating Profitability
Net Sales
(Billions of yen / %)
(Billions of yen)
694.6
Net Income
723.5
690.3
644.2
(Billions of yen)
63.5
670.7
35.5
50.0
50.4
49.9
8.8
7.2
44.5
6.6
7.8
7.2
33.7
25.3
19.4
12.8
07
08
09
11
10
(Years ended March)
07
08
09
10
11
(Years ended March)
Operating income
Operating profitability
Return on Equity
(Yen)
9.8
9.2
09
10
(Years ended March)
11
(Yen)
86.1
84.6
60.9
6.6
08
Cash Dividends per Share
Net Income per Share
(%)
07
32.0
50.0
50.0
50.0
09
10
11
34.0
48.0
5.4
32.1
3.9
07
08
09
11
10
(Years ended March)
07
Net Sales by
Reportable Segment
09
10
(Years ended March)
11
07
Profitability by
Reportable Segment
(Billions of yen)
8
08
17.0
10.0
9.7
(Years ended March)
Overseas Sales /
Overseas Sales Ratio
(%)
SHISEIDO
REPOR T 2011
20.8
22.7 ANNUAL
08
10.5
10.1
8.1
10.1
42.9
11.4
32.4
9.3
36.5
38.0
264.3
262.0
36.9
287.8
237.5
50.0
50.4
49.9
8.8
7.2
44.5
6.6
7.8
7.2
25.3
19.4
12.8
07
08
09
11
10
(Years ended March)
07
2011/2010 (Yen)
Per Share Data:
9.8
Net income
9.2 (Note 2)
Net assets (Note 2)
Cash dividend
09
Yen
−62.0%
−11.5
±0.0
2009
10
2010
86.1
¥ 48.0
60.9
84.6
50.0
48.0
32.1
7.2%
5.4
11
07
104.1 08
09
08
U.S. dollars (Note 1)
2011
(Yen)
2011
50.0
¥ 32.1
50.0
$0.39
50.0
774.8
9.32
50.0
0.60
34.0
32.0
6.6%
9.8
3.9
59.1
11
10
Cash Dividends per Share
7.8%
11
10
09
(Years ended March)
875.7
50.0
3.9
07
¥ 84.6
839.9
5.4
Financial Ratios:
Return on equity
Payout ratio (Consolidated)
08
11
10
Net Income per Share
(%) 07
09
(Years ended March)
Operating income
Percent change
Return on Equity
6.6
08
155.5
07
08
09
11
10
(Years
ended herein
March)refer to U.S. currency. Yen amounts have been translated,
(Years ended
March)
(Years
ended
March) on March 31, 2011.
Notes: 1.All dollar
amounts
solely
for the convenience of the reader, at the rate of ¥83.15
to US$1
prevailing
2.Net income per share (basic) is calculated based on the weighted average number of shares outstanding during each respective year. Net assets per share is calculated before dilution.
Net Sales by
Reportable Segment
Profitability by
Reportable Segment
(Billions of yen)
(%)
20.8
22.7
17.0
278.8
240.9
275.7
10.0
9.7
250.4
302.6
8.5
6.3
423.9
430.9
08
09
358.4
383.8
397.5
10
(Years ended March)
Domestic Cosmetics Business
Global Business
Others
4.5
11
07
4.8
08
3.8
5.1
09
11
10
08
82.4
45.7
430.0
09
117.1
84.3
85.5
108.0
100.0
50.7
460.7
471.2
15.3
383.8
408.1
10
(Years ended March)
Americas
Asia/Oceania
11
262.0
287.8
237.5
122.0
112.1
118.6
79.3
92.8
88.5
73.8
54.0
59.4
54.9
48.5
07
08
09
115.2
78.2
87.6
11
10
(Years ended March)
Americas
Europe
Asia/Oceania
Interest-bearing Debt /
Interest-bearing Debt Ratio
8.3
6.8
5.5
4.7
07
Japan
Europe
6.5
127.8
7.8
5.6
6.1
4.0
08
214.4
14.3
13.9
13.4
109.6
103.8
56.6
264.3
36.9
15.5
83.3
88.4
51.7
38.0
224.8
3.0
(%)
102.4
36.5
91.5
Operating Profitability by
Geographic Area
(Billions of yen)
Japan
Europe
9.3
5.5
(Years ended March)
Others
Global Business
Net Sales by
Geographic Area
07
32.4
10.1
8.1
42.9
11.4
10.5
10.1
4.7
07
Overseas Sales /
09
7.2
6.5
6.0
5.6
62.1
63.2
4.1
(Years ended March)
Americas
Asia/Oceania
11
38.1
37.0
24.0
15.0
13.7
10
197.5
1.6
07
08
09
10
(Years ended March)
Interest-bearing debt
Interest-bearing debt ratio
11
Notes: 1. Net sales by reportable segment and geographic area represent sales to external customers only and do not include intersegment/interarea sales or transfers.
2. Profitability by reportable segment and operating profitability by geographic area do not include eliminations/corporate.
Equity
3.Effective the fiscal year ended March 2011, the Company has reclassified its operations into three segments for reporting purposes,
in lineRatio/Debt-Equity
with its application of AccountingRatio
Standards
Related to Disclosure of Segment Information. The new segments are: Domestic Cosmetics Business, Global Business, and Others.
(%)The domestic professional business, previously included
within the Domestic Cosmetics segment, is now included in the Global Business segment.
4. Interest-bearing debt ratio = Interest-bearing debt ÷ Invested capital* * Invested capital = Interest-bearing debt + Total net assets
9
Message from the President & CEO
Profile
1959: B orn in Tokyo
(currently 52 years old)
1982: J oined Shiseido Co., Ltd. After six
years of experience as a sales
manager in Nara, Japan, began
handling strategy formulation and
other projects at the head office.
2005: D
esigned and formulated the ThreeYear Plan in the Corporate Planning
Department. Worked with President
and CEO Maeda (now Chairman) in
promoting reform. Subsequently
became General Manager of the
Business Planning Department.
2008: C orporate Officer and General
Manager of Corporate Planning
Department
2009: Corporate Officer (Director)
2010: C orporate Executive Officer
(Director)
2011: P resident & CEO
(Representative Director),
effective April 1
Hisayuki Suekawa
President & CEO
(Representative Director)
10
Shiseido aims to become a global player representing
Asia with its origins in Japan.
Under the theme of getting into a growth trajector y, the
new Three-Year Plan will guide Shiseido in achieving a turnaround in Japan and accelerating globalization to evolve into
and remain an outstanding company in the future.
The previous Three-Year Plan achieved strong growth overseas,
but unfinished issues remain in the Japanese market.
I am Hisayuki Suekawa. I became President & CEO of Shiseido in April 2011. I
received the baton of reform from my predecessor, Shinzo Maeda, and will carry it forward as the head of the Company. I intend to lead the advance of Shiseido’s innovation.
I would like to begin my explanation of Shiseido’s management policies and strategies
by providing an overview of the various reforms we implemented in Japan and overseas
during the previous Three-Year Plan, which had the theme of improving the quality of
activities across the board.
The year ended March 2011 was the final year of the previous Three-Year Plan.
Overseas sales increased solidly, with strong growth in China and the rest of Asia
complemented by the sales of Bare Escentuals, Inc., which we acquired in the year ended
March 2010. In the domestic market, some sectors such as the self-selection category
showed signs of recovery. However, the mid-priced market, a crucial market segment for
Shiseido, was challenging and remains an area we must work on. Operating income
decreased partly because of lower sales in Japan and nonrecurring costs associated with
the acquisition of Bare Escentuals.
Our progress overseas during the past three years was impressive. In addition to
strengthening cultivation of the global brand
, we worked aggressively to
enhance competitiveness through initiatives such as accelerating growth in China by
concentrating on channel-specific marketing. As a result, we achieved solid sales growth
at a compound annual growth rate of 13 percent on a local currency basis. We generated
substantial sales growth in all the regions we serve, with compound annual growth rates
of 26 percent in the Americas, 11 percent in Asia/Oceania, and 5 percent in Europe. For
the year ended March 2011, the overseas sales ratio increased to 42.9 percent, leading
me to conclude that we have cultivated strong businesses with a solid foundation.
In Japan, however, sales continued to decrease. We focused on key areas in each
channel and concentrated resources. As a result, our ef for ts were successful at
department stores and priority voluntary chain stores, but we experienced difficulties
selling mid-priced products at drugstores and general merchandise stores. Two factors
11
have weakened domestic sales: marketing reliant on new products and insuf ficient
response to evolving customers and markets.
During the previous Three-Year Plan, we implemented all reforms as planned. Some
of them succeeded, but we also recognize that our reforms are only halfway complete.
My mission is to drive Shiseido’s evolution by taking charge of and accelerating the
reforms we have been implementing.
We must quickly achieve a domestic business turnaround
a nd accelerate globalization to get Shiseido into a growth
t rajectory.
In 2008, Shiseido declared its goal for the coming decade of becoming a global player
representing Asia with its origins in Japan, and drew up a 10-year roadmap for achieving
it. Our goal for the year ending March 2018 is to become a company with consolidated
net sales in excess of ¥1 trillion and an overseas sales ratio of more than 50 percent that
can consistently achieve operating profitability of 12 percent or higher and return on
equity (ROE) of 15 percent or higher. The new Three-Year Plan is Phase II of this
roadmap, and has the theme of getting Shiseido into a growth trajectory.
Taking a fresh look at Shiseido at the start of the new Three-Year Plan, we have
entered a new phase of globalization in which overseas sales account for about 40 percent
of net sales, and similarly, approximately 40 percent of our employees are not Japanese.
During this period of major management transformation, guidelines that help all
employees of the Shiseido Group share the same raison d’être, values, and spirit in
initiatives are essential. We therefore revised our existing Corporate Philosophy to create
Shiseido
Ten-Year Roadmap
New Three-Year Plan
Globalization
Phase Ⅲ
Make a leap forward
Globalization
Shiseido
Paradigm shift through
fundamental reforms
Globalization
PhaseⅠ
Improve quality of
activities across the board
Phase Ⅱ
Get into a
growth trajectory
2005
2008
2011
Accelerated transformation into a global company
(Integration of domestic and overseas business operations)
Customer-oriented marketing reforms
12
Become a global player
Establish a presence in Asia
2014
2017
（Year ending March 2018）
a new and evolutionar y Corporate Philosophy for the Shiseido Group: Our Mission,
Values and Way. In creating it, we drew on the opinions of Group employees worldwide,
involving more than 5,000 people. I believe that we will achieve sustained growth with all
employees sharing this Corporate Philosophy and putting it into practice every day, and I
will take the lead in activities to inculcate it.
My top two priorities in getting Shiseido into a growth trajectory will be revitalizing our
business in Japan and accelerating globalization. We will take radical steps to quickly turn
around and energize operations in the challenging domestic cosmetics market. We will also
generate growth by keeping pace with our global competitors as we further expand our
global business. This is the only way for us to evolve. With this rationale as a starting point,
for the new Three-Year Plan, we will carry on the three Visions we introduced in 2005:
“Rebirth as a 100% Customer-Oriented Company”; “Brighten Our Brand, a Valuable
Management Resource”; and “Fill the Shiseido Organization with People with Their Own
Appeal.” We have also formulated four growth strategies and will support the Visions and
these strategies with measures that reinforce the management base.
We will continue to take on greater challenges by executing
our four growth strategies.
Four growth strategies underpin the new Three-Year Plan. The first is the Global MegaBrand Strategy, in which we will consider markets beyond regional boundaries and focus
deployment of resources from the perspectives of distinction and concentration. Our aim is
to become a Global Multiple-Brand Company that has several brands with ¥50 billion to ¥100
billion in annual sales each. We plan to select three brands each from the prestige and
masstige* categories, and will focus on developing them as global mega-brands.
Next is the Asian Breakthrough Strategy. We aim to expand our overall share in the
Asian market, which is expected to become the world’s largest by 2020, by designating
Asia as our priority area. Our first step will be revamping marketing and sales strategies
in the crucial Japanese market to achieve growth that exceeds that of the overall market.
We will also emphasize initiatives in China, where we are strong, and in other Asian
countries in order to reinforce our management base.
Third is the New Frontier Strategy. Shiseido will increase points of contact with
customers in new sales channels through full-scale Web-based marketing. In Japan, we
are establishing a new business format that links the Internet and existing stores, and
will begin full-scale development from April 2012. At the same time, we will work to
develop emerging markets as future engines of growth.
Fourth is the Customer-First Strategy. The aim of this strategy is to become No. 1 in
terms of customer support worldwide through dramatic reforms that put customers first
in all of our business processes. This will involve thoroughly refining product
d evelopment and sales activities.
(Please refer to The Growth Strategies of the New Three-Year Plan on pages 16 to 23
for more detail on Shiseido’s growth strategies.)
*Masstige: A word coined from “mass” and “prestige.” Masstige products are positioned as more expensive than massproduced products, but more moderately priced than prestige products.
13
We will reinforce our management base so that we match our
global competitors.
Shiseido will support its four growth strategies by reinforcing its management base
with multifaceted initiatives that focus on global optimization. In production and
procurement, efforts to optimize and strengthen our supply chain will include further
enhancing the efficiency of production and distribution in Asia. In addition, we will work
to standardize operations and accelerate decision-making by introducing our SAP core
business processing system to establish the basis for global information processing. We
are also fostering the globalization of human resources in ways such as helping local
employees overseas shape their careers and cultivating global executives. Moreover, we
plan to deepen our global commitment to the corporate social responsibility (CSR)
activities we have been strengthening over the past several years in areas such as the
environment and social contribution.
Shiseido fulfills its corporate responsibilities by promoting
management that contributes to people’s beauty and health.
I would like to expand on my earlier comments about CSR activities to explain how
Shiseido will approach management.
The “Our Way” section of Our Mission, Values and Way, which I mentioned earlier,
defines the way we should behave toward our stakeholders. In addition, Our Way
includes the Ten Principles of the United Nations Global Compact, which we have
participated in since 2004, as well as the principles and reasoning of the world’s first CSR
standards, ISO26000. In other words, Our Way is Shiseido’s CSR charter.
Through dialogue and cooperation with stakeholders, Shiseido aims to achieve a
sustainable society by undertaking activities that address the issues and expectations of
society. Specifically, we will realize our vision for 2020 by working companywide in the
three areas in which we can make an important contribution to society: women and
cosmetics (beauty); culture; and the environment.
Shiseido also believes that assisting in the recover y from the Great East Japan
Earthquake of March 2011 is an important responsibility. In April 2011, I visited stores in
the stricken areas of Morioka, Sendai, and Fukushima. Many people affected by the
earthquake made comments such as “I would at least like a mirror and an eyebrow
pencil” and “I feel lost without lotion,” which highlighted just how essential cosmetics are
in the daily lives of women. We would like to support the recover y through unique
activities that deliver the enjoyment and pleasure of cosmetics, including the stable
supply of cosmetics and beauty volunteer activities at the emergency shelters.
(Please refer to Initiatives Based on Our Way on pages 32 to 45 for more detail on
Shiseido’s CSR activities.)
14
Management
Targets of the New
Three-Year Plan
■ Compound annual growth in net sales of 6% or higher
(Local currency basis)
■ Operating profitability of 10% within three years
(Assumed exchange rates: ¥80 per U.S. dollar, ¥110 per euro, and ¥12.5 per Chinese yuan)
Shiseido must consistently take on challenges to evolve into and
remain an outstanding company in the future.
The targets of the new Three-Year Plan are compound annual growth in net sales of 6
percent or higher on a local currency basis and operating profitability of 10 percent
within three years.
The Great East Japan Earthquake has created uncertainties in materials acquisition,
production and business confidence, and its impact on domestic sales will be substantial.
At first, we considered revising our numerical targets, but chose not to, deciding instead
to work companywide to achieve our goals and vision for the year ending March 2018.
Our targets are high and achieving them will be a challenge. We will increase
investments in areas such as marketing both in Japan and overseas to get Shiseido into a
growth trajector y during the year ending March 2012 by steadily enhancing the
foundation for accelerating growth from the year ending March 2013.
We aim to maximize returns to shareholders through direct means and by generating
medium- and long-term share price gains. To this end, our fundamental policy is to make
strategic investments that drive earnings growth while raising capital efficiency, which
will lead to medium- and long-term increases in dividends and share price. Our target for
returns over the medium-term is a consolidated payout ratio of 40 percent. Based on this
target, we will prioritize payment of stable dividends while implementing share buybacks
in a flexible manner. For the year ending March 2012, we plan to keep annual dividends
at ¥50 per share due to the expectation that earnings will increase under the new ThreeYear Plan and our continuing emphasis on s table dividends.
My mission is to carry on Shiseido’s founding spirit of serving customers and contributing to society through beauty and to continue creating new and richer sources of value
by discovering many new customers so that Shiseido evolves into and remains an outstanding company in the future. I pledge to devote my heart and soul to this mission.
We are counting on the continued support of shareholders and investors as we evolve
to meet your expectations.
July 2011
Hisayuki Suekawa
President & CEO (Representative Director)
15
Feature: The Growth Strategies of the New Three-Year Plan
Shiseido’s new Three-Year Plan ending March 2014 is Phase II of
Shiseido’s drive to become a global player representing Asia with
its origins in Japan. Under the theme of getting Shiseido into a
growth trajectory, the new Three-Year Plan has four strategies for
achieving a turnaround in the Japanese market and accelerating
globalization. This interview with President Suekawa explores
Shiseido’s four growth strategies and plans for the first year of the
Three-Year Plan.
Overview of the New Three-Year Plan
Vision
Rebirth as a 100% CustomerOriented Company
Global
Mega-Brand
Strategy
Asian
Breakthrough
Strategy
New
Frontier
Strategy
Japan
China
Asian Countries
Recovery of growth
potential
Sustained growth in the
markets, which serve as
a growth engine
Increasing opportunities
to discover customers
in the expanding
middle-income group
16
Fill the Shiseido Organization with
People with Their Own Appeal
Americas
Europe
Refining the prestige image
Upgrade Shiseido Group brand value
Improvement of brand value in the prestige market
Increase opportunities to discover customers
Full-scale promotion of the masstige market
Become a leading company representing Asia
Expanding market share in Asia
Enhancement of business foundations for growth
Promote the priority activities in each country
Expand opportunities to discover customers through new sales channels
Full-scale entry to direct marketing
Develop the growth engine for the next generation
Enhancement of initiatives in emerging countries
Return to our origin as a manufacturer
CustomerFirst
Strategy
Reinforcement of
management base
Brighten Our Brand, a Valuable
Management Resource
Refining product development
Realize completely customer-oriented business
Refining of sales activities
Optimization of
production system
Improvement of
procurement system
Establishment of
IT infrastructure
Globalization of
human resources
Deepening of CSR Activities
Growth Strategy 1
Global Mega-Brand Strategy
How will Shiseido build its brands
in the future?
Shiseido aims to keep pace with its global
competitors as a Global Multiple-Brand Company
that has several brands with ¥50 billion to ¥100
billion in annual sales each.
Conventionally, Shiseido has developed brands
originating in Japan, Europe and the Americas
globally by enhancing their unique value and
presence in each area. With the overseas sales ratio
now over 40 percent, our brand strategy entails
accelerating globalization. We will continue our
ef for ts to maximize brand value by area while
designating global mega-brands for priority
development through concentrated investments of
manpower, marketing outlays and other resources to
address markets that extend beyond regional
boundaries. We have selected three prestige brands
and three masstige brands to become our six global
mega-brands. We will enhance the value of Shiseido
Group brands in the prestige categor y while
increasing opportunities in the masstige category to
expand the discovery of new customers in the rapidly
growing middle-income group, primarily in Asia.
What are your initiatives for each of
the six global mega-brands?
In the prestige categor y, our plan is to accelerate
globalization by focusing on the development of
three brands: the global brand
, clé
d e p e a u Beauté, and Bare Escentuals. We will
cultivate the global brand SHIS
, which is
now available in 85 countries and regions
including Japan, by strengthening the lines and
enhancing the brand concept so that brand presence
rivals that of its global competitors from Europe and
the United States. We will also enhance the presence
of the clé de peau Beauté brand, which was
comprehensively renewed in spring 2011, as a brand
that appeals to affluent consumers in Asia and the
United States. We will maximize synergies with Bare
Escentuals, which we acquired in March 2010, with a
focus on further growth in the Americas and business
（%）
42.9%
6.5%
1992
1998
2003
(Years ended March)
2008 2011
17
Global Mega-Brands
Bare Escentuals
Za
Global brand
clé de Peau Beauté
expansion into Europe centering on the United
growth in the prestige and masstige categories in
Kingdom, and into Asia from Japan.
Asia while enhancing brand presence in the
In the masstige categor y, the total skincare and
European and U.S. prestige markets. In addition to
makeup brand Za, which is sold in nine Asian
the six global mega-brands, we have many distinctive
countries with a focus on China, per for med
brands that are rooted in specific regions. These
strongly. We will position Za as a self-selection and
include the designer fragrance brands of Beauté
advice brand, taking into account the characteristics
Prestige International S.A. that originated in Europe,
of the countries and regions it ser ves. We will also
DECLÉOR and CARITA in the professional category,
expand regional coverage for Senka, a skincare
and the NARS makeup brand that originated in the
brand for the low-priced market in Japan and the
United States. We also have AUPRES and URARA,
masstige market in Asia that we have already
which we originated in China, along with
launched in Japan and Taiwan. We will emphasize
MAQUILLAGE and Elixir from Japan. We will
its quality as a product originating in Japan and
further enhance the value of these brands/lines to
carefully consider customer needs in the countries
complement our global mega-brands, thus building a
and regions we ser ve with the aim of increasing
powerful brand portfolio with the aim of becoming a
sales. We also plan to introduce a third brand to
Global Multiple-Brand Company.
expand beyond skincare and makeup.
Under the new Three-Year Plan, we will aggressively
promote the Global Mega-Brand Strategy to expand
18
Senka
(For further information regarding our brands/
lines, please refer to Brand/Line Overview on pages
24 and 25.)
Growth Strategy 2
Asian Breakthrough Strategy
implement this policy, we achieved solid results
What initiatives will Shiseido
execute in its home market
of Japan?
during a spring 2011 MAQUILLAGE promotion by
developing information and renewing communication.
Significantly reducing the number of new products
Shiseido must act on its declaration to become a
global player representing Asia with its origins in
Japan by increasing market share in Asia, including
Japan. In doing so, our top priority will be achieving a
turnaround in Japan, which accounts for approximately
60 percent of net sales. Our sales in Japan have been
lackluster because of 1) marketing reliant on new
products; and 2) insufficient response to evolving
customers and markets. We will address these issues
by implementing fundamental reforms focused on two
key areas: stepping up cultivation of existing products
and introducing a new Web-based business model.
Our first initiative in stepping up cultivation of
existing products will be reducing the number of new
products while enhancing value brand by brand. We
will take a scalpel to inefficient marketing by intensely
promoting a policy of not launching products unless
they win customer acclaim. Moving proactively to
will free up manpower and costs that we will reinvest
in the value chain, including r esear ch and
development, infor mation development, sales
activities, and activities of beauty consultants at sales
counters. This will increase the quality of all activities.
We will also promote flexible front-line sales activities
and foster innovation by shifting strategy formulation
functions, authority for ordering promotional
materials, and certain marketing outlays to a sales
subsidiar y from our head of fice. Fur ther, we will
create mechanisms for responding quickly by area to
changing customer needs. Promoting these reforms
will increase sales at stores, which will also support
reduction of store inventor y. Because initiatives to
develop existing products are especially crucial to
turning around domestic operations, I will lead them
myself. I am visiting workplaces and stores
throughout Japan to deepen employee understanding
Development in Asia
◆ Concentrate investment in
nurturing existing businesses
◆ Develop new Web-based marketing
China
◆ Prioritize allocation of
resources to achieve stable
growth in the future
◆ Sustain double-digit growth by
further strengthening our
business base
Japan
Other
Asian
Markets
◆ Enhance the prestige business
◆ Promote full-scale development
of masstige brands
19
and get them working on specific activities.
Introducing a new Web-based business model, one
involve further enhancing the prestige category and
expanding the masstige business. We will thoroughly
of the pillars of our New Frontier Strategy, will involve
enhance the global brand
and the China-
promoting a new marketing approach that capitalizes
only brand AUPRES in department stores to solidify
on the characteristics of both stores and the Internet.
their appeal in China. We now have contracts with
I will cover this in detail later.
more than 5,000 cosmetics specialty stores. The next
We will strengthen investment to promote these
stage will involve enhancing performance by further
reforms during the year ending March 2012, primarily
expanding sales per store. We will do so by stepping
through marketing outlays. We expect this invest-
up cultivation of URARA, Pure & Mild and d’ici là.
ment to drive steady growth in the year ending
In the drugstore channel, where we market DQ, we
March 2013 and beyond.
will achieve further growth through means including
improved communication. We will complement
What will be the focus of
initiatives to generate stable
growth in Asia?
China is an engine of growth for Shiseido, but
because of its strong growth potential, our global
competitors are investing heavily in aggressive
strategies in this market. Shiseido has been doing
business in China for 30 years since entering the
market in 1981. We will maintain our presence
in China while putting priority on allocating even
more resources to this market to sustain growth.
Significantly strengthening investment will reinforce
the powerful business base we have created to date as
we move to maintain double-digit sales growth and
achieve operating profitability of at least 10 percent
under the new Three-Year Plan.
Our initiatives to build a solid business base
channel-specific initiatives by using the Shiseido
Group’s comprehensive capabilities to open up
markets. For example, we will launch Bare Escentuals,
and enhance our presence in salons through the
professional business. We will focus investment of
personnel, marketing outlays and other resources on
these activities with the aim of achieving sustained
growth in the Chinese market.
In Asian markets other than Japan and China, where
the middle-income segment is expected to increase
significantly in the future, Shiseido will enhance the
prestige business and promote full-scale development of
masstige brands. We will reinforce our presence in the
priority markets of Taiwan, Korea and Thailand to
increase sales. Our goal of increasing sales will include
aiming for an even greater share of Taiwan’s prestige
market and building our presence in key markets such
as the Korean market, where we have an opportunity to
grow sales, and the Thai market, which is our base in the
ASEAN region.
20
In Japan, we will review responsiveness at sales counters
In China, initiatives such as major promotions for
and enhance communication of product value.
In other Asian countries, we will aggressively expand
AUPRES will help maintain strong growth.
and build the presence of masstige brands such as Za
and Senka.
Growth Strategy 3
New Frontier Strategy
Please explain Shiseido’s new Web
marketing initiative.
the new cosmetics sales store business model,
In order to succeed in the global market of the
hensive website for beauty and health where not
future, we need to respond quickly to changing
only the Shiseido Group but also many companies
customers and markets while identifying and
involved in areas such as beauty, healthcare, medical
developing growth markets. In the new Three-Year
products and fashion will par ticipate. As of April
Plan, we aim to expand points of contact with
2011, we forecast that the customer organizations of
customers through full-scale marketing ef for ts in
Shiseido and companies considering participation
Japan and overseas that center on the rapidly
would have a total of approximately 20 million
growing activity on the Internet.
registered members.
star ting with an online shopping mall called the
Beauty Platform. We will cultivate it as a compre-
First of all, we will initiate e-commerce in the United
Customers will visit the Shiseido website via the
States and China. At the same time, in Japan, while
Beauty Platform. In addition to attractive content, we
leveraging the strengths of our large network of stores,
will present optimum beauty solutions by using our
we will establish a new Web-based cosmetics sales
database encompassing customers, products and
store business model.
stores. Many customers say they want to try out the
In 2012, we will begin full-scale development of
scent, look or feel of cosmetics before making a
New Cosmetics Sales Store Business Model
Customer
Discovery
Diverse Content
Platform
Business
Shopping Mall
(the virtual online stores
of various companies)
Beauty Platform
Deepen
Relationships
with
Customers
Online
Counseling
Store
Navigation
Direct
Marketing
Online Shop
Beauty
Content
Shiseido Website
Introduce
Customers
Existing Brick-andMortar Stores
Sales of
Existing
Brick-andMortar
Stores
21
Growth Strategy 4
purchase. The Shiseido website will have a store
navigation function to introduce these customers to
stores that sell our products, and will also offer a
convenient online shop where customers can
海外売上高比率
purchase
approximately 3,000 products.
（%）
This unique business model that leverages the
Internet to expand points of contact to discover
customers and introduce them to brick-and-mortar
stores will be indispensable to future growth.
6.4%
How
will Shiseido develop
emerging
countries
into its
1993
1998
2003
next growth engine?
42.9%
What is the background of
Shiseido’s Customer-First Strategy
and what initiatives will it entail?
6.5%
One is putting customers first in all activities and
processes. The other is becoming No. 1 in terms
of
1992
2008
2011 （3月期）
customer support worldwide. This strategy is at the
heart of the new Three-Year Plan and is relevant to
is working to accelerate expansion in new
34,747
markets. Under the previous Three-Year
Plan, we
3,485 その他
29,036
all corporate activities to become a global player
representing Asia with its origins in Japan.
newly entered 24,453
13 countries. As of March
北米 2011, our
5,227 31,
We will put customers first by returning to our
19,987
products
were available in a total of6,451
85 countries
and
南米
roots and thoroughly refining manufacturing as well
regions, including Japan.
as product development and sales activities. We will
9,868
欧州
In the new Three-Year Plan, Shiseido will expand
execute a complete overhaul of all areas of the value
アジア
the regions in which its products are available
while
chain, from research, development and production
+55%
further strengthening initiatives in
that 2006
of fer
2010
significant
（日本のぞく）
アジア
6,416
地域
emerging
3,307 日本 countries
2014 tunities
2018
oppor
for
to marketing, sales and beauty consulting, without
（3月期）
growth.
In
clinging to our past successes. We will work to
Russia, which has seen strong growth particularly
maximize customer satisfaction and prevail in global
over the past several years, we will enhance in-store
competition by developing infor mation that
activities that focus on our strength in skincare. We
communicates value commensurate with product
aim to become one of the top five companies in
price and having all beauty consultants worldwide
Russia’s prestige market.
ser ve customers in the full spirit of Shiseido’s
unique omotenashi (hospitality).
Number of Countries and Regions Where
Shiseido Products Are Available
82
85
29
1991
22
Overseas Sales Rati
（%）
The term “customer-first” has two meanings.
グローバル市場規模予測
Shiseido
（億円）
CustomerFirst Strategy
1995
2000
2005
2010 2011
(Dec.) (Mar.)
1998
(Y
Performance Forecast for the Year Ending March 2012
Strategy in the First Year of
the New Three-Year Plan
During the new Three-Year Plan, we are aiming for
billion overseas. We will reinforce existing businesses
compound annual growth in sales of 6 percent or higher
in Japan by increasing marketing outlays in areas
on a local currency basis and operating profitability of
including adver tising as well as sample and
10 percent within three years by implementing the four
promotional expenses for front-line sales. We will also
strategies I have just outlined. For the year ending
invest aggressively in marketing to build a solid
March 2012, we forecast that net sales will increase 1.4
foundation for our new Web-based business model
percent year on year to ¥680 billion, assuming that the
that we will launch in 2012. Overseas, we are
Great East Japan Earthquake will have the effect of
emphasizing China, where we will increase marketing
reducing domestic sales by approximately ¥10 billion,
outlays to expand our presence and market share. We
the markets of Europe and North America will continue
also plan to strengthen sales by shifting personnel
to recover, and sales will increase in Asian markets,
including sales and beauty consultants from Japan to
particularly China. Breaking down this forecast, we
China. Worldwide, we will energetically invest in
believe that domestic sales will be essentially unchanged
cultivating the global mega-brands in both the prestige
compared with the year ended March 2011, while
and masstige categories.
overseas sales will increase 10 percent on a local
We forecast that net income will increase 64.2
percent year on year to ¥21 billion because other
currency basis and 3.2 percent on a yen basis.
However, we forecast that operating income will
expenses and tax payments will decrease significantly.
decrease to ¥40 billion from the year ended March 2011
We therefore forecast that increasing investment to
because we will invest heavily in areas such as
generate future growth in Japan and overseas will
marketing in order to achieve growth in the year ending
reduce operating income for the year ending March
March 2013 and beyond.
2012. However, steadily accelerating growth through
These investments will total approximately ¥20
billion – ¥7 billion in Japan and approximately ¥13
this investment will help us achieve the targets of the
new Three-Year Plan.
Performance Forecast for the Year Ending March 2012
(Billions of yen)
Forecast
Year-on-Year
Change
Year-on-Year Change
(Local currency basis*)
680
＋1.4%
＋4%
Domestic sales
383
＋0.0%
−
Overseas sales
297
＋3.2%
＋10%
Operating income
40
−10.0%
−
Net income
21
＋64.2%
−
Net sales
Overseas sales ratio
43.7%
＋0.8 points
−
5.9%
−0.7 points
−
* Assumed exchange rates: ¥80 per U.S. dollar, ¥110 per euro, and ¥12.5 per Chinese yuan
23
Brand/Line Overview
Shiseido aims to build a powerful brand portfolio by combining global mega-brands developed on a priority basis
to extend beyond regional boundaries and brands for which it is enhancing presence in specific regions.
Domestic Cosmetics Division
Counseling
Self-selection
Global MegaPrestige
J
REVITAL GRANAS ●
J ●
C●
A
MAQUILLAGE ●
J ●
C●
A
Aqua Label ●
Global brand
SHISEIDO
J ●
C●
A●
E
U●
●
ELIXIR SUPERIEUR
J ●
C●
A
●
J ●
A
Bénéfique ●
J ●
C●
A
Uno ●
Toiletries
J ●
A
Integrate ●
clé de peau BEAUTÉ
J ●
C●
A●
U
●
E
J ●
C●
A●
Tsubaki ●
Healthcare Division
The Collagen ●
J
24
In & On ●
J
A
J ●
SEA BREEZE ●
Non-Shiseido
IPSA ●
J ●
C●
A
d ’ ici là ●
J●
C●
A
Bare Escentuals
bareMinerals
J ●
E
U●
●
Main Regions of Availability
J China: ●
C Asian countries: ●
A
Japan: ●
E
U Europe: ●
North America: ●
Global Business
Overseas Cosmetics Division
Non-Shiseido
Brands
Masstige
ISSEY MIYAKE
narciso rodriguez
J ●
C●
A●
E
U●
●
E
J ●
A●
U●
●
NARS
J ●
C●
A●
E
U●
●
China
Za
C●
A
●
C
AUPRES ●
C
DQ ●
C
URARA ●
Senka
J ●
A
●
C
Pure & Mild ●
Overseas and Domestic Professional Divisions
One Brand Targeted for
Categor y E xpansion
( New Launch Planned)
JOICO
C●
A●
U
●
DECLÉOR
J ●
C●
A●
E
U●
●
CARITA
A
J ●
C ●
Qi ●
J ●
A●
E
U●
●
25
The Domestic Cosmetics Business manufactures cosmetics and toiletries for sale in Japan. In a
difficult, contracting market, the Domestic Cosmetics Business continued to emphasize concentration
and distinction in promoting measures to strengthen sales through rearrangement of targeted stores
and brands according to specific channels.
Business Overview
←国内
Share of Total Net Sales
A leading company in Japan’s cosmetics market,
Shiseido operates in the primarily high-priced, highvalue-added counseling product categor y, the spot
counseling category centering on mid-priced items, the
53.4%
self-selection market encompassing low-priced products,
and the toiletries category. Shiseido’s high-value-added
counseling products are sold at voluntary chain stores,
department stores and general merchandise stores. Mid-
Net Sales / Segment Income
priced and self-selection products are mainly sold at
Net Sales (Left scale)
(Billions of yen)
500
dr ugstores. Among these channels, Shiseido is
400
397.5
32.7
Segment Income (Right scale)
(Billions of yen)
50
383.8 38.9
358.4 33.6
40
300
30
200
20
100
10
0
2009
2010
(Years ended March)
2011
0
capitalizing on the advantages of the voluntar y chain
stores and department stores that can provide the quality
services and counseling that the Company aims for.
Overview of Performance in the
Year Ended March 2011
Against a backdrop of factors such as cooling
1.0
consumer sentiment, the domestic over-the-counter
0.8
cosmetics market has continued to contract since the
Sales by Division (Year Ended March 2011)
0.6
Sales
(Billions of yen) Percent change
181.6
Self-selection cosmetics
82.0
Toiletries
41.9
Domestic Cosmetics Division 305.5
Healthcare Division
15.6
Others
37.4
Total
358.4
Counseling cosmetics
- 8.5%
- 3.7%
-10.0%
-7.5%
+2.6%
-2.6%
- 6.6%
second half of the year ended March 2008. In the year
0.4
ended March 2011, the market shrank a further 1 to 2
percent.
0.2
Structurally, the markets for high- and low-pricedトイレタリー 11.7
0.0
products were relatively firm. However, weak sales in
the mid-priced product market were a key factorセルフ化粧品 22.9
◆ Trends in the Domestic Over-the-Counter
Note: Effective the fiscal year ended March 2011, the Company has reclassified its operations into
three segments for reporting purposes, in line with its application of Accounting Standards
Related to Disclosure of Segment Information. The new segments are: Domestic Cosmetics
Business, Global Business, and Others. The domestic professional business, previously included
within the Domestic Cosmetics segment, is now included in the Global Business segment.
26
ヘルスケア 4.4
Cosmetics Market (Shiseido estimates)
←海外
Year ended
March 2009
Year ended
March 2010
Year ended
March 2011
Year-on-year
change in sales
−2∼3%
−3∼4%
−1∼2%
clé de peau Beauté
Shiseido’s largest-selling top-end prestige brand in the Domestic
Cosmetics Division. Moving to enhance it as a global brand, we
generated strong results by renewing the brand’s skincare products
in January 2011 and its makeup products in February 2011.
causing overall sales in the Domestic Cosmetics
For primarily high-priced, high-value-added counseling
Business to decrease 6.6 percent compared with the
products, we achieved steady results at department stores
previous fiscal year to ¥358.4 billion.
with the ongoing implementation of our Double Counter
Segment income (operating income) decreased 13.8
strategy entailing separate counters for the global brand
percent compared with the previous fiscal year to ¥33.6
and the top-end prestige brand clé de peau
billion. Ef for ts to deploy selling, general, and
Beauté. In the second half of the year, we undertook a
administrative expenses such as marketing costs more
comprehensive renewal of the clé de peau Beauté brand
efficiently did not fully compensate for the significant
lineup, including package design and image model.
reduction in marginal income due to lower sales.
Ongoing implementation of our PS Program2 generated
strong results at voluntary chain stores by focusing on
Year Ended March 2011:
Domestic Cosmetics Division
During the year ended March 2011, we continued
fostering mega lines and relationship-building brands/
lines 1 to achieve long-seller product status. We also
continued executing measures to strengthen sales by
nar r owing priority ar eas in each channel and
concentrating resources in them.
improvement at approximately 800 participating stores.
In the spot counseling categor y, centering on midpriced items and “one-point counseling” (tips), we stepped
up initiatives to foster the MAQUILLAGE line in its fifth
year on the market. We also renewed the Elixir
Superieur line.
While these initiatives resulted in solid performance
by clé de peau Beauté and other high-priced brands/
lines, the impact of contraction of the market for midpriced items and weak sales of flagship lines such as
MAQUILLAGE
A core total makeup line in the Domestic
Cosmetics Division. In the spring 2011
promotion, Shiseido concentrated on
renewing communication used in the July
2010 launch of MAQUILLAGE Rouge
Enamel Glamour. This approach is an
example of successful cultivation of existing
products.
27
Elixir and MAQUILLAGE caused overall sales of
targeting the low-priced market was also a solid performer.
counseling cosmetics to decrease 8.5 percent year on year.
However, Tsubaki struggled because of intense competition in
In the self-selection categor y, we launched new
the shampoo market, which caused overall toiletr y sales to
Anessa sunscreens that offer exceptional ultraviolet ray
decrease 10 percent year on year.
protection and do not require special cleansers for
As a result of the above, overall sales in the Domestic
removal. We also continued to cultivate the Integrate
Cosmetics Division decreased 7.5 percent year on year to
line of mineral foundations, which remained a hit.
¥305.5 billion.
However, self-selection sales decreased 3.7 percent year
According to Shiseido estimates for the year ended March
on year because of lackluster performance of the Uno
2011, our over-the-counter sales for counseling and self-
line, in which we launched Fog Bar in the previous fiscal
selection cosmetics contracted 2 to 3 percent year on year.
year, and the Aqua Label line.
Consequently, our store inventory (inventory in the process of
In the toiletries category, the SEA BREEZE line popular
distribution) also decreased year on year.
primarily among teenage users performed well, supported
by a hot summer. The strategic skincare brand Senka
Anessa
Senka
ANESSA has the top share in
Sales of Senka were strong, with 2.5 million units shipped
Japan’s sunscreen market. New
in the first 11 weeks after its launch in September 2010.
products per formed well
We also began sales in Taiwan in October 2010, and plan
because we made them more
to launch the brand suc-
pleasing to use and employed
cessively in other Asian
unique technology to enhance
countries.
sun protection.
Healthcare Division
Shiseido stepped up ef for ts to cultivate brands,
Kirei no Susume, a balanced beverage product, and IHADA, a
augmenting The Collagen, the top-selling line of
pharmaceutical for skin problems that cosmetics cannot
supplements in the collagen market in terms of over-the
resolve. As a result, sales in the Healthcare Division continued
counter sales. We added High-Activated Beauty Powder,
to expand, increasing 2.6 percent to ¥15.6 billion compared
which can be taken by dissolving it in food and
with the previous fiscal year.
beverages. We also launched new products, including
1. Relationship-building brands/lines: Brands/lines that deepen relationships with customers through counseling.
2. PS Program: A strategy for nurturing voluntary chain stores with growth potential that want to strengthen cooperation with Shiseido. The program
involves the formulation of shared goals and focused execution tailored to each store’s unique characteristics.
28
358.4 33.6
32.7
300
30
200
20
100
10
0
2009
2010
(Years ended March)
2011
0
1.0
0.8
0.6
Sales
(Billions of yen) Percent change
Global Business
ヘルスケア 4.
0.4
181.6
- 8.5%
Self-selection cosmetics
82.0
- 3.7%
Toiletries
41.9
-10.0%
Domestic Cosmetics Division 305.5
-7.5%
Healthcare Division
15.6
+2.6%
The Global Business manufactures cosmetics for sale overseas and
Others
37.4
-2.6%
TotalJapan and overseas.
358.4
6.6%
-In
salons for sale in
the year ended March 2011, the
Counseling cosmetics
0.2
トイレタリー 11.
0.0
products for hair and beauty セルフ化粧品 22.
Global Business enhanced its
presence in Western prestige markets and concentrated on maintaining strong growth in China and
expanding points of contact with customers in the Asian masstige market.
←海外
Business Overview
Shiseido operates in a wide array of countries and
regions. The global brand
was available
in 85 countries and regions including Japan as of
March 31, 2011.
45.1%
Shiseido operates in the prestige category in Europe
and the Americas, centered on the global brand
. In the United States, the makeup brand
NARS also has strong customer suppor t, and Bare
Net Sales / Segment Income
Escentuals has the leading share of the mineral
Net Sales (Left scale)
(Billions of yen)
foundation market with a unique business model that
Segment Income (Right scale)
(Billions of yen)
400
300
30
15.4
200
counter sales at retail outlets such as department stores
302.6
275.7
250.4
20
9.5
includes direct marketing via television and over-the-
9.0
100
and cosmetics specialty stores. In Europe, Shiseido’s
potent brands include the designer fragrances of Beauté
10
Prestige International S.A.
Shiseido has been in the Chinese market for 30
0
2009
2010
(Years ended March)
2011
0
years, ahead of other global cosmetics companies.
Shiseido is implementing a channel-specific brand
strategy that involves selling the global brand
Sales
(Billions of yen)
Overseas
Cosmetics Division
Overseas and
Domestic
Professional
Divisions
Total
261.7
Percent
change
and the China-only brand AUPRES at
Percent change
(Local currency
basis)
+25.0% +32.0%
department stores and the URARA and Pure & Mild
brands at cosmetics specialty stores. We are building a
power ful store network; as of December 31, 2010 it
プロフェッショナル
40.9
302.6
- 0.3%
+5.1%
+20.9% +27.6%
Notes: 1.Exchange rates for major currencies for the year ended March 2011: ¥87.8 per u.s. dollar, ¥116.4 per
euro, and ¥13.0 per Chinese yuan
2.Effective the fiscal year ended March 2011, the Company has reclassified its operations into three
segments for reporting purposes, in line with its application of Accounting Standards Related to
Disclosure of Segment Information. The new segments are: Domestic Cosmetics Business, Global
Business, and Others. The domestic professional business, previously included within the Domestic
Cosmetics segment, is now included in the Global Business segment.
encompassed approximately 190 stores
the global
13.5selling
%
brand
, 920 stores selling AUPRES, and
5,200 cosmetics specialty stores.
化粧品
86.5%
Year Ended March 2011
The high-end markets of Europe and North America
improved as a result of economic recover y. Strong
29
growth continued in the markets of Asia including China,
concentrate on promoting Za and MAJOLICA MAJORCA. A
and emerging countries as strong economic expansion
marketing campaign in collaboration with retailers in Thailand
increased the number of middle-income earners.
generated par ticularly strong results. Complementing the
Under these conditions, overall sales in the Global
Business increased 27.6 percent compared with the
steady performance of these brands, sales of Aqua Label
increased substantially.
previous fiscal year on a local currency basis as sales
Shiseido maintained an aggressive channel-specific brand
increased in the Americas, Europe and Asia/Oceania.
strategy in China, demonstrating an ongoing commitment to
Excluding the sales of Bare Escentuals, sales increased
10.0 percent on a local currency basis. As a result of the
appreciation of the yen, sales increased 20.9 percent on a
Global Brand
Shiseido complemented prior efforts to enhance lines in ways
yen basis to ¥302.6 billion.
Segment income (operating income) decreased 5.4
percent to ¥9.0 billion because of nonrecurring costs
associated with the acquisition of Bare Escentuals.
such as introducing newly designed counters to strengthen the
brand’s presence in
the prestige category.
Excluding these costs, segment income would have
increased 22.0 percent year on year to ¥11.6 billion.
Overseas Cosmetics Division
Results were strong in both the prestige and masstige
markets during the year ended March 2011.
In the prestige market, the global brand
achieved sales growth in various countries. Shiseido
executed focused programs to cultivate the brand,
including the introduction of newly designed counters
and promotional activities to increase product awareness.
The
line and the
Future Solution LX premium skincare
BOP (Bio-Performance) high-
performance skincare line were among the lines that
performed strongly as a result.
After Shiseido acquired Bare Escentuals, the two
companies began collaborating in a project to achieve
synergies that enhanced Groupwide ef ficiency by
integrating production functions and distribution facilities
and strengthened sales at stores and via the website. As
a result, Bare Escentuals achieved sales and income
targets for the year ended March 2011.
In addition, sales of NARS increased by more than 30
percent, while growth recovered in the designer
fragrance and travel retail businesses.
In Asian masstige markets, Shiseido continued to
30
bareMinerals
Bare Escentuals’ primar y brand. Featuring a mineral
powder containing no preser vatives, fragrances, oils or
talc, it has gained a towering share of the U.S. mineral
foundation market.
Za
A core brand targeting middle-income
AUPRES
Shiseido created this China-only brand using its
many years of research into climate and the skin of
Chinese women. Sales have consistently increased
since the brand’s launch in 1994, building a power-
earners in Asia. Shiseido is energetically
promoting the brand in Thailand, Taiwan
and elsewhere in Asia to enhance its
presence as a dedicated Asian skincare/
makeup brand.
ful position in the prestige market.
ISSEY MIYAKE
This Beauté Prestige International
NARS
Shiseido acquired this makeup
brand in 2000. Its powerful brand
cachet in the United States
continues to expand.
designer fragrance has potent brand
cachet and is available in more than
100 countries. Beauté Prestige
International also sells the narciso
rodriguez brand.
this crucial market where exceptional growth is forecast.
increased 32.0 percent year on year on a local currency
We continued to introduce new counters at department
basis and 25.0 percent year on year on a yen basis.
stores while enhancing the AUPRES lineup. At cosmetics
specialty stores, we nurtured the URARA brand sold only
in this channel and the Pure & Mild brand, while
introducing d’ici là, a high-end brand. As a result of these
activities, we maintained double-digit sales growth in
China that exceeded the growth rate of the overall
market, as well as a high level of operating profitability
above 10 percent.
Shiseido further accelerated its ongoing efforts to
expand business in new markets. The number of stores
handling our products in Russia tripled year on year to
900. We also began doing business in the three Balkan
countries of Albania, Kosovo and Macedonia and
expanded our operations in other new markets.
With the growth in existing businesses and the
Overseas and Domestic
Professional Divisions
In Japan, business conditions remained difficult amid
economic recession and intense competition. Overseas,
sales grew in Asia, where market expansion continues.
Results were also robust in Europe and North America,
supported by ongoing economic recover y. As a result,
sales of the Overseas and Domestic Professional Divisions
increased 5.1 percent year on year on a local currency
basis. On a yen basis, sales decreased 0.3 percent year on
year to ¥40.9 billion because of the appreciation of the yen.
contribution of newly consolidated Bare Escentuals’
results, the Overseas Cosmetics Division substantially
exceeded results for the previous fiscal year. Sales
31
Initiatives Based on Our Way
Our Way denotes appropriate conduct
toward stakeholders under the Shiseido Group
Corporate Philosophy “Our Mission, Values
and Way.” Based on Our Way, we are working
to achieve a sustainable society by enhancing
dialogue and cooperative activities with stakeholders and creating health and beauty for people.
Toward Consumers
Toward Business Partners Toward Shareholders
This section introduces Shiseido’s efforts to
meet people’s needs for beauty and health
through research and development activities and response to consumers.
We work together with our business partners to create new value. This section
explains our collaborative efforts with
business partners along with issues such
as our approach to procurement.
Learn about Shiseido’s corporate governance policies, structure and efforts to
maximize corporate and shareholder
value in this section.
▶P33
▶P37
Please refer to Corporate Governance
on pages 50 to 54.
Toward Employees
Toward Society and the Earth
For further information regarding our CSR activities,
please refer to the Shiseido
CSR section on the Shiseido
website.
http://www.shiseido.co.jp/e/csr/
It covers topics including Shiseido’s
Respect for employee diversity. Comfortable,
fulfilling workplaces. Find out about
Shiseido’s unique initiatives for employees
here.
This section introduces how Shiseido
leverages its strengths through initiatives
in three areas to resolve various issues
concerning society and the Earth.
▶P38
▶P40
Environmental Data
▶P44
32
Social Data
▶P45
latest CSR activities, Stakeholder
Dialogues, Third-Party Evaluation,
and GRI Guidelines balance sheet.
Toward Consumers
100% Customer-Oriented Manufacturing
In manufacturing, Shiseido is strengthening quality assurance so that consumers can be confident its products are safe.
Based on the Shiseido Group Corporate Philosophy, Our
ISO22716* (Cosmetics GMP) standards introduced in 2007
Mission, Values and Way, we aim to ser ve our customers and
have been adopted as regulations in many countries. We have
society. Products and ser vices that satisfy consumers are
established internal standards that are even more rigorous
created by combining tangibles consisting of cosmetics
than ISO22716 so that we can maintain safety and reliable
products and associated intangibles such as various
quality. We are fur ther strengthening manufacturing to
information and beauty methods. Shiseido achieves this by
ensure consumers can use our products with peace of mind.
conducting cosmetics research from the three perspectives
Shiseido is also enhancing its agility and speed to flexibly
of functionality, sensitivity and sensations, and safety to
and quickly respond to changing consumer needs. We manu-
create value that exceeds consumer expectations.
facture flexibly, rather than relying on mass-production lines,
For functionality, Shiseido conducts research with a focus
by cultivating multi-skilled employees so that a single techni-
on creating healthy, beautiful skin. Research for sensitivity
cian can oversee all production processes and focusing on
and sensations involves investigating usability, scent, color
the development of facilities technology that increases pro-
and beauty methods to make products pleasing, delightful and
ductivity through means such as improvements to manufac-
exciting. Safety is the most important of the three perspec-
turing facilities.
tives. We ensure that the products we develop are safe for con-
Going for ward, we will place the highest priority on con-
sumers and can be used worry free. Today, consumer beauty
sumers in our actions as we return to our origin as a manu-
and health needs are becoming more sophisticated and
facturer, with the aim of earning the greatest support of our
diverse. We are responding by promoting further technologi-
customers. In addition to products, we will innovate our
cal innovation for cosmetics from a global perspective as well
entire value chain, from information development, which is
as from new perspectives such as beauty therapy cosmetics
important for linking customers and sales counters, to mar-
and healthcare.
keting activities and descriptions used in advertising.
* ISO22716: International standards for cosmetics manufacturing drafted
by the International Organization for Standardization
◆ Three Approaches in Research and
Development
●
Mechanisms to Leverage
Developing formulations
Physical properties, scent, color
●
●
Skin and hair research
Human science research
Physiological mechanism of skin
Physiological psychology
and cognitive science
●
Developing medicinal agents Beautiful skin,
Youthful skin
and raw materials
Searching, synthesis, and
biotechnology
Customer Feedback
Shiseido works to achieve 100% customer-oriented manu●
facturing by making efforts to incorporate valuable feedback
techniques
from customer consultation and requests and other sources
Enjoyable feel,
Developing formulation
Emotional satisfaction, Joy
Sensitivity
and
Sensations
Functionality
Emulsification and
dispersion, etc.
in the development of products and improvement of ser vices.
Specifically, it helps us quickly detect consumer and societal
●
Beauty care research
Beauty information development,
color research,
sensory evaluation
●
Customers
Safety
Considering effects on body
and environment
Developing
store fixtures
Skin condition diagnosis
and counseling system
●
Developing packaging
and wrappings
Convenience
and eco-friendliness
●
Stability, safety, and
microbiological safety
fore collect, analyze and use customer feedback information,
sharing it throughout the Company and requesting relevant
divisions to develop or improve products and beauty information, and refine ser vices. This supports our “100% customer-
●
Verifying solutions
and methods
Quality assurance
changes and reflect them in corporate activities. We there-
Design goal check and
customer’s perspective
oriented” vision.
In Japan, our Customer Information Center receives
approximately 120,000 customer comments and inquiries
33
annually via toll-free calls, e-mail, letters and other means,
promoting globalization. Quickly grasping customer opinions
and beauty consultants use terminals to submit another
worldwide and putting those opinions to work in manage-
130,000 comments received at sales counters. These are
ment are indispensable to our globalization program. We
among the venues and methods through which we collect
have established systems in China in addition to Japan, and
customer feedback. We manage the information using our
are collecting and analyzing consultations and requests, shar-
computer system and have organized it for analysis by rele-
ing them internally, and effectively reflecting them in corpo-
vant parties as required.
rate activities. However, other overseas subsidiaries have yet
We take these opinions and evaluations seriously and
use them as reference in making product improvements.
to introduce such systems, making a globally shared system
a priority.
They provide us with background and allow us to under-
To achieve this goal, Shiseido has developed global speci-
stand how consumers feel about the cosmetics they use in
fications for the system it has used in Japan since 1996 to col-
their daily lives. Employees share the feedback we receive
lect and use customer feedback. Named Mirror*, the system
via an intranet so that we can use it to create more satisfy-
was introduced in Japan in April 2011 and overseas in July
ing value.
2011. This is strengthening our framework for sharing and
Aiming to become a global player representing Asia with
its origins in Japan, Shiseido is currently in the midst of
using feedback from customers worldwide.
The introduction of Mirror will uniformly raise the level of
◆ The Mirror System for Collecting and Using Global Customer Feedback
Input, investigation and response functions
Customers
Customers
Inquiry
Inquiry
Point of customer
contact
Point of customer
contact
Japanese version
Reflect in risk management,
marketing and other
English version
corporate activities
Customers
Inquiry
Point of customer
contact
Chinese version
Data analysis
and
aggregation
Mirror
Examples of Products That Reflect Customer Feedback
clé de peau BEAUTÉ New Skincare
HAKU Melanofocus W
An easy-to-grip container design with an easy-to-push dispenser
We developed a refill container that preserves the
and a stable container height that also allows easy storage improved
quality of the contents while allowing the user to easily
the convenience of this lotion and emulsion. In addition, Shiseido
see how much is remaining. Introducing the refill has
made the product easy to under-
reduced the amount of plastic used for containers by
stand. For example, larger type
60 percent.
size makes the package insert
easy to read, the bottle color makes
uct, we received and aggregated
the item easy to identify, and the
comments such as “I have trouble
simple product names are easy to
knowing when to buy more
remember. We also introduced a
because I can’t see inside” and
cream refill to enable extended use
“Throwing away the container
of the original container.
every time I use up the product is
After launching the first prod-
wasteful” and used them to evolve
34
the container.
our response to customer consultation and other requests at
all customer information centers around the world. At the
same time, the efficient collection and use of feedback from
customers worldwide will create value for the Shiseido Group.
For further information on representative products created
through initiatives to incorporate customer feedback,
please refer to the Shiseido website.
http://www.shiseido.co.jp/corp/customer/voice/ (Japanese only)
* Mirror: The name embodies reviewing our activities through customer
feedback, or in other words, the reflection of our image in a mirror.
A corporate advertisement announcing that
Shiseido is using evaluation of level of customer
satisfaction to innovate
beauty consultant activities, and a questionnaire
consultation capabilities. We have also distributed the code
of conduct called Shiseido BC Omotenashi Credo, which beau-
Responding to Customers
ty consultants worldwide use in their day-to-day activities to
Beauty consultants fulfill the crucial role of listening to
customer requests at the sales counter and introducing products and beauty information according to each person’s skin
and cosmetics use. Aiming for high-quality counseling activities from our beauty professionals, in 1998 Shiseido was the
first in the industr y to implement an internal cer tification
system for beauty knowledge and technology approved by
create the spirit of omotenashi (hospitality) at sales counters.
In addition, we conduct an overseas customer sur vey ever y
six months to confirm that sales counter responsiveness
reforms have taken hold and are thoroughly implemented,
and to fur ther enhance the level of responsiveness. The
results are used in formulating action plans, training and onthe-job training.
the Ministr y of Health, Labour and Welfare. From 2005, we
moved to achieve 100% customer-oriented store activities by
including level of customer satisfaction with ser vice in the
evaluation of beauty consultant activities. We share customer
feedback with beauty consultants ever y month, review their
activities and determine tasks ahead as a means of enhancing
their responsiveness and raising the level of customer satisfaction. We are also emphasizing customer satisfaction overseas, where we have been moving to improve responsiveness
since 2009 in order to expand the number of loyal customers.
Specifically, we have developed and deployed counter ser vice
software for Internet use with the goal of improving skincare
We have translated the Shiseido BC Omotenashi Credo, a
digest of beauty consultant activities, into 22 languages
for overseas circulation.
◆ Initiatives to Increase Customer Satisfaction
Sales Counters
Customers
Head Office
Beauty consultants ask
customers to fill
out questionnaires
Customers fill out questionnaires and
mail them to Shiseido
Questionnaires received
and aggregated
Results sent to business offices
by the end of the month
Beauty consultants’ sales
counter activities take
issues into account
Beauty Consultants
Business Offices
Based on the results, clarify issues
using review and findings, then set goals
Sales counter activities planned
using the results
35
Shiseido Technology Supports Beauty
development of emulsification technology, which is essential for
cosmetics; the development of the effective skin-brightening and
Shiseido has a broad technology platform spanning
research, product development, production and quality assur-
anti-aging ingredients customers strongly desire; and the elucidation of the complex mechanisms of skin action and aging.
ance. The knowledge we have accumulated over more than a
century of research and development is a powerful advantage
For further information regarding our technologies, please
driving the superiority of our products.
refer to the Shiseido Research and Development section
Our research is integrated from basic research in interface
science and dermatology to the application of the findings in
on the Shiseido website.
http://www.shiseido.co.jp/e/technology/
product research. We focus on activities that are indispensable
to providing even better products to consumers, such as the
Skin-Brightening Research
Anti-Aging Research
Shiseido has been at the forefront of skin-brightening
Shiseido takes multiple approaches in exploring the factors that
research since launching the lotion Hydrogen Peroxide
cause skin to wrinkle and sag with age. Hyaluronic acid is known
Cucumber in 1917. In fact, effective skin-brightening ingredi-
to help the skin retain moisture. We discovered that vitamin A
ent development is one of our greatest strengths. We have
promotes the synthesis of hyaluronic acid and reduces wrinkles.
developed approximately one-third of the active skin-
We are also investigating the mechanism by which ultraviolet rays
brightening ingredients used in Japanese cosmetics, including
damage collagen and elastin fibers, and are making progress in
arbutin and stabilized vitamin C derivative. This record of achieve-
developing effective anti-aging pharmacological agents based on
ment is particularly impressive given that the development of
our findings.
active ingredients in Japan typically takes about 10 years.
Shiseido recently developed a new skin-brightening active
including dermal immunity and dermatology, energetically exploring
ingredient, m-Tranexamic acid, which acts on the chronic mild
skin mechanisms such as moisture retention and barrier functions.
inflammatory condition at the sites of spots to suppress
Recently, joint research with Sagami Women’s University and
melanocyte activation. We have also patented our latest
Kitasato University was the first in the world to clarify the mecha-
skin-brightening active
nism that produces Natural Moisturizing Factor (NMF), an ingredi-
ingredient potassium 4-
ent that is an integral component related to the skin’s moisture
methoxysalicylate (4MSK),
retention function.
In addition, Shiseido conducts basic research in other areas
in Japan, Taiwan, Korea,
the United States and
Europe.
Automated systems that rapidly screen
ingredients enable us to quickly apply
analytical data to skin-brightening technology development.
Acknowledgement of Shiseido’s Technologies
by Others
Shiseido has received numerous awards from a wide array
of scientific organizations and other associations including
The Inter national Federation of Societies of Cosmetic
Chemists (IFSCC), the world’s most authoritative congress for
cosmetic science and technology.
36
Shiseido won top honors in the Basic Research (Oral),
Applied Research (Oral) and Poster Presentation categories at
the 26th IFSCC Congress held in September 2010 in Buenos
Aires, Argentina. We have won top honors from the IFSCC 13
times, which is the most of all cosmetics manufacturers worldwide. Shiseido also received awards for the findings of five
research projects from organizations including the Japanese
Society of Aesthetic Dermatology.
Toward Business Partners
Approach to Procuring Raw Materials
Additionally, the departments work to communicate and
reaffirm cooperation with Shiseido’s approach. Approximately
Shiseido’s purchasing policies involve integrating all of the
Shiseido’s Group’s capabilities with those of business partners
140 business partner companies participated in the purchasing policy session held in May 2011.
in a spirit of mutual trust to jointly create new value and contribute to customers and society. Shiseido aims to grow together
with business par tners that share its aims, which include
The Shiseido Group Supplier Code
cooperatively building procurement and purchasing mecha-
of Conduct
nisms through joint development of new technology and strategic alliances based on purchasing that lowers costs through
fair competition and shared value creation.
Aiming to expand our sphere for creating beautiful lifestyles, Shiseido uses procurement activities in its efforts to
Shiseido seeks to optimize procurement performance on a
research, develop, produce and sell highly safe products and
global level. We select suppliers regardless of whether they
services that satisfy customers. Our suppliers span numerous
are in Japan or overseas by comprehensively considering ele-
areas, from raw materials and fragrances to packaging and
ments such as quality, cost, deliver y schedule, technology
sales promotion materials. We view them all as partners in the
development capabilities, ser vice capabilities, management,
creation of new value, and place the highest importance on
and initiatives to contribute to society, such as CSR.
mutual understanding, including in the promotion of CSR
We also consider the environment through purchasing
activities.
activities that reduce, reuse and recycle resources. This
Shiseido is concerned about the environment. Based on
includes reducing the use of petroleum, adopting plant-based
the Green Procurement Standards promulgated in 1999 to
resources, using non-wood materials and biomass, reducing
specify items required of suppliers, we issued the Shiseido
energy use, and reducing CO2 emissions. Committed to CSR,
Group Supplier Code of Conduct (formulated in 2006, updated
we always take compliance and social ethics into account, and
in 2010) to suppliers in Japan and overseas. It codifies our
conduct procurement activities that embrace fair trade and
standards for human rights, legal compliance, labor, the
biodiversity.
p rotection of intellectual proper ty and confidentiality,
environmental conservation, fair commercial transactions and
compliance monitoring. While working to inform our suppliers
Strengthening Our Relationship with
about the code, we conclude purchasing contracts and letters
Business Partners
of understanding confirming that they will comply with the
Shiseido Group Supplier Code of Conduct.
In order to respond to changing times and the emerging
Furthermore, we maintain a qualitative awareness of com-
needs of society, Shiseido’s approach to procurement involves
pliance by conducting annual sur veys and face-to-face inter-
obtaining the understanding of business partners in a mutual
views covering items including envi-
and sincere commitment to society in promoting product man-
ronmental and CSR initiatives. In the
ufacturing.
event that we discover noncompliance
We therefore aim to strengthen our relationships with
with the Shiseido Group Supplier
business partners. The procurement departments in Japan
Code of Conduct, we will demand
annually hold purchas-
rigorous cor rective measures and
ing policy sessions and
provide guidance and suppor t for
separate working groups
their implementation.
for particular areas includ-
The Shiseido Group Supplier
Code of Conduct
ing ingredients, fragrances
and materials.
The purchasing policy session held in May 2011
37
Toward Employees
Nurturing Human Resources
policy and oversee companywide training. Ecole Shiseido
offers professional training in a variety of fields, interdisciplin-
Since its founding, Shiseido has been so committed to nur-
ary training for new employees and management, and training
turing its human resources that people have called the
to develop the skills required in upper management positions.
Company “Shoseido” in a play on words that uses a quaint
In the year ended March 2011, it conducted approximately 80
Japanese term for “student.” This aspect of our corporate cul-
training programs. The President & CEO of Shiseido serves as
ture has been passed down through our history and endures
the chancellor of the university, and corporate officers serve
today, as reflected in the Declaration of Shiseido ‘Co-Excellence’
as the deans of the faculties that correspond to their own areas
adopted in 2006. The declaration aims to cultivate people by
of responsibility. Thus they take the lead in developing a pool
linking the self-realization of workers and the growth of the
of interested and talented employees.
Company. We also established Aesthetics, Self-Reliance and
Ecole Shiseido also operates the Shiseido Beauty
Reform Power as indicators of the skills and sensibility that we
Academy, which is a virtual beauty graduate school that is the
seek to cultivate, comprising a specific definition of what is
gateway to becoming a high-level beauty professional. It has
meant by “people with their own appeal.” We are also working
provided career development programs to approximately
to create an environment where employees can develop
12,000 employees throughout Japan who are involved in the
through a process of mutual growth that is reinforced by daily
area of beauty. The academy offers two tracks: one for aspir-
guidance and training, personnel assignments and evaluations
ing managers working to become organizational leaders, and
by their supervisors.
one to help people master the technology of beauty and
In accor dance with the Declaration of Shiseido
become high-level beauty professionals.
‘Co-Excellence’, we opened a corporate university called Ecole
Shiseido in 2006 and launched a variety of training initiatives
to implement the Company’s human resource development
◆ Basic Approach to Human Resource
Development
Achieving Gender Equality
Since 90 percent of its customers are women, Shiseido focuses
on providing new products and services that reflect women’s
• Appropriately assign responsibilities, set
objectives and provide incentives according to
required qualifications and personal characteristics
• Manage and guide daily work activities
• Provide appropriate guidance
• Provide career direction
through fair evaluations
• Promote people appropriately
based on ability
Management
by objective and
on-the-job
training
for 80 percent of all our employees, must therefore play a central
role in management and business activities. Accordingly,
Shiseido has introduced a variety of support programs that balance work with childcare and nursing care since 1990.
Shiseido has been strengthening these initiatives since the
Improve results and capabilities
Increase motivation
values and current lifestyles. Our female employees, who account
year ended March 2006 by planning and implementing the
Gender Equality Action Plan (Phase I: year ended March 2006
Assign personnel
based on ability,
aptitude and
interests of
the employee
See employees
as unique
individuals
Fair evaluation
and treatment
based on
achievement
to year ended March 2007; Phase II: year ended March 2008
to year ended March
2010). The three main
components of the plan
Enhance skills and
career awareness.
Enhance the desire to grow
Training and
education
• Assign personnel with an eye on future
development potential
• Provide opportunities for employees to
take the initiative through the Job
Challenge and Free Agent programs
38
are 1) cultivating an
organizational culture
that seeks to change
employees’ awareness
and actions by spreading
• Foster career awareness and provide
necessary knowledge and skills
• Provide opportunities for independent
learning
the concept of gender
equality within the
Kangaroom Shiodome, an in-house nursery
school at the Shiodome Office for Tokyo area
employees, exemplifies the support Shiseido
provides to help balance work with childrearing.
Company; 2) training and promoting female leaders with a
Shiseido undertakes various activities to leverage diversity.
view toward accelerating participation of women in Company
We promote the Work Improvement Proposal System and the
management; and 3) achieving work-life balance. As a result, a
Gender Equality Action Plan, which build on education and
corporate culture has taken root that truly balances work with
operational improvement at ever y level of the Company to
childcare and nursing care. In the year ended March 2011, a
engender respect for diverse work styles. We offer the Career
total of 1,218 people took childcare leave, 1,415 took time off
Support Forum that provides management training that encour-
for childcare, 33 took nursing care leave and 21 took time off
ages female employees to think about developing their careers
for nursing care.
with the aim of gaining independence and professional aware-
The theme of Phase III of the Gender Equality Action Plan
ness. We also conduct the Shiseido Global Leadership Program
for the three years ending March 2013 is firmly establishing a
for managers of overseas subsidiaries. In addition, the special
corporate culture in which female leaders are continuously
subsidiary Hanatsubaki Factory Co., Ltd. actively hires develop-
developed. The specific action plan under this theme has two
mentally challenged individuals.
core initiatives: strengthening the appointment and promotion
of female leaders and human resources development; and
reviewing how employees work to raise productivity.
Shiseido aims to further energize organizational capabilities by enabling employees with diverse values to take active
roles, thereby reaching a stage in which both men and women
can advance their careers while balancing work with childcare
and nursing care.
Nurturing Human Resources on a Global Basis
Shiseido defines global human resources as people who are
globally competent because they have specialized knowledge in
global fields, the ability to understand different cultures, and
communication skills, and who demonstrate management-level
leadership.
Shiseido formulated its Global Human Resources Policy in
2008 to nurture such personnel. The three objectives of the policy are 1) to nurture senior managers at overseas subsidiaries;
Promoting Diversity
2) to make effective use of human resources on a global level;
and 3) to improve the quality of personnel functions at overseas
Diversity
subsidiaries.
Shiseido comprises more than 40,000 employees with
With our global personnel strategy currently in its first
diverse values, viewpoints and other attributes, including nation-
phase, we are building a personnel platform that we share glob-
ality, gender, age, employment status and developmental chal-
ally. This platform will be the basis for leveraging human
lenges. Our approach to diversity begins with respect for
resources from 2010 through 2013. Specifically, while continu-
human rights and aims to realize mutual benefit for the individ-
ing to structure global personnel rules, we are building and
ual and the Company by recognizing and respecting the values
implementing systems for nurturing local employees at over-
of each employee and incorporating their personalities within a
seas subsidiaries and deploying and transferring personnel on a
diverse internal organization. We achieve this by making every
global level.
ef for t to keep the workplace free from discrimination and
harassment.
The first Career Support
Forum 2009 was held in
March 2010, and 155
female employees and
managers working at or
near the head office
participated. Shiseido
aims to hold Career
Support Forums for all
business offices.
In 2009, Shiseido established regional human resource development committees in four regions worldwide to nurture global
human resources.
39
Toward Society and the Earth
Basic CSR Policy
Shiseido aims to realize a sustainable society through dialogue and cooperation with stakeholders to develop activities
that address society’s expectations while contributing to the
creation of people’s beauty and health. Shiseido has designated
the three priority areas of 1) women and cosmetics (beauty),
Shiseido Life Quality
Beauty Seminar
which involves activities that promote total feminine care and
well-being; 2) culture, which involves the creation of beauty
based on profound sensitivity and intellect; and 3) the environment, which involves realizing a society where humanity and
the Earth’s environment can coexist beautifully.
Cultural Initiatives
Aiming to contribute to a spiritually af fluent society
through support for the arts, Shiseido exhibits representative
examples of the corporate culture it has cultivated to employ-
Activities Related to Women and
ees and the general public. The Shiseido Corporate Museum
Cosmetics (Beauty): Shiseido Life
in Kakegawa, Shizuoka Prefecture is the center for our corpo-
Quality Beauty Program
Since its founding, Shiseido has helped people achieve the
beauty they desire with beauty products and methods. In the
Shiseido Life Quality Beauty Program, we aim to enrich people’s hearts with the following two activities.
rate culture collections and exhibits. The museum collects and
preserves materials such as product packages, posters, television commercials and other materials and selectively exhibits
them free of charge. Hanatsubaki, a magazine we launched in
1937, is another medium with a long history of communicating
our corporate culture to society.
Founded in 1919, the Shiseido Gallery in Ginza, Tokyo is
Shiseido Life Quality Makeup
at the core of Shiseido’s support for the arts. Guided by a phi-
Shiseido continues to promote Perfect Cover foundation for
losophy of discovering and creating new beauty, it provides
br uises, dark spots, vitiligo* and skin irregularities and
the next generation of artists with a place to present their
provide makeup advice for serious skin concerns. Shiseido
works. The Shiseido Gallery also sponsors theater, dance and
conducts these activities primarily through Shiseido Life
other contemporary expression primarily focused on modern
Quality Beauty Centers, as well as at cosmetics specialty
art. Moreover, some of the pieces exhibited at the Shiseido
stores and medical institutions in Japan, and overseas in China
Galler y are exhibited to the public free of charge at the
and Taiwan.
Shiseido Art House in Kakegawa.
* V itiligo is an acquired skin condition characterized by pigment loss causing white patches on the face, neck, hands, feet and other areas. Its cause
is unknown.
Shiseido Life Quality Beauty Seminars
Shiseido Life Quality Beauty Seminars are a communityThe Shiseido Gallery
based activity in which employees visit facilities for the elderly
and the developmentally challenged to provide free beauty
seminars. These seminars are gaining attention from medical
and other institutions as a cosmetic therapy that makes people
feel good about themselves, and Shiseido energetically conducts them in Japan and overseas. The President & CEO and
other of ficers of Shiseido join employees in
conducting these seminars as an opportunity to help people
experience the power of cosmetics.
40
The Shiseido Corporate Museum
Basic Policy for Environmental Activities
Eco Standard and the Sales Promotion Tools Eco Standard to
codify environmental initiatives for our products and sales pro-
The name Shiseido derives from a Chinese expression
meaning “praise the virtues of the great Earth, which nurtures
motions. We also formulated the Office Eco Standard with
specific rules for addressing environmental issues in offices.
new life and brings forth new values.” In line with this expres-
In April 2010, Shiseido established the Environmental
sion, Shiseido has consistently shown consideration for the
Planning Department to step up collaborative environmental
environment since its foundation, with gratitude and esteem for
activities with related departments to achieve the goals of the
the blessings of the Earth. In April 2009, placing environmental
Shiseido Earth Care Project.
activities at the core of its management, Shiseido started the
Shiseido Earth Care Project, an environmental initiative involving all employees throughout the world. The year ending
March 2012 will be the third year of the project, the mission of
which is to realize a sustainable society where humanity and
the Earth’s environment can coexist beautifully. In addition to
basic environmental activities, which are obvious social responsibilities, the project is aimed at engendering a new lifestyle
that links beauty and eco activities through active promotion of
Shiseido’s unique environmental policies.
◆ Overview of Shiseido’s
Environmental Activities
Our Mission, Values and Way
Shiseido Eco Policy
Mission
Aiming for the realization of a sustainable society
where humanity and the Earth’s environment can
coexist beautifully
Shiseido’s Promise to Society
In November 2008, Shiseido expressed to the world its
strong dedication to the environment by endorsing “Caring for
Climate: The Business Leadership Platform,” a climate change
initiative being spearheaded by the United Nations Global
Compact.
In March 2009, Shiseido became the first company in the
cosmetics industr y in Japan to be certified as an “Eco-First
Company” by Japan’s Ministry of the Environment. The EcoFirst Program was created by the Ministry of the Environment
in April 2008 to encourage leading companies in each industry
to further expand their environmental protection activities by
having them make a commitment to the Minister for the
Environment. In addition to reporting the progress of initiatives to the Ministr y of the Environment, we will officially
announce the results through our website and other channels.
Project
Name
Caring for Climate: The Business Leadership Platform (Summary)
Activities by
all employees
throughout
the world
Goals
Environmental activities unique to Shiseido
＋
Basic environmental activities
1. T ake practical actions now to increase the efficiency of
energy usage and to reduce our CO2 emissions, set
voluntary targets for doing so, and report publicly on
the achievement of those targets annually in our
Preserve the bounty of the Earth,
reduce CO2 emissions and save resources
Achieve a new lifestyle linking beauty and eco
activities in a way that is unique to Shiseido
Communication on Progress.
2. Build significant capacity within organizations to understand fully the implications of climate change for business and develop a coherent business strategy
for minimizing risks and identifying opportunities. Also, engage fully and positively with our own national governments, intergovernmental organizations and
civil society organizations to develop policies and measures that will provide an
Environmental Management Framework
enabling framework for the business sector to contribute effectively to building
a low-carbon economy.
In 1992, Shiseido formulated the Shiseido Eco Policy as a
3. Work collaboratively with other enterprises nationally and sectorally, and along
management policy regarding the environment. In 2010, we
our value chains, by setting standards and taking joint initiatives aimed at re-
accommodated the change in environmental issues from a
ducing climate risks, assisting with adaptation to climate change and enhanc-
product lifecycle perspective by establishing the Production
ing climate-related opportunities.
41
Reducing Environmental Burden
reduction targets due to changes in the domestic market, but
the use of emissions trading allowed us to reach them. We
Overview of the Year Ended March 2011
Shiseido has been promoting initiatives with the objective
of realizing a low-carbon society by reducing CO2 emissions at
achieved our objectives overseas as a result of initiatives such
as the phase 2 installation of solar power generation equipment at a U.S. factory.
domestic factories by 15 percent (compared with the year
ended March 1991; per unit of production) and by 10 percent
at overseas factories (compared with the year ended March
2008; per unit of production) by the year ending March 2011.
Our efforts at domestic factories did not quite achieve CO 2
Representative environmental
activities carried out by Shiseido
are introduced by number on a
special website.
http://www.shiseido.co.jp/e/eco/
Numbered Initiatives
Case Study 1: No. 083 – Environmental
Initiatives in the Renewal of clé de Peau
BEAUTÉ Skincare Products
Case Study 3: No. 051 – Phase 2
Installation of Solar Power Generation
Equipment at a U.S. Factory
Environmental initiatives for a January 2011 skincare product
renewal included formulations using fragrances procured from
fair trade* sources, the first-ever refill for La Crème, and product
packages and inserts made of bagasse paper (a non-wood paper
made from sugar cane fiber residue left over in the juice extraction process).
The phase 2 installation of solar power generation equipment
at Shiseido America, Inc.’s U.S. plant was completed and operation began in August 2010. Phase 1 consisted of a fixed-tilt solar
power system installed in May 2007, while phase 2 is a solar
tracking system that changes the angle of panels in step with the
position of the sun during the day. The combined systems can
generate 2.3 million kWh of
electricity annually, enough
to supply more than 70 percent of the electricity the
factory uses in one year, and
are expected to reduce CO2
emissions by approximately
1,200 tons annually.
La Crème (Cream)
La Crème
(Cream)
refill
clé de Peau BEAUTÉ skincare line
Case Study 2: No. 071 – Introduction of
Electric Cars as Sales Vehicles
In January 2011, Shiseido Sales Co., Ltd. introduced 10 Nissan
Leaf electric cars at its sales bases in the Tokyo metropolitan area.
Electric cars do not emit CO2 while in operation because they do
not use gasoline, which significantly reduces CO2 emissions.
These vehicles prominently display the Shiseido Earth Care
Project logo on their left, right and rear. Shiseido is considering
the introduction of such
vehicles in the future, taking into account issues
such as the availability of
recharging stations.
Case Study 4: No. 053 – Tree-Planting
Activities in China
In April 2008, Shiseido addressed concerns about desertification in Lanzhou, Gansu Province, China by launching a 10-year
afforestation program. Approximately 23 hectares of Oriental
arbor vitae and other species of trees have been planted from
the start of the program through 2010.
Shiseido held the fourth round of this afforestation program in
April 2011. A total of approximately 60 volunteers participated, including employees from the Shiseido Group from China and Japan and
from business partners in China. With the addition of cherry trees,
we will plant 17,800 trees over 6.5 hectares during 2011.
This decade of greening is a means of deepening the bonds
of friendship between
Japan and China and
protecting the environment by reducing CO2 in
the atmosphere.
* F air trade involves the sustained purchase of the raw materials and products of developing nations at a fair price, with the aim of helping workers in those nations improve their standard of living
and achieve self reliance. Fair trade also contributes to environmental conservation by preventing problems such as overexploitation of resources in order to achieve sustainable use.
42
Preserving Biodiversity
Future Initiatives
Shiseido’s future environmental initiatives will center on
making products environmentally friendly throughout their
entire lifecycle and reducing CO2 emissions worldwide.
We will make products environmentally friendly throughout their entire lifecycle, from procurement and production to
logistics, sales and disposal, based on the Production Eco
Standard. Specifically, beginning in 2011 we will work with
Toyota Tsusho Corporation to procure sugar cane-based polyethylene from Braskem S.A., a major Brazilian chemical manufacturer, and start using this plastic in cosmetics containers.
Other proactive initiatives to promote environmentally friendly
products will include increasing the number of refills available
and expanding the introduction of product packages that use
bagasse paper made from sugar cane fiber residue left over in
Shiseido bases its environmental activities on preserving
the Earth’s blessings (biodiversity), the source of the value we
create. In all of our business processes, we recognize that the
Earth’s blessings are both crucial and limited, and that we
must manage them rigorously so that they can be passed on to
future generations.
In 2009, we planted the Shiseido Tsubaki Forest of approximately 3,000 camellia trees in the Tsubaki district of
Shirahama-cho, Nishimuro-gun, Wakayama Prefecture and initiated forest conservation activities that will span 10 years. We
are also conducting tree-planting programs in China and
Thailand as part of our effort to preserve the Earth’s blessings
both in Japan and overseas.
the juice extraction process.
During the third round of
volunteer forestry activities
in June 2011, Shiseido
employees and members
of their families planted
camellia seedlings. Our
efforts to preserve Tsubaki
Forest will continue.
Shiseido is reducing CO2 emissions worldwide as a fundamental CSR activity. We are working to meet the reduction
targets shown below.
◆ CO2 Reduction Targets
Target Year
Base
Scope
Year ending Year ending
Year
March 2014 March 2021
Domestic
Overseas
CO2 Reduction
Production
15%
20%
facilities
Year ended
Non-production March 2010
5%
14%
facilities
Production
—
20%
23%
facilities
Non-production Year ended
4%
11%
facilities
March 2010
Criteria
Absolute
amount
Compared
with BAU*
Absolute
amount
* BAU: B usiness as usual. Volume of CO 2 emitted assuming that particular
reduction measures are not implemented.
Rigorous Control of Chemical Substances
Shiseido reports to the Japanese government as mandated
◆ The Production Process for Sugar
by the Pollutant Release and Transfer Register Law (PRTR
Cane-Based Polyethylene
Law), while rigorously managing under its own auspices the
Sugar
use and disposal of chemical substances including raw materials and reagents at facilities such as factories and research labo-
Sugar cane
Fermentation of
liquid remaining
after sugar
refining (molasses)
Bioethanol
Sugar cane-based
polyethylene
Sugar cane fiber residue left over in the juice
extraction process (bagasse)
→Burned for energy for sugar and ethanol production
→Raw material for paper (bagasse paper)
砂糖
ratories. In addition, Shiseido supports occupational health and
safety by ensuring, through systemization and other means,
that material safety data sheets are issued when providing customers with semifinished products containing chemical substances governed by regulations including the PRTR Law and
the Industrial Safety and Health Act.
43
Environmental Data
Shiseido has reported the volume of energy used (input)
Ministry of the Environment.
and environmental load (output) determined through environ-
Shiseido will enhance the presentation of its environmen-
mental accounting for the year ended March 2011.
tal data to the greatest extent and raise the environmental
The data was calculated and disclosed using GRI’s G3
awareness of employees as it works to further promote envi-
Sustainability Repor ting Guidelines and the 2007
ronmental activities.
Environmental Repor ting Guidelines issued by Japan’s
◆ Environmental Performance Data
Indicator
Scope
Production facilities
Electric power (ten thousand kWh)
Non-production facilities
City gas (ten thousand m3)
LPG (t)
Inputs
Fuel (kl)
Steam (GJ)
Water (ten thousand m3)
Domestic
CO2 (t)
Outputs
SOx (t)
NOx (t)
Wastewater (ten thousand m3)
BOD
（t）
COD (t)
Waste (t)
Recycling ratio (%)
Electric power (ten thousand kWh)
City gas (ten thousand m3)
Inputs
LPG (t)
Fuel (kl)
Overseas
Steam (t)
Water (ten thousand m3)
CO2 (t)
Recycling ratio (%)
Note: Data for overseas non-production facilities includes major facilities only.
Outputs
Waste (t)
Year ended
March 2010
3,801
3,890
665
108
46
0
0
0
11,720
92
Year ended
March 2011
3,776
3,767
583
115
41
0
0
10
11,974
85
28,873
26,966
18,729
18,453
0
6
76
13
27
5,160
1,552
100
3,460
762
339
24
3
0
37
0
4,680
37
0
5
74
20
32
4,474
1,328
100
3,763
788
346
25
53
0
24
60
4,627
40
26,293
3,309
3,358
729
87
28,177
Targets
Target for year ended March 2011: 15% below actual emissions
in the year ended March 1991 (per unit of production)
Target for year ended March 2011: 10% below actual emissions
in the year ended March 2008 (per unit of production)
3,570
3,313
764
89
◆ Environmental Accounting
1. Environmental Protection Costs
Category
(1) Cost breakdown by operation
(1) - 1 Pollution prevention
(1) - 2 Global environmental
protection
Water contamination, atmospheric pollution, etc.
Promotion of energy conservation, measures to
protect the ozone layer, etc.
Waste processing, recycling, wastewater re-use,
(1) - 3 Recycling
material usage reduction, etc.
Costs associated with Recycling of Containers and
(2) Upstream and downstream costs Packaging Recycling Law, green procurement,
product recycling, etc.
Personnel expenses (excluding R&D) for
(3) Administrative costs
environmental management
R&D for environmentally friendly products, etc.
(4) Research and development
(including personnel expenses)
costs
Support of environmental groups, disclosure of
environmental information, environmental
(5) Social contribution costs
advertising, etc.
(6) Environmental remediation costs Environmental remediation costs, etc.
(7) Other costs
Total
44
2. Environmental Protection Outcomes
(Unit: Millions of yen)
Main initiatives
Investment Expenses
584 334
0 83
578
8
6
243
0
403
1
426
0
149
0
76
0
0
586
1
0
1,389
(Unit: Millions of yen)
Outcomes
Revenue from the recycling of waste
Earnings
generated in main business activities
and the recycling of used products, etc.
From energy conservation
Cost Waste-related
savings
From resource conservation
Other
Total
Economic effect
31
107
9
55
0
202
Environmental accounting period: April 1, 2010 - March 31, 2011
Scope: Domestic and overseas factories, domestic research centers
and head office departments
Social Data
The following tables present personnel data in addition to
(http://www.shiseido.co.jp/e/csr) in order to deepen stake-
data in the areas of women and cosmetics (beauty) and cul-
holder understanding of Shiseido’s CSR initiatives. We will
ture. Shiseido also presents more detailed information, GRI
further enhance data relevant to our social activities and per-
Guidelines balance sheet, and other information not included
sonnel with the aim of providing easily understandable infor-
in this publication on the CSR and Environment website
mation to stakeholders.
◆ Data for Social Contribution Activities
Area
Item
Indicator
Life Quality
Beauty Centers
Shiseido Life Quality
Beauty Program
Life Quality
Women and
Beauty Seminars
Cosmetics (Beauty)
Shiseido Children’s Seminar
2
Shiseido Running Club
Number of users
1,293
1,479
Number of seminars held
Times
2,993
3,095
Number of participants
Persons
49,707
47,919
Domestic and
overseas
Domestic and
overseas
Domestic and
overseas
Domestic and
overseas
Number of Beauty Volunteers1 participating
Persons
2,247
3,515
Domestic
Number of attendees
（Note 2）
Persons
—
810
Domestic
Number of running classes held
Times
3
2
Domestic
Number of grant recipients
Number of exhibits
Number of pledges
（Note 3）
Shiseido Hanatsubaki Fund3
Scope
（
3 4）
Shiseido Art House
Social Contribution
by Employees
Year ended Year ended
March 2010 March 2011
（
3 4）
Shiseido Corporate Museum
Shiseido Gallery
Countries and
Number of countries and regions (number of centers) (Note 1) regions (centers)
Number of lectures held outside the Company Shiseido Female Researcher Science Grant
Culture
Unit
Persons
Times
6
2
Domestic
Persons
10
10
Domestic
Exhibits
1
2
Domestic
Exhibits
7
7
Domestic
Exhibits
4
4
Domestic
Pledges
9,911
12,589
Domestic
1. Beauty Volunteers are retired beauty consultants who provide activity support.
2. Shiseido Children’s Seminars provide information to pre-adolescents on skin and hygiene and how to care for their changing skin correctly.
3. Shiseido Hanatsubaki Fund: Employees make donations from their wages and voluntarily participate in support activities. There are currently eight support groups.
Note 1: Japan (Tokyo); China (Shanghai); Taiwan (Taipei, Kaohsiung). Established in Hong Kong in April 2011.
Note 2: For fifth- and sixth-year elementary school children.
Note 3: 1 pledge = ¥100; pledge totals for March.
◆ Personnel Data
Unit
Number of employees
Persons
Year ended
March 2010
40,563
Year ended
March 2011
Includes
45,780
Group employees in Japan and overseas
(including fixed-term contract employees)
Remarks
Overseas data as of December 31
Average age
Years
38.3
38.5
Group employees in Japan
(excluding fixed-term contract employees)
Average years of service
Years
14.9
14.8
(excluding fixed-term contract employees)
Hours worked
(total hours worked annually
per employee)
Hours
1,809.9
1,812.8
(excluding managers and fixed-term contract employees)
Ratio of female employees
%
82.9
82.8
Ratio of female leaders
%
19.9
22.2
Indicates leaders appointed to management positions
Employees rehired after
retirement
Persons
93
136
Data for Japan program only
%
1.83
1.83
Employees taking nursing
care leave
Persons
28
33
Employees taking time off for
nursing care
Persons
16
21
1,218
Data for Japan program only, including data for shortterm childcare leave program
1,415
1,417
Kangaroo Staff program available in Japan only
Ratio of physically challenged
employees
Employees taking childcare
leave
Persons
1,123
Employees taking time off
for childcare
Persons
1,252
Kangaroo Staff4 members
Persons
1,273
Scheduled working hours
Year ended March 2010: 1,829.0 hours;
Year ended March 2011: 1,844.5 hours
4. Kangaroo Staff members support retail activities during evening hours by filling in for beauty consultants who are taking time off to care for their children.
45
Shiseido’s Management Structure
From left (back) Nobuo Otsuka, Yasuko Takayama, Akio Harada, Toshio Yoneyama, Reiko Kuroda, Carsten Fischer, Taeko Nagai, Shoichiro Iwata, Tatsuomi Takamori, Tatsuo Uemura
46
(front) Shinzo Maeda, Hisayuki Suekawa, Kimie Iwata
Board of Directors, Corporate Auditors and Corporate Officers
(As of June 24, 2011)
Directors
Shinzo Maeda
Hisayuki Suekawa
Representative Director, Chairman of the Board
Representative Director, President & CEO
1970 Joined Shiseido
1996 General Manager of New Cosmetic Marketing Department, Cosmetics
Marketing Division
1997 General Manager of International Business Department (I) and International
Strategic Marketing Department, International Operations Division
1997 Chief Officer of Asia-Pacific Headquarters, International Operations Division
2000 General Manager of International Marketing Department, Self-Selection
Products, Cosmenity Value Creation Division
2001 General Manager of Training Department, Cosmetics Strategic Planning Division
2003 General Manager of Corporate Planning Department
2003 Director, Corporate Officer
2005 Representative Director [incumbent], President & CEO
2011 Chairman [incumbent]
2007 General Manager of the Business Planning Department
2008 Corporate Officer, General Manager of Corporate Planning Department
2009 Director
2010 Corporate Executive Officer
2011 Representative Director [incumbent], President & CEO [incumbent]
Kimie Iwata
Carsten Fischer
Tatsuomi Takamori
Representative Director,
Executive Vice President
Director, Corporate Senior Executive Officer
Director, Corporate Executive Officer
Responsible for Global Business (International
Business, China Business and Professional Business),
Responsible for Americas
Chief Officer of International Business Division
Chairman & CEO of Shiseido Americas Corporation
Responsible for Domestic Cosmetics Business,
Healthcare Business and Clé de Peau BEAUTÉ
Marketing Unit
Chief Officer of Domestic Cosmetics Business
Division
1979 Joined Hans Schwarzkopf GmbH
1999 President and CEO, Wella Japan Co., Ltd.
2003 Executive Vice President, Wella AG Corporation
2004 P resident of Professional Care, and Corporate
Officer, Procter & Gamble Company
2006 Corporate Advisor of Shiseido
2007 C orporate Executive Officer, Responsible for
International Business [incumbent], Chief Officer
of International Business Division [incumbent],
Responsible for Professional Business [incumbent]
2008 D
irector [incumbent], Responsible for China
Business [incumbent]
2010 C orporate Senior Executive Officer [incumbent]
2011 C hairman & CEO of Shiseido Americas
Corporation [incumbent], Responsible for
Americas [incumbent]
2002 General Manager of International Marketing
Department, Self-Selection Products
2003 General Manager of East Asia Operation
Department, International Sales Division
2004 General Manager of China Strategic Planning
Department, International Business Division
2006 Chief Officer of China Business Division
2007 Corporate Officer
2009 Director [incumbent]
2010 C orporate Executive Officer [incumbent],
Responsible for Domestic Cosmetics Business,
Healthcare Business and Clé de Peau BEAUTÉ
Marketing Unit [incumbent], Chief Officer of
Domestic Cosmetics Business Division [incumbent]
Responsible for Corporate Culture, Advertising
Creation, Beauty Creation, General Affairs, Legal
Affairs, and Executive Affairs
Responsible for Committees under Direct Control of
the Board of Directors
1971 Entered Ministry of Labour
2001 Director-General, Equal Employment, Children
and Families Bureau, Ministry of Health, Labour
and Welfare
2003 Corporate Advisor of Shiseido
2004 General Manager of CSR Department
2004 Director, Corporate Officer
2007 Corporate Executive Officer
2008 Representative Director [incumbent], Executive
Vice President [incumbent], Responsible for
Corporate Culture [incumbent], Responsible for
Committees under Direct Control of the Board of
Directors [incumbent]
2010 Responsible for Advertising Creation [incumbent]
2011 Responsible for Beauty Creation, General
Affairs, Legal Affairs, and Executive Affairs
[incumbent]
47
Directors
Shoichiro Iwata1
Taeko Nagai1,2
Tatsuo Uemura1
External Director
External Director
External Director
1973 Joined Lion Fat and Oil Co., Ltd. (currently Lion
Corporation)
1986 Joined Plus Corporation, Deputy General
Manager of Product Development Division
1992 Head of ASKUL Business Project, Sales Division
of Plus Corporation
1995 Manager of ASKUL Business Division, Plus
Corporation
1997 Representative Director, President of ASKUL
Corporation [incumbent]
2000 CEO of ASKUL Corporation [incumbent]
2006 External Director of Shiseido [incumbent],
Chairman of Remuneration Advisory Committee
of Shiseido [incumbent]
1960 Joined Japan Broadcasting Corporation (NHK)
1990 Manager of NHK Urawa Station
1993 Chief Commentator of NHK
1995 Retired from NHK
1997 Board Member of Setagaya Arts Foundation
2005 Vice Chairman of NHK
2009 V ice President of Setagaya Arts Foundation
[incumbent]
2010 E xternal Director of Mitsui Chemicals, Inc.
[incumbent]
2011 External Director of Shiseido [incumbent]
1977 Lecturer, Faculty of Law, The University of
Kitakyushu
1979 Associate Professor, Faculty of Law, The
University of Kitakyushu
1981 Associate Professor, School of Law, Senshu
University
1986 Professor, School of Law, Senshu University
1990 Professor, College of Law and Politics, Rikkyo
University
1997 Professor, School of Law, Waseda University
[incumbent]
2003 Director, Center of Excellence - Waseda Institute
for Corporation Law and Society
Professor, Waseda Law School [incumbent]
2004 External Director, Jasdaq Securities Exchange,
Inc.
2006 External Director of Shiseido [incumbent],
Chairman of Nomination Advisory Committee of
Shiseido [incumbent],
Dean of Faculty of Law and the School of Law,
Professor of Waseda Law School and Waseda
University
2008 Director, Global Center of Excellence - Waseda
Institute for Corporation Law and Society
[incumbent]
Michiko Achilles2
Tsunehiko Iwai
Yoshinori Nishimura2
Responsible for Public Relations, Consumer
Information, Environmental Affairs, CSR and
Corporate Culture Reforms
Responsible for Technical Planning, Quality
Management and Frontier Science Business
Chief Financial Officer
Responsible for Finance, Investor Relations,
Information System
Responsible for Planning and Internal Control
Corporate Officers
Kozo Hanada
Chief Officer of Professional Business Operations
Division
President & CEO of Shiseido Professional Co., Ltd.
Asa Kimura
Responsible for Cosmetics Products Research &
Development and Software Development
Shoji Nishiyama
Masaru Miyagawa
Responsible for Functional Food Research &
Development, Innovative Science Research &
Development, Research Administration and
Technology Alliances
Chief Officer of China Business Division
Chief Area Managing Officer of China
Chairman of Shiseido China Co., Ltd.
Director retired as of June 24, 2011: Director, Corporate Senior Executive Officer Yasuhiko Harada (Retired from position of Corporate Senior Executive Officer as of
March 31, 2011)
Corporate auditor retired as of June 24, 2011: Corporate Auditor Kazuko Ohya
Corporate officers retired as of March 31, 2011: Corporate Officer Shoji Takahashi and Corporate Officer Takafumi Uchida
48
Corporate Auditors
Yasuko Takayama2
Toshio Yoneyama
Standing Corporate Auditor
Standing Corporate Auditor
2006 General Manager of Consumer
Information Center
2008 General Manager of Consumer Relations
Department
2009 General Manager of Social Affairs and
Consumer Relations Department
2010 General Manager of Corporate Social
Responsibility Department
2011 Standing Corporate Auditor [incumbent]
2000 Chief Officer of Fine Chemical Division
2004 General Manager of Product Development
Department, Cosmetics Business Division
2005 President of Institute of Beauty Sciences
2006 Corporate Officer
2008 Chief Officer of Healthcare Business Division
2010 Standing Corporate Auditor [incumbent]
Akio Harada1
Reiko Kuroda1
Nobuo Otsuka1
External Corporate Auditor
2001 Prosecutor General
2005 External Corporate Auditor of Shiseido
[incumbent]
2005 External Corporate Auditor of Sumitomo
2005 External Director of Seiko Holdings
2009 External Director of Japan Post Holdings
Co., Ltd. [incumbent]
2010 External Director of Turnaround Initiative
Corporation of Japan [incumbent]
1992 Professor, Department of Chemistry, College of
Arts and Sciences, and Department of Biological
Science, Graduate School of Science, The
University of Tokyo
1996 Professor, Department of Life Sciences, Graduate
School of Arts and Sciences, The University of Tokyo
[incumbent]
2008 External Corporate Auditor of Shiseido [incumbent]
1988 President and Director of Keiseikai Hospital
2007 External Corporate Auditor of Shiseido [incumbent]
2010 Chairman of Keiseikai Hospital [incumbent]
Shigeto Ohtsuki2
Tooru Sakai
Mitsuo Takashige
General Manager of Personnel Department
Responsible for Production, Purchasing and Logistics
General Manager of Corporate Planning Department
Yu Okazawa
Youichi Shimatani
Ryuichi Yabuki
General Manager of International Sales Department,
International Business Division
President of Shiseido Europe S.A.S.
President of Shiseido International Europe S.A.
President of Shiseido Deutschland GmbH
President of Taishi Trading Co., LTD.
Responsible for Marketing of Domestic Cosmetics
Business and Domestic Non-Shiseido Brand
Businesses
Responsible for Sales of Domestic Cosmetics
Business
President & CEO of Shiseido Sales Co., Ltd.
President & CEO of FT Shiseido Co., Ltd.
1. Independent Director / Corporate Auditor required by Rule 436-2 of the Tokyo Stock Exchange Securities Listing Regulations
2. New appointment
49
Corporate Governance
Directors meets at least once a month to discuss all significant
Corporate Governance Policy
Shiseido is setting higher standards of corporate
governance based on the understanding that maximizing
corporate
and
shareholder
value,
fulfilling
social
responsibilities and achieving sustainable growth and
development are key to maintaining support as a valuable
company from all stakeholders (consumers, business partners,
shareholders, employees, society and the Earth).
matters. In a change to separate supervision and execution,
from April 2011 the Chairman of the Board of Directors no
longer holds concurrent positions as a corporate executive
officer. Formerly, the President & Chief Executive Officer was
Chairman of the Board of Directors. Attendance at the 15 Board
of Directors’ meetings in the year ended March 2011 was 100
percent.
The adoption of a corporate executive officer system has
separated the decision-making and supervisory functions of the
Management and Execution
Structure
Board of Directors from the business execution functions of
corporate officers. The Corporate Executive Officer Committee,
Shiseido has selected a corporate auditor structure with
which acts as the final decision-making body regarding material
double check functions for business execution: super vision
issues, furthers the transfer of authority to corporate officers and
by the Board of Directors and audits of legality and adequacy
accelerates operational decision-making. Shiseido’s President &
by the Board of Auditors.
Chief Executive Officer chairs this Committee. In addition, the
Furthermore, Shiseido believes that as a global corporation
Policy Meeting of Corporate Officers is held once per year to
it must establish corporate governance that earns a high level
discuss Shiseido’s medium-to-long-term strategy and determine
of
its direction.
stakeholder
trust
while
also
strengthening
senior
management in order to prevail against competitors. Shiseido
The term of office of directors is one year, and the term
has therefore worked to reform corporate governance in four
limit of corporate officers is four years per position in
areas: clarifying the allocation of responsibility, enhancing
principle and six years maximum.
reinforcing
To obtain an outside point of view and further strengthen
supervisory and auditing functions, and strengthening decision-
the Board of Directors’ super visor y function in regard to
making functions.
business execution, Shiseido appointed two external directors
management
transparency
and
soundness,
Shiseido has strengthened these functions by establishing
from the year ended March 2007, and added a third external
committees and a corporate executive officer system as well as
director in June 2011. Having external directors has
integrating these outstanding features of a company of
stimulated discussion at Board of Directors’ meetings and
committees with the corporate auditor structure.
strengthened its super visor y capabilities. Furthermore,
The Board of Directors is composed of eight members,
Shiseido has designated three external directors as
including three external directors. The small number of
independent directors and three external auditors as
members facilitates rapid decision making. The Board of
independent auditors pursuant to the Tokyo Stock Exchange’s
Securities Listing Regulations.
◆ Overview of Corporate Governance Policy
Management Transparency, Fairness and Speed
Clarify allocation of
responsibility
2001 Introduced corporate executive
2001
2006
2006
2006
50
officer system
Introduced 1-year term for directors
Set upper term limit per position
Formulated rules governing
promotions and demotions
for corporate officers
Lowered upper age limit per
position for holding office
Enhance management
transparency and soundness
2001 Established Remuneration
Committee
2005 Established Nomination
Advisory Committee
Reinforce supervisory and
auditing functions
2005 Increased number of external
corporate auditors from 2 to 3
2006 Appointed external directors
Strengthen decision-making
functions
2001 Established Corporate
Executive Officer Committee
and Policy Meeting of
Corporate Officers
2002 Reduced number of directors
In addition, Shiseido is actively promoting diversity among
meetings and other important meetings.
directors in such ways as appointing women, foreign nationals
Representative directors and corporate auditors meet
and people who have built careers outside of Shiseido. Wide
regularly to exchange opinions and resolve corporate
perspective and advanced insight will promote objectivity and
governance issues. Shiseido maintains a framework to ensure
strengthen the Board’s supervisory and decision-making
that corporate auditors discharge their duties effectively. For
functions. In the year ending March 2012, a new female external
example, the Company arranges liaison meetings with the
director joined the Board of Directors, and two people from
accounting auditors and the Internal Auditing Department in
outside the Company became executive officers. Of the 13
addition to assigning full-time staff to assist in audits.
members of the Board of Directors and the Board of Corporate
Corporate auditor attendance for the 14 Board of Auditors
Auditors, eight people, or 62 percent, have built careers outside
meetings held in the year ended March 2011 was 100 percent
of Shiseido. Four of them, or 31 percent, are women, and one,
(except for one corporate auditor whose attendance rate was
or 8 percent, is a foreign national.
78.5 percent). Attendance at Board of Directors meetings was
The 106th General Meeting of Shareholders held on June
100 percent (except for one corporate auditor whose
Management Transparency, Fairness and Speed
25, 2006 adopted Introduction of Countermeasures to Large
Clarify
management
Acquisitions
of allocation
Shiseido of
Co., Ltd. SharesEnhance
(Takeover
Defense).
responsibility
Subsequently,
based on regulator y changes,
a meeting of the
2001 Introduced corporate executive
2001 Established Remuneration
officer
system
Committee
Board of
Directors
held on April 30,
2008 resolved to
2001 Introduced 1-year term for directors
Advisory
limit per position
2006 Set upper
discontinue
theterm
Takeover
Defense, and
the Committee
108th General
2006 Formulated rules governing
Meetingpromotions
of Shareholders
and demotions approved its removal from the
Articles
of Incorporation.
Shiseido will generate and increase
2006 Lowered
upper age limit per
attendance rate was 80 percent).
Reinforce
supervisory
andthe entire
Strengthen
Internal
audits of
Group decision-making
are conducted to
auditing functions
functions
ensure that business is executed
in an appropriate manner,
2001 Established Corporate
Executive
Officer
Committee and
auditors from
to 3
andcorporate
audit results
are2 reported
to the
Board
of Directors
2005 Increased number of external
and Policy Meeting of
Corporate Officers
2002 Reduced number of directors
2006 Appointed external directors
Board of Auditors.
Shiseido employs three types of audits: internal audits,
audits by the corporate auditors, and accounting audits.
earnings for shareholders by steadily executing the Three-Year
To increase the ef fectiveness and ef ficiency of audits,
Plan, which will increase Shiseido’s competitiveness in global
Shiseido has been enhancing mutual cooperation among
markets and ability to generate sustained growth, and expand
the par ties concerned through means such as regular
corporate value.
liaison meetings to repor t on audit plans and audit results
and exchange opinions.
Audit Structure
Shiseido’s Board of Auditors consists of two standing
Committees
corporate auditors and three external corporate auditors.
With a view to promoting transparency and objectivity
Corporate auditors monitor the legality and adequacy of
in management, Shiseido has established two committees
directors’ performance by attending Board of Directors’
to advise the Board of Directors: the Remuneration
◆ The Company’s System for the Management and Execution of Business
General Meeting of Shareholders
Appointment,
termination
Accounting Auditors
Resolution at the General Meeting of
Shareholders based on laws
Audit
Appointment, termination
Audit
Board of Directors
Advisory committees to the Board of Directors
Appointment,
termination
Board of Auditors
Advisoryy committees to the Board of Directors
Remuneration Committee
Report
Nomination Advisory
Committee
CSR Committee
Supervision
Policy Meeting of
Corporate Officers
Corporate Executive Officer Committee
Proposal of material legal and
management issues
Resolution,
approval
Proposal
Resolution, approval
Decision-Making Meeting of Corporate Officers
51
Committee, which makes recommendations on executive
◆ Committees and Their Members
remuneration and performance evaluation guidelines; and
Remuneration Committee
〔Chair〕
Shoichiro Iwata, External Director
〔Members〕 Shinzo Maeda, Representative Director, Chairman
Hisayuki Suekawa, Representative Director, President & CEO
Kimie Iwata, Representative Director, Executive Vice President
Taeko Nagai, External Director
Tatsuo Uemura, External Director
the Nomination Advisor y Committee, which makes
recommendations on director and corporate officer
candidates and promotions. Both committees are chaired
by external directors to maintain objectivity.
On April 1, 2011, Shiseido combined the CSR Committee
and the Compliance Committee to establish the CSR
Committee, which reports directly to the Board of
Directors. This further enhances Shiseido’s ability to
identify and appropriately respond to society’s demands
from a unified perspective.
The CSR Committee covers all areas in which the Shiseido
Group is expected to fulfill its corporate social responsibility
(CSR). It monitors the demands and expectations of society
and determines the direction for the Group’s CSR activities.
At the same time, it monitors risks associated with
management strategy and business execution and takes
necessary countermeasures. Chaired by Shiseido’s Executive
Vice President, the CSR Committee is composed of members
representing a broad cross-section of the Company. It also
Nomination Advisory Committee
〔Chair〕
Tatsuo Uemura, External Director
〔Members〕 Shinzo Maeda, Representative Director, Chairman
Hisayuki Suekawa, Representative Director, President & CEO
Shoichiro Iwata, External Director
Taeko Nagai, External Director
CSR Committee
〔Chair〕
〔Members〕 Carsten Fischer, Director, Corporate Senior Executive Officer
Tatsuomi Takamori, Director, Corporate Executive Officer
Michiko Achilles, Corporate Officer, Responsible for Public Relations, Consumer
Information, Environmental Affairs, CSR and Corporate Culture Reforms
Tsunehiko Iwai, Responsible for Technical Planning, Quality Management and
Frontier Sciences Business
Shigeto Ohtsuki, Corporate Officer, General Manager of Personnel Department
Mitsuo Takashige, Corporate Officer, General Manager of Corporate Planning
Department
Hajime Akatsuka, Chairman of the Central Executive Committee, Shiseido Labor
Union
Yoko Hayashi, External Member, Attorney at Law, Athena Law Office
Mariko Kawaguchi, External Member, Managing Director, CSR Group, Corporate
Communication Department, Daiwa Securities Group Inc.
〔Observers〕 Taeko Nagai, External Director
Yasuko Takayama, Standing Corporate Auditor
Toshio Yoneyama, Standing Corporate Auditor
includes experts from outside Shiseido, and makes proposals
for and reports on plans and results of activities to the Board
of Directors.
� Overview of Shiseido’s CSR Activities Domain
◆ Overview of Shiseido CSR Domains
Remuneration to Directors, Corporate
Officers and Corporate Auditors
Remuneration to directors and corporate officers consists of
a basic fixed portion and a performance-linked portion that
Proposing new social values
Creating markets
Social contribution activities
(including philanthropy)
Unique
Shiseido
CSR
(Activities that
increase
corporate value)
Compliance with laws and regulations
Provision of products and services
Collaboration with business partners
Profits and dividends, payment of taxes, valuing employees,
creation of employment opportunities
and share price. The performance-linked portion of the
remuneration of directors other than external directors increases
with their degree of responsibility as corporate executive officers.
On average, assuming full achievement of the targets of the
Environment
Information disclosure, protection of human rights,
protection of personal information
fluctuates depending on the achievement of management targets
Three-Year Plan and each of its fiscal years, the basic fixed
Fundamental
CSR
(Activities that
minimize risk and
protect
corporate value)
Continued corporate existence
portion is designed to be about 40 percent of total remuneration
and the performance-linked portion about 60 percent.
Performance-linked remuneration consists of a short-
term incentive bonus based on annual consolidated results,
medium-term incentive remuneration based on the achievement
of the targets of the Three-Year Plan, to be paid in cash at the
Shiseido actively promotes both fundamental CSR required of a company and selective CSR
unique to Shiseido that increases corporate value.
culmination of the plan, and stock options as long-term
incentive, primarily aimed at fostering a shared awareness of
profits with shareholders. Performance-linked remuneration is
designed to give directors and corporate officers a medium-tolong-term perspective, not just a single-year focus, and to
52
Management Transparency, Fairne
Clarify allocation of
responsibility
motivate management to become more aware of Shiseido’s
performance and share price.
External directors receive only basic fixed remuneration
because of the importance of a stance independent from
business execution in their supervisory functions. Due to the
nature of auditing, corporate auditors receive fixed basic
remuneration only, to eliminate linkage with performance.
Basic remuneration for directors and corporate auditors
is within the monthly remuneration limits decided by the
General Meeting of Shareholders; performance-linked
22001
) ¥38 Introduced
million wascorporate
recordedexecutive
for the year ended
2011 asRemuneration
performance-linked
2001March
Established
remuneration
(linked to the previous Three-Year Plan
completed in the year ended
officer system
Committee
March 2008) granted to one director of the Company, who at the time served as
2001 Introduced 1-year term for directors
corporate executive officer not concurrently holding the office of director.
Advisory Committee
2006 Set upper term limit per position
3) Two subsidiaries of the Company paid ¥9 million to two directors of said subsidiaries
2006
governing
whoFormulated
also servedrules
concurrently
as directors of the Company until March 31, 2010 as
promotions
and ended
demotions
bonuses
for the year
March 2010.
4) ¥23 million was recorded as a final retirement payment granted to one director who
2006 Lowered upper age limit per
retired at the conclusion of the 110th Ordinary General Meeting of Shareholders held
on June 25, 2010. (Payment was made based on the resolution of the 104th Ordinary General Meeting of Shareholders held on June 29, 2004 to grant final retirement
payments due to the abolition of the retirement bonus system for directors and corporate
auditors).
6. None of the directors or the corporate auditors will receive remuneration other than the
executive remuneration described above (including that described in notes 1 through 5).
incentive
remuneration
and
incentive stock options, is also set on a case-by-case basis
Basic
Shinzo Maeda
Directors (10 people) Short-Term Medium-Term Long-Term
Incentive
Incentive
Incentive
Bonus Remuneration Stock Options
(for Three Years)
Total
287 120 283
104
795
External directors
(2 of the 10)
26 — —
—
26
Corporate auditors
(6 people)
96 — —
—
96
36 — —
—
36
383 120 283
104
891
External auditors
(3 of the 6)
Total
Short-Term Medium-Term
Long-Term
Incentive
Incentive Remuneration
Incentive
Bonus (for Three Years) Stock Options
Basic
(Millions of yen)
Notes:
1. Basic remuneration for directors has the ceiling amount of ¥30 million per month as per
the resolution of the 89th Ordinary General Meeting of Shareholders held on June 29,
1989. Basic remuneration for corporate auditors has the ceiling amount of ¥10 million per
month as per the resolution of the 105th Ordinary General Meeting of Shareholders held
on June 29, 2005.
2. A total amount of ¥142 million was paid during the year ended March 2011 as bonuses to the
eight directors (excluding the external directors) for the year ended March 2010 (based on the
resolution of the 110th Ordinary General Meeting of Shareholders held on June 25, 2010).
3. The above payment includes the amounts of the following remuneration, etc., paid to
directors and corporate auditors.
1) Remuneration to two retired directors
The Company paid ¥13 million in basic remuneration for the months April through June
2010 to two directors who retired at the conclusion of the 110th Ordinary General
Meeting of Shareholders held on June 25, 2010 and recorded ¥8 million for the year
ended March 2011 as expenses associated with stock options granted to said directors.
2) Remuneration to one retired corporate auditor
The Company paid ¥7 million in basic remuneration for the months April through June
2010 to one corporate auditor who retired at the conclusion of the 110th Ordinary General
Meeting of Shareholders held on June 25, 2010.
4. The medium-term incentive remuneration shall be as per the resolution of the 108th
Ordinary General Meeting of Shareholders (held on June 25, 2008). Medium-term
incentive remuneration will not be paid to directors, excluding Mr. Carsten Fischer,
because the ratio of achievement of the target (10%) for the ratio of operating income to net
sales on a consolidated basis for the final year of the Three-Year Plan was less than the
minimum ratio required for provision of the remuneration. This remuneration will also not be
paid to external directors. As the payment of the medium-term incentive remuneration to
Mr. Carsten Fischer is based on the ratios of achievement of targets for operating sales and
operating income, each on a cumulative basis for the three years of the business division in
his charge in the Three-Year Plan from April 2008 to March 2011; and as the performance
for said three years has been determined and the targets have been achieved, the estimated
amount of remuneration to Mr. Fischer has been included in the above table. The amount in
the table indicates the amount corresponding to the three years.
5. The following remuneration will be paid in addition to the above payments.
1) ¥6 million was recorded for the year ended March 2011 as expenses associated with
stock options granted to three directors of the Company, at the time they served as
corporate executive officers not holding the offices of directors.
corpora
2006 Appoint
(Millions of yen)
by resolution of the General Meeting of Shareholders.
Auditors for the Year Ended March 2011
2005 Increase
Directors and Directors Whose Total
Remuneration Exceeded ¥100 Million for the Year
Ended March 2011
long-term
◆ Remuneration to Directors and Corporate
Reinforc
audi
◆ Remuneration by Type to Representative
remuneration, including the short-term incentive bonus,
medium-term
Enhance management
Representative Director
49 28 —
25
Total
103
Kimie Iwata
69
37 15 — General
16 Meeting
Representative Director
Appointment,
Resolution at the General Meeting of
Carsten Fischer termination
on laws
443
82Audit
51 Shareholders
283 based26
Director
of Shareho
Appointm
Accounting Auditors
Notes:
Board of Directors
1.Advisory
As bonuses
for the yeartoended
March of
2010,
¥35 million was paid to Mr. Shinzo Maeda,
committees
the Board
Directors
Representative Director, ¥18 million was paid to Ms. Kimie Iwata, Representative
Remuneration
Committee
Director,
and ¥50 million was
paid to Mr. Carsten Fischer, Director, in the year ended
March 2011 (based on the resolution of the 110th Ordinary General Meeting of
Super
Report
Shareholders held on June 25, 2010).
Nomination Advisory
2. In addition to the
above payments, a total amount of ¥1 million has been recorded as
Committee
expenses associated with stock options granted to Mr. Carsten Fischer, Director, at the
time he served as corporate executive officer not concurrently holding the office of Corporate Executive
director. ¥38 million was recorded for the year ended March 2011 as performance-linked
remuneration (linked to the Three-Year
Plan completed
in thelegal
year ended
Resolution,
Proposal
of material
and March 2008)
Proposal
granted to Mr. Carsten Fischer, at the time he served
as corporate
executive officerapproval
not
management
issues
holding the office of director.
3. The medium-term incentive remuneration shall be asDecision-Making
per note 4 of RemunerationMeeting
to
of Corpor
Directors and Corporate Auditors for the Year Ended March 2011, above.
4. None of the three directors above will be paid remuneration other than the executive
remuneration described above (including that described in notes 1 through 3).
◆ Remuneration by Type to Directors Other Than
External Directors During the Three-Year Plan
Ended March 2011
Fixed portion of remuneration
799
308
46.4%
0
20
(Millions of yen)
Performance-linked portion of remuneration
17.9%
40
60
283
16.5%
80
332
19.3%
100
(%)
Basic remuneration
Short-Term Incentive Bonus Medium-Term Incentive Remuneration
Long-Term Incentive Stock Options
Notes:
1. The graph reflects a decrease in the weight of the performance-linked portion because
two representative directors did not receive short-term incentive bonuses for the year
ended March 2009 as they did not achieve the predetermined threshold based solely on
consolidated performance. In addition, the medium-term incentive remuneration was not
paid to directors (excluding Mr. Carsten Fischer).
2. T he above figures include remuneration paid by subsidiaries to directors of said
subsidiaries who also served concurrently as directors of the Company, and long-term
incentive stock options are only for the three-year period ended March 2011.
53
Compliance
In April 2011, Shiseido newly established the Shiseido
Group Corporate Philosophy “Our Mission, Values and Way.”
Our Mission defines our corporate mission and business
domains, and sets out our raison d’être. Our Values define the
approach that must be shared by all employees of the Shiseido
Group in order to realize Our Mission. Our Way promotes
legitimate and fair business practices by defining standards
for ensuring the highest level of ethical conduct.
The CSR Committee, which reports directly to the Board
of Directors, is responsible for improving the quality of the
Company in ways including promoting legitimate and fair
business practices throughout the Group as well as risk
countermeasures. It submits proposals for and reports on
action plans and their results to the Board of Directors.
At each business office, a manager responsible for instilling
and establishing Our Mission, Our Values and Our Way
encourages activities that promote corporate ethics and works
to preclude or quickly detect and resolve problems. The
Company also provides multiple reporting and consultation help
lines, which include external lawyers, to quickly detect and
correct actions that contravene the law, ordinances, the Articles
of Incorporation and other regulations of the Company. In
institutional investors. In the year ended March 2011, Shiseido
conducted more than 500 such meetings.
The President & Chief Executive Officer leads meetings
for individual investors twice a year to explain our strategies
and results, and Shiseido makes webcasts of presentations
and question-and-answer sessions available on its website. In
addition, Shiseido also conducts a survey once every six
months, primarily of individual shareholders, and uses the
results in ways such as improving disclosure materials.
Shiseido collects investor opinions and puts them to use
in management. The Investor Relations Department obtains
shareholder and investor opinions from dialogues and
communicates them within the Company in various ways,
which contributes to management reforms. Specifically,
investor opinions concerning management are analyzed to
identify management issues, which are reported in a timely
fashion. Every quarter, Shiseido also posts the IR Report,
which presents the collected opinions of securities analysts,
on the Company intranet. In addition, Shiseido conducts
internal communication to convey investor evaluations of the
Company to employees.
◆ Overview of Investor Relations Activities
addition, Shiseido conducts Groupwide internal audits to assure
duties are being performed appropriately. The results of these
Activities for
individual investors
・Twice-yearly information meetings led by the President & CEO
・Webcasts of these meetings are posted on Shiseido’s website
Activities for securities
analysts and
institutional investors
・Twice-yearly meetings led by the President & CEO to
announce first-half and full-year results (teleconferences by
members of the Investor Relations Department to announce
first- and third-quarter results)
・Individual interviews at Shiseido
・Meetings with investors in Europe, the United States and Asia
audits are reported to directors and corporate auditors.
Dialogue with Shareholders
and Investors
Shiseido is committed to timely and appropriate disclosure.
Activity
We emphasize dialogue with shareholders and investors to
maintain accountability and work to increase corporate value
by incorporating their opinions in management.
The President & Chief Executive Officer leads meetings for
IR materials
available on
Shiseido’s website
institutional investors twice a year to present first-half and fullyear results, while members of the Investor Relations
Department holds teleconferences twice a year to discuss firstand third-quarter results. The President & Chief Executive
Officer, Chief Financial Officer and members of the Investor
Relations Department also visit investors in Japan and overseas
and respond to requests for one-to-one meetings from
54
Other
Details
・Notice of Convocation of the Ordinary General Meeting of
Shareholders
・Annual securities filing and quarterly reports (Japanese only)
・Corporate Governance Report
・Timely disclosure materials
・Signed statements associated with timely disclosure
・Financial Results Briefing materials
・Consolidated Settlement of Accounts
・Annual Report
・To Our Shareholders and Investors (Printed brochure for
shareholders) (Japanese only)
・IR Report, analyzing investor opinions concerning
management and reporting on management issues, is posted
on Company intranet
・Internal communication conveying investor evaluations of
Shiseido to employees
Risk Management
over view of the flow of operations in each division and
Fundamental Stance on Risk
Management and Approach to
Business Continuity
Shiseido’s activities overall; clearly specifying operational
procedures and authority; and ensuring versatility in man-
Shiseido’s fundamental stance on risk management is
that the Company’s primar y responsibility is ensuring the
safety of employees and their families while also protecting
Company assets, maintaining operating continuity and earning the trust of stakeholders. This fundamental stance is
the basis of our belief that we enhance corporate value by
quickly responding to risks as they materialize and minimize their impact as a matter of course, and engaging in
aging various risks. Built on Business Continuity Plan I and
Business Continuity Plan II, which we formulated and had
been implementing since 2004 in order to establish a system for managing the business continuity planning cycle,
this plan was instrumental in dealing with the Great East
Japan Earthquake that occurred in March 2011.
Identifying Potential Risks
responsible behavior that prevents social loss and contributes
Shiseido focuses on verifying potential risks because the
to society. The CSR Committee, which reports directly to the
Company recognizes that preventing risks from materializing
Board of Directors, implements the risk management system
is crucial to business continuity. We make sure to include
by controlling the various risks and compliance issues related
projections of the social environment and international affairs
to Shiseido’s corporate activities and by promoting various
as well as changes in domestic and international treaties and
policies to preclude risk. Moreover, the risk management orga-
regulations. To do this, we look at risk from three perspec-
nization’s three-tier structure – Countermeasure Headquarters,
tives: social requirements, risks Shiseido cannot or will not
Countermeasure Project and Countermeasure Team – responds
address, and risks Shiseido should address. Through this
to risks that materialize according to risk severity.
process, we determine the initiatives we should implement,
In February 2011, we formulated Business Continuity Plan
III with the objectives of presenting an easily understandable
which we call CSR Actions.
Specifically, in accordance with Our Way, Global Reporting
◆ CSR Action Process
Relevant Head Office Division
CSR Status Survey
Relevant Domestic and Overseas Group
Companies CSR Self Assessment
1. Itemize and prioritize corporate responsibility issues
2. Conduct internal audit
Conduct internal audit in accordance
with core ISO26000 issues
Focus on
issues
2. Conduct internal audit
Conduct internal audit of issues required for
corporate management
Report
Report
3. Summarize and define tasks
Feedback
Feedback
4. Feedback on overall conclusions
4. Feedback on overall conclusions
Feedback on overall conclusions of Shiseido
Group and conclusions of affiliated companies
Feedback on overall conclusions of Shiseido Group
and conclusions specific to individual companies
5. Confirm plans for and progress of
countermeasures
Report
Report
CSR Committee
55
Initiative (GRI) guidelines and ISO26000, Shiseido classifies all
determine potential risks. Shiseido will constantly ascer-
survey results and other information obtained from institutions
tain society’s perspective and operational exposure in
involved in socially responsible investing and CSR auditing into
working to respond to risks quickly and appropriately.
categories such as corporate governance, human rights, labor
practices, the environment, fair business practices, consumer
issues, and participation in and development of the community.
We break these down into more detailed categories and scru-
Products That Are Healthy and Eco-Friendly
tinize each one in terms of the Plan-Do-Check-Act cycle: Do we
At the World Summit on Sustainable Development held in
have a specific plan (Plan)? Do we have a system in place for
Johannesburg in 2002, the United Nations adopted the goal of
action (Do)? Are we evaluating and validating (Check and Act)?
using and producing chemicals by 2020 in ways that lead to
Based on this review, we determine the initiatives we will
the minimization of significant adverse effects on human
implement. Issues that we identify are evaluated and prioritized
health and the environment. With this in mind, Shiseido’s fun-
according to their relative impact on our business and degree
damental stance is not to sell products that adversely impact
of interest to society.
human health or the environment, based on information it has
We use this process for risk mapping, with the CSR
collected regarding domestic and international regulatory
Committee receiving reports on the results and the respon-
trends and chemical substance safety, and the latest scientific
sible division receiving feedback so that we can quickly for-
knowledge.
mulate and implement plans. Major issues that the CSR
For example, all chemical substances associated with cos-
Committee has studied through this process include initia-
metics and containers shipped within the EU are subject to the
tives to promote biodiversity, programs to increase safety
awareness, support to empower women in developing countries, business continuity planning and operational system
preser vation.
Fur thermore, from April 2011, Shiseido’s subsidiaries
and affiliates in Japan and overseas began conducting selfassessments using the CSR Action items, thus establishing
a system that enables the Shiseido Group as a whole to
◆ Itemized Verification Sheet
We have created an itemized checklist of risks and conduct audits from
various perspectives.
56
Specific Countermeasures
European REACH Regulation that came into effect in June 2007
and its prescribed registration procedures. As a matter of
course, we keep track of all substances that require registration.
We also confirm that our products and containers contain no
more than 0.1 percent of Substances of Very High Concern
(SVHC), for which information must be provided because they
are known to have probable serious effects on human health
and the environment.
◆ Risk Map
Level of impact: High
Degree of interest
to society: Low
Degree of interest
to society: Medium
Degree of interest
to society: High
Level of impact: Medium
Degree of interest
to society: Low
Degree of interest
to society: Medium
Degree of interest
to society: High
Level of impact: Low
Degree of interest
to society: Low
Degree of interest
to society: Medium
Degree of interest
to society: High
We map risk items primarily according to degree of influence on business and degree of
interest to society, and then prioritize the initiatives we will execute.
determine damage and create an organization to maintain
Initiatives to Abolish Animal Testing
Shiseido does not use animal testing in the development
of finished cosmetics products. For raw materials, our fun-
continuous product supply. At the same time, we initiated
support activities in the stricken area.
damental stance is to avoid the use of animal testing except
Shiseido donated ¥100 million to support relief efforts
in cases in which it is legally required for product safety
shortly after the earthquake, as well as over 200,000 items
assurance or no alternative is available. Shiseido intends to
including FRESSY Dry Shampoo, which does not require
eliminate all animal testing in line with the leading initiative
water. Subsequently, we responded to requests for cosmet-
in this area, the EU Cosmetics Directive, which is aimed at
ics from the stricken area by providing 30,000 sets of skin-
phasing out all animal testing by 2013. Shiseido ended in-
care products, makeup and other cosmetics to relief cen-
house animal testing in March 2011 with a view to protect-
ters. In addition, Shiseido employees in Japan as well as
ing animals while strictly maintaining safety so that custom-
Group companies overseas and their employees voluntarily
ers can use our products without concern. Shiseido will
donated money to the Hanatsubaki Fund, which supports
work to achieve this goal quickly by promoting the develop-
social contribution activities.
ment of alternatives through cooperation with domestic and
Production was affected by damage to certain production
overseas industr y associations and organizations that vali-
facilities at the Kuki Factory. Restoration was completed in
date alternative methods, such as the Japan Cosmetic
two weeks and the factory resumed operations. Shiseido is
Industr y Association and the European Center for the
dealing with the issue of power shortages through changes in
Validation of Alternative Methods. We have also been
factory operation days and hours and by shifting production
exchanging opinions and holding discussions with experts,
to other factories. In addition, while the impact of the earth-
academics and humane societies, and intend to further pro-
quake on our business partners has affected the procurement
mote collaborative initiatives with these stakeholders.
of certain ingredients and raw materials, some of our suppliers
have restored operations, and we have made progress in pro-
Response to the Great East Japan Earthquake
curing substitutes.
The Great East Japan Earthquake of March 2011 damaged Shiseido’s offices and factories as well as those of
business partners and stores it does business with. In
accordance with our Business Continuity Plan III, immediately after the earthquake, we established the Headquarters
for Emergency Disaster Response at our head office to
◆ Headquarters for Emergency Disaster Response Organization Chart
General Manager of Sales Division
Headquarters for Emergency Disaster Response
General Manager
(President & CEO)
Sustained Product Supply Committee
(Activities to support restoration of operations)
Corporate Officer Responsible for
Production, Purchasing and Logistics
(Executive Vice President and
Chair of CSR Committee)
Personnel team
Sales Administration Department
Secretariat
(CSR Department)
(Corporate Officer Responsible for CSR)
Members
Telecommunications
team
(Corporate Officer Responsible for the Sales Department)
Deputy General Manager
Facilities &
procurement team
CSR Committee members
Corporate officers responsible for lead divisions,
general managers of related divisions
Financial
team
Communication
team
Regional
support team
General Manager of Area Headquarters
for Disaster Response
Sales
divisions
Sales
divisions
57
Main Subsidiaries and Af filiates
(As of March 31, 2011)
Company Name
Location
Paid-in Capital
Shiseido Sales Co., Ltd.
Minato-ku, Tokyo
¥100 million
Shiseido FITIT Co., Ltd.
Chuo-ku, Tokyo
¥10 million
Shiseido International Inc.
Chuo-ku, Tokyo
¥30 million
The Ginza Co., Ltd.
Chuo-ku, Tokyo
¥100 million
Domestic
Cosmetics Business
FT Shiseido Co., Ltd.
Chuo-ku, Tokyo
¥100 million
100.0
Shiseido Pharmaceutical Co., Ltd.
Chuo-ku, Tokyo
¥100 million
100.0
Shiseido Americas Corporation
Delaware, U.S.A.
(Thousands of U.S. dollars)
100.0
Shiseido America, Inc.
New York, U.S.A.
(Thousands of U.S. dollars)
Blush Holdings LLC
Delaware, U.S.A.
(U.S. dollars)
Bare Escentuals, Inc.
Delaware, U.S.A.
(U.S. dollars)
Zotos International, Inc.
$403,070
Main Business1
Equity ownership percentage3
100.0
100.0
100.0
98.2
100.0
（100.0）
$28,000
100.0
（100.0）
$100
100.0
（100.0）
$0.01
100.0
Connecticut, U.S.A. (Thousands of U.S. dollars)
$25,000
（100.0）
Paris, France
(Thousands of euro)
�256,133
100.0
Paris, France
(Thousands of euro)
Shiseido Deutschland GmbH
Dusseldorf,
Germany
(Thousands of euro)
Shiseido Cosmetici (Italia) S.p.A.
Milan, Italy
100.0
（100.0）
100.0
（100.0）
100.0
（100.0）
100.0
（100.0）
100.0
（100.0）
100.0
（100.0）
Shiseido International Europe S.A.
Shiseido International France S.A.S.
Shiseido Europe, S.A.S.
Beauté Prestige International S.A.
Laboratoires Decléor S.A.S.
Shiseido China Co., Ltd.
Shanghai Zotos Citic Cosmetics Co., Ltd.
Paris, France
Paris, France
Paris, France
Shanghai, China
Shanghai, China
Shiseido Liyuan Cosmetics Co., Ltd.
Beijing, China
Shiseido Hong Kong Cosmetics Ltd.
Hong Kong, China
Taiwan Shiseido Co., Ltd.
Taipei, Taiwan
�36,295
�5,200
(Thousands of euro)
�2,400
(Thousands of euro)
�9,000
Global Business
(Thousands of euro)
�17,760
(Thousands of euro)
�19,374
(Thousands of yuan)
100.0
CNY565,093
92.6
(Thousands of yuan)
（72.6）
CNY418,271
65.0
(Thousands of yuan)
（33.0）
CNY94,300
(Thousands of HK dollars)
100.0
HKD123,000
(Thousands of NT dollars)
NTD1,154,588
51.0
Shiseido Professional Co., Ltd.
Chuo-ku, Tokyo
¥250 million
100.0
Shiseido Beauty Salon Co., Ltd.
Chuo-ku, Tokyo
¥100 million
100.0
Shiseido Parlour Co., Ltd.
Chuo-ku, Tokyo
¥100 million
Chiyoda-ku, Tokyo
¥11,600 million
Other: 68 subsidiaries
—
—
—
—
(Equity-method affiliates): 3 companies
—
—
—
—
Selan Anonymous Association2
Others
99.3
—
［ 100.0 ］
Notes:1.The segment name is noted in the Main Business column.
2.A company of less than 50 percent equity ownership that is treated as a subsidiary because Shiseido is essentially in control.
3.N umbers in parentheses include indirect equity ownership, and numbers in brackets represent ownership by parties with a close relationship or those in
agreement with Shiseido.
58
Financial Section
Six-Year Summary of Selected Financial Data
60
Management’s Discussion and Analysis
61
Consolidated Financial Statements
76
Consolidated Balance Sheets
Consolidated Statements of Income
Consolidated Statements of Comprehensive Income
Consolidated Statements of Changes in Net Assets
Consolidated Statements of Cash Flows
Notes to the Consolidated Financial Statements
82
1. Basis of Presenting Consolidated Financial Statements
2. Summary of Significant Accounting Policies
3. Cash Flow Information
4. Financial Instruments
5. Securities
6. Inventories
7. Short-term and Long-term Debt
8. Accrued Retirement Benefits
9. Income Taxes
10. Contingent Liabilities
11. Net Assets
12. Stock Option Plan
13. Research and Development
14. Transactions with Related Parties
15. Accounting for Leases
16. Derivative Financial Instruments
17. Impairment Loss
18. Restructuring Expenses
19. Loss on Disaster
20. Segment Information
21. Business Combination
22. Subsequent Event
Independent Auditors’ Report
103
59
Six-Year Summary of Selected Financial Data
For the years ended March 31, 2006 to 2011
Millions of yen
Thousands of dollars
(Note 1)
(Except per share data)
(Except per share data)
2006
2007
2008
2009
2010
2011
2011
Operating Results:
Net sales
¥670,957 ¥694,594 ¥723,485 ¥690,256 ¥644,201 ¥670,701 $8,066,158
Cost of sales
176,884 185,533 186,466 171,752 160,166 168,692 2,028,768
Selling, general and
administrative expenses
455,194 459,056 473,554 468,590 433,684 457,551 5,502,718
Operating income
38,879 50,005 63,465 49,914 50,351 44,458 534,672
EBITDA (Note 2)
58,963 78,036 94,960 70,149 75,699 65,576 788,647
Net income 14,436 25,293 35,460 19,373 33,671 12,791 153,830
Financial Position
(At year-end):
Total assets
¥671,842 ¥739,833 ¥675,864 ¥606,569 ¥775,446 ¥740,184 $8,901,792
Short-term liabilities (Note 3)
12,786 Long-term debt
Interest-bearing debt
Net assets
66,144 38,653 27,601 112,693 69,492 61,694 24,566 34,452 101,754 181,156 2,178,665
82,278 127,838 63,219 62,053 214,447 197,518 2,375,442
387,613 403,797 399,739 351,951 365,208 321,191 3,862,790
Net income (Note 4)
¥ 34.4 ¥ 60.9 ¥ 86.1 ¥ 48.0 ¥ 84.6 ¥ 32.1 $0.39
Net assets (Note 4)
906.1 940.8 946.2 839.9 875.7 774.8 9.32
Cash dividend
30.0 32.0 34.0 50.0 50.0 50.0 0.60
Weighted average number of
shares outstanding during
the period (thousands)
412,855 412,572 407,696 403,240 397,886 397,864
Operating profitability (%)
5.8 7.2 8.8 7.2 7.8 6.6
Return on assets (%)
2.1 3.6 5.0 3.0 4.9 1.7
Operating ROA (%) (Note 5)
5.9 7.4 9.4 8.2 7.5 6.1
Return on equity (%)
3.9 6.6 9.2 5.4 9.8 3.9 Equity ratio (%)
55.7 52.5 56.6 55.6 44.9 41.7 16,362 196,777
Per Share Data
(In yen and U.S. dollars):
Financial Ratios:
Interest coverage ratio (times) (Note
6)
8.6 30.6 39.1 23.6 45.4 32.8 Interest-bearing debt ratio (%) (Note 7)
17.5 24.0 13.7 15.0 37.0 38.1 Payout ratio (Consolidated) (%) 87.2 52.6 39.5 104.1 59.1 155.5 Number of employees
at year-end (Note 8)
25,781 27,460 28,793 28,810 28,968 Net sales per employee
¥26.0 ¥25.3 ¥25.1 ¥24.0 ¥22.2 31,310
¥21.4 Notes:1. U.S. dollar amounts are converted from yen, for convenience only, at the rate of ¥83.15 = US$1 prevailing on March 31, 2011.
2.EBITDA (Earnings before interest, tax, depreciation and amortization) = Income before income taxes + Interest expense + Depreciation and
amortization
3. Short-term liabilities = Short-term debt + Current portion of long-term debt
4. Net income per share (primary) is based on the average number of shares outstanding during the fiscal year. Net assets per share is
calculated using the number of shares outstanding as of the balance sheet date.
5. Operating ROA = (Operating income + Interest and dividend income) ÷ Total assets (Yearly average)
6. Interest coverage ratio = Net cash provided by operating activities ÷ Interest paid*
*As stated in the statements of cash flows
7.Interest-bearing debt ratio = Interest-bearing debt ÷ Invested capital*
* Invested capital = Interest-bearing debt + Total net assets
8. The number of employees at year-end does not contain temporary employees.
60
$257
Operating Results
Overview
of Bare Escentuals and lower marginal income because of the
decrease in domestic sales caused operating income to decrease
During the fiscal year ended March 31, 2011, the cosmetics
market continued to grow overseas, with ongoing recovery in
Europe and North America and continued strong market expansion in China and newly industrialized economies. In Japan, the
cosmetics market brightened briefly during summer 2010, but
overall consumer sentiment was slow to improve and the market
continued to contract. In addition, Japan suffered from the Great
East Japan Earthquake in March 2011, which was an unprecedented natural disaster.
Since the fiscal year ended March 31, 2009, the Shiseido Group
has been aiming to become a global player representing Asia with
its origins in Japan by carrying out a Three-Year Plan to improve
the quality of activities across the board. In the fiscal year ended
March 31, 2011, the final year of the Three-Year Plan, Shiseido
concentrated on creating a brand loved by customers throughout
the world with a focus on strengthening cultivation of the global
brand
, further expanding its business in China, and
nurturing core brands/lines in the home market of Japan. In addition, we worked to improve profitability by promoting structural
reform, nurturing global human resources and strengthening corporate governance in order to establish an “unsurpassed, worldclass quality of business management.” Moreover, as a corpora-
11.7 percent to ¥44,458 million ($534,672 thousand).
Net income decreased 62.0 percent to ¥12,791 million
($153,830 thousand) because of the impact of a change in estimation of product samples and promotional items within the
scope of assets, write-down of investments in securities, and
loss on disaster related to the Great East Japan Earthquake.
In the first year of the Three-Year Plan that concluded on March
31, 2011, Shiseido had to change its targets for operating profitability, return on equity (ROE; net income divided by average total
net assets) and the overseas sales ratio because of the impact of
the global financial crisis touched off by the collapse of Lehman
Brothers in autumn 2008 and the subsequent changes in market
structure and weakening consumer sentiment.
Operating profitability for the fiscal year ended March 31,
2011, the final year of the Three-Year Plan, was 6.6 percent,
and ROE was 3.9 percent. The overseas sales ratio was 42.9
percent as a result of strong growth in Shiseido’s China business and the acquisition of Bare Escentuals.
Changes in Accounting Policies
Application of Accounting Standard for Asset
Retirement Obligations
tion that is part of society, we actively promoted CSR activities,
Effective from the year ended March 31, 2011, Shiseido has
including social contributions and environmental protection.
adopted “Accounting Standard for Asset Retirement Obligations”
Shiseido devoted all of its capabilities to these corporate activ-
(ASBJ Statement No. 18, March 31, 2008) and “Guidance on
ities during the fiscal year ended March 31, 2011. As a result,
Accounting Standard for Asset Retirement Obligations” (ASBJ
overseas sales increased 21.2 percent compared with the previ-
Guidance No. 21, March 31, 2008). This change reduced operating
ous fiscal year to ¥287,835 million ($3,461,636 thousand), with
income by ¥131 million ($1,575 thousand), and reduced income
recovery of the potential for growth in the markets of Europe and
before income taxes by ¥976 million ($11,738 thousand).
North America and continued strong growth in Asian markets
cosmetics company Bare Escentuals, Inc. in March 2010, which
Application of Accounting Standard for
Business Combinations
added to net sales. In the Japanese market, however, consumer
Effective from the year ended March 31, 2011, Shiseido has
sentiment was slow to improve and a changing market structure
adopted “Accounting Standard for Business Combinations” (ASBJ
that is becoming polarized between high- and low-priced products
Statement No. 21, December 26, 2008), “Accounting Standard
led to continued contraction in the mid-priced cosmetics market,
for Consolidated Financial Statements” (ASBJ Statement No. 22,
in which Shiseido is strong. As a result of these and other factors,
December 26, 2008), “Partial Amendments to Accounting
sales in Japan decreased 5.8 percent to ¥382,866 million
Standard for Research and Development Costs” (ASBJ Statement
($4,604,522 thousand). Consequently, net sales including domes-
No. 23, December 26, 2008), “Accounting Standard for Business
tic and overseas sales increased 4.1 percent to ¥670,701 million
Divestitures” (ASBJ Statement No. 7, December 26, 2008),
($8,066,158 thousand).
“Revised Accounting Standard for Equity Method of Accounting
Although Shiseido worked to reduce expenses and operate
for Investments” (ASBJ Statement No. 16, December 26, 2008)
efficiently, nonrecurring expenses associated with the acquisition
and “Revised Guidance on Accounting Standard for Business
including China. Shiseido also completed the acquisition of U.S.
61
Combinations and Accounting Standard for Business Divestitures”
Bare Escentuals. Analysis of the major components of SG&A
(ASBJ Guidance No. 10, December 26, 2008).
expenses is included in the following sections.
Marketing Costs
Net Sales
Marketing costs consist of advertising and promotional
Net sales increased 4.1 percent compared with the previous
expenses. The ratio of marketing costs to net sales decreased
fiscal year to ¥670,701 million ($8,066,158 thousand), and
1.2 percentage points to 21.5 percent. Overseas, Shiseido
increased 6.7 percent on a local currency basis. Overseas sales
concentrated marketing costs on regenerating the global
. In Japan, Shiseido raised cost efficiency by
increased 21.2 percent, with recovery in Europe and North
brand
America and continued strong growth in Asian markets including
assiduously distinguishing and concentrating brands/lines for
China. Shiseido also completed the acquisition of U.S. cosmetics
investment, which reduced the overall ratio of marketing
company Bare Escentuals, Inc. in March 2010, which added
costs to net sales.
to overseas sales. Sales in Japan decreased 5.8 percent
Personnel Expenses
because of the slow improvement of consumer sentiment and
The ratio of personnel expenses to net sales increased 0.7
the ongoing polarization of the cosmetics market between
percentage points to 23.7 percent. In Japan, this ratio rose
high- and low-priced products.
because bonuses increased while net sales decreased.
Net Sales/Overseas Sales Ratio
Overseas, personnel expenses increased with the expansion
Cost of the
Salesratio
Ratio/SG&A
Expensesexpenses
Ratio
of operations. However,
of personnel
(Billions of yen)
(%)
600
45
400
30
200
15
60
800
0
0
2007
2008
2009
2010
2011
Net Sales
694.6
32.4
723.5 690.3
36.5 38.0
644.2
36.9
670.7
42.9
Domestic Sales
Overseas Sales
469.8
224.8
459.2 428.3
264.3 262.0
406.7
237.5
382.9
287.8
Cost of Sales and Selling, General and
Expenses
800Operating Income/Operating Profitability
Cost of Sales
60
(%)
0.9 percent
0 to 24.0 percent. 2.5
0 existing businesses decreased
20
2009
2010
29
Selling, General and Administrative Expenses
694.6 723.5 690.3
644.2 670.7
0
Sales
0
2007
2008(SG&A)
2009 expenses
2010
2011
increased
32.4 general
36.5 and
38.0administrative
36.9
42.9
rseas Sales Ratio Selling,
50.0
63.5 49.9
50.4 to 44.5
Operatingcompared
Income
5.5 percent
the previous
fiscal year
¥457,551
mestic Sales
469.8 459.2
428.3 with
406.7
382.9
7.2
8.8
7.2
7.8
6.6
Operating
Profitability
rseas Sales
224.8
264.3 262.0
237.5The287.8
million
($5,502,718
thousand).
ratio of SG&A expenses to net
sales increased 0.9 percentage points to 68.2 percent as a result
of nonrecurring expenses associated with the acquisition of
(Billions of yen)
(%)
2010
20
24.9
67.3
2
6
22.7
23.0
21.3
0.3
2
2
2
69
28
68
70
67
66
Cash Flows from Operating Activities/Acquisition
of Fixed As
65Prepaid Expenses)
25 (Property, Plant and Equipment + Intangible Assets + Long-term
(Billions of yen)
24
64
80
23
2011
62 SHISEIDO ANNUAL REPOR T 2011
ng Income/Operating Profitability
2009
(%)
ratio of cost of sales to net sales increased 0.3 percentage points
7.5
15
200to 25.2 percent. Excluding
5
40
Bare Escentuals,
Inc., the ratio for
2008
2008
(%)
26
2007
23
Amortization Expenses Associated with2007
Cost of Sales Ratio (Left scale) 26.7
Mergers and Acquisitions
27
30
24
in response to lower net sales.
ous fiscal year to ¥168,692 million ($2,028,768 thousand). The
60
27
The ratio of other expenses to net sales
26 increased 0.4 per25
centage points to 21.7 percent despite efforts
to reduce costs
30
45
600 Cost of sales increased
10
80
5.3 percent compared
with the previ400
28
Other Expenses
Cost of Sales Ratio/SG&A Expenses Ratio
(%)
(Billions of yen)
was lower than the rate of increase in net
29 sales.
25.8 24.9
66.1
65.4 67.9
SG&A
Expense
Ratio
(Right
scale)
The ratio of amortization expenses associated with mergers
Marketing
Costs
23.6
22.9
and acquisitions to net sales increased 1.0 percentage
points23.7
Personnel Expenses
21.6
21.4 22.4
to 1.3 percent. This was mainly due to amortization of goodwill
Other Expenses
20.6
20.9 21.5
and customer-related intangible
assets of
Bare Escentuals.
M&A-related Amortization
Expenses
0.3
0.2
0.3
es/Overseas Sales
Ratio
Administrative
(Billions of yen)
decreased because the rate of increase (%)
in personnel expenses
30
63
2008
2009
2010
2011
SG&A Expense Ratio (Right scale) 66.1
25.8
65.4
24.9
67.9
40
24.9
67.3
25.2
68.2
Marketing Costs
Personnel Expenses
Other Expenses
M&A-related Amortization Expenses
22.9
21.4
20.9
0.2
23.7
20
22.4
21.5
0
0.3
22.7
23.0
21.3
0.3
2007
21.5
23.7
21.7
1.3
2008
2009
2010
201
Cash Flows from Operating 69.4
Activities
Acquisition of Fixed Assets 28.6
75.3
42.8
69.4
67.
27.7
28.2
25.5
26.
2007
23.6
21.6
20.6
0.3
60
15
200
0 Discussion and Analysis
Management’s
Cost of Sales Ratio/SG&A Expenses Ratio 0
Net Sales/Overseas Sales Ratio
2010
2011
Net Sales
694.6
32.4
644.2
36.9
670.7
42.9
Domestic Sales
Overseas Sales
(%)
723.5 690.3
30
36.5 38.0
29
469.8
224.8
459.2 428.3
28
264.3 262.0
27
406.7
237.5
382.9
287.8
2007
2008
2009
2010
2
25.8
65.4
24.9
67.9
24.9
67.3
2
6
Marketing Costs
23.6
22.9 1023.7
Consolidated Subsidiaries
Personnel Expenses
21.6
21.4 22.4
7.5
60
Other
Expenses
20.6
20.9
Minority interests in net income of consolidated subsidiaries21.5
M&A-related Amortization Expenses 0.3
0.2
0.3
5
40 compared with the previous fiscal year
decreased 27.9 percent
22.7
23.0
21.3
0.3
2
2
2
2007
(Billions of yen)
(%)
600
45
400
30
200
15
60
800
2008
2009
26
25
24
0
0
2007
694.6
Net Sales
Overseas
Sales
Ratio
Operating Income 32.4
2008
2009
723.5 690.3
36.5 38.0
2010
2011
644.2
36.9
670.7
42.9
Domestic Sales
469.8 459.2 428.3 406.7 382.9
Operating
income decreased
with the
Overseas Sales
224.8 11.7
264.3percent
262.0 compared
237.5 287.8
previous fiscal year to ¥44,458 million ($534,672 thousand).
Operating profitability decreased 1.2 percentage points to 6.6
23
of Sales Ratio (Left scale) 26.7
Operating Income/OperatingCost
Profitability
SG&A
Expense
Ratio (Right scale)of66.1
Minority Interests in Net
Income
(Billions of yen)
80
percent.
to ¥2,576 million ($30,980
thousand).
20
Operating Income/Operating Profitability
Net Income
(Billions of yen)
(%)
60
7.5
40
5
20
2.5
10
80
0
0
Operating Income
2007
2008
2009
2010
2011
50.0
7.2
63.5
8.8
49.9
7.2
50.4
7.8
44.5
6.6
2.5
0
0
2007
2008
2009
2010
2011
50.0 63.5 49.9 50.4
44.5
Operating Income
Net
incomeProfitability
decreased 62.0
with the
7.2 percent
8.8 compared
7.2
7.8
6.6previOperating
ous fiscal year to ¥12,791 million ($153,830 thousand). Net
Cash Flows from Operating Activities/Acquisition of Fixed As
income per share decreased
to ¥32.1
($0.39)
from Assets
¥84.6
for thePrepaid Expenses)
(Property, Plant
and Equipment
+ Intangible
+ Long-term
(Billions of yen) 5.9 percentage
previous fiscal year. Return on equity decreased
80
points to 3.9 percent from 9.8 percent for the previous fiscal year
because of lower net income.
60
40
Net Income/Return on Equity
20
(Billions of yen)
(%)
15
50
30
Net other expenses totaled ¥15,763 million ($189,573 thou-
20
sand), compared with net other expenses of ¥3,612 million
($38,822 thousand) for the previous fiscal year. Reflecting higher
10
interest
expenses due
to fund procurement, net interest expense,
Net Income/Return
on Equity
0
(Billions less
of yen) interest expense, totaled ¥1,497 mil(%)
calculated as interest
50
15
40
12
lion ($18,004 thousand), compared with net interest expense of
Net Income
Return on Equity
3
2009
2011
2010
25.3
35.5 19.4 33.7 12.8
Net Income
6.6 decreased
9.2
5.4 percent
9.8 compared
3.9
Return before
on Equity
Income
income taxes
38.6
with the previous fiscal year to ¥28,695 million ($345,099 thousand).
12
2009
2010
20
75.3
9
42.8
69.4
67
27.7
6
28.2
25.5
26
3
2007
2008
25.3
6.6
35.5
9.2
2009
2010
(Billions of yen)
19.4
800
5.4
33.7
9.8
0
2011
12.8
3.9
400
200
Review by Reportable Segment
0
0
2008
600
9
30a change in estimation of product samples
including the impact of
6
20 within the scope of assets were also
and promotional items
2007
Activities
Total Assets/Operating ROA
¥738 million ($8,876 thousand) for the previous fiscal year. Losses
2007
2008
Income before Income
Taxes
0
40
Other Income (Expenses)
booked in Other Income
10 (Expenses).
(%)
0
2008
2009
Results by reportable segment follow below. 2007
739.8
675.9
606.6
Total
Assets
Net Sales by Reportable Segment
7.4
9.4
8.2
Operating ROA
(Billions of yen)
Domestic Cosmetics
Business
2010
20
775.4
7.5
74
750
Assets/Interest-bearing
Debt decreased
Sales in the DomesticNet
Cosmetics
Business segment
of yen)
6.6 percent year on 500
year to ¥358,408 (Billions
million
($4,310,379 thou-
Income Taxes, Including Deferred Taxes
500
Income taxes, including deferred taxes, increased 40.4 percent
compared with the previous fiscal year to ¥13,328 million
($160,289 thousand) as a result of the tax effect of the elimination
of unrealized intercompany
profit on inventories. The effective tax
(Billions of yen)
750 compared with 20.3 percent in the previrate was 46.4 percent,
ous fiscal year.
500
250
sand) despite solid results in the healthcare business. Shiseido’s
400
meticulous efforts to250
respond to a changing market structure that
300
is becoming polarized between high- and low-priced products did
0
200 of challenges in the
not successfully compensate
for the
effect
2007
2008
2009
2010
2011
100
market
for mid-priced
products.
430.9 423.9 397.6
383.8 358.4
Domestic
Cosmetics Business
241.0 278.8 275.7
250.4 302.6
Global
Business
0
[Domestic Cosmetics Division]
2007
2008
22.7
20.8 17.0 10.0
9.7 2009
Others
Sales in the Domestic Cosmetics
Division decreased
7.5 per403.8
399.7
Net
Assets
Total
694.6 723.5 690.3 644.2 670.7 352.0
127.8lower
63.2sales
62.1
Interest-bearing
cent compared with the previous
fiscal Debt
year, with
2010
20
365.2
214.4
32
19
year
on year
of counseling
products, self-selection products and
Income
by Reportable
Segment
Equity
Ratio/Interest-bearing
Debt Ratio
(Billions of yen)
2007
2008
2009
2010
2011
0
2007
Domestic Cosmetics Business 430.9
2008
2009
423.9 397.6
2010
2011
383.8
358.4
(%)
43.3 32.7
38.9
33.6
100
SHISEIDO
ANNUAL
REPOR9.0T 2011
11.0
17.8 15.4
9.5
Global Business
2.2
1.9 751.5
1.7
1.8
Others
63
toiletries. During the year, we continued our focus on fostering
Segment income (operating income) for the Domestic
mega lines and relationship-building brands/lines, with the aim
Cosmetics Business segment decreased 13.8 percent com-
of achieving long-seller product status. We also continued
pared with the previous fiscal year to ¥33,573 million ($403,764
entrenching our policy of distinction and concentration and
thousand) and segment profitability was 9.3 percent. Efforts to
implemented measures to strengthen sales through meticulous
deploy selling, general, and administrative expenses such as
arrangement of targeted stores and brands according to spe-
marketing expenses more efficiently did not fully compensate
cific channels.
for the significant reduction in marginal income due to lower
In the high-priced cosmetics category, which centers on high-
sales.
value-added counseling products, we continued to execute our
PS Program for specialty stores and our Double Counter strategy for department stores, achieving steady results at major
outlets. In the second half of the year, we undertook a comprehensive renewal of the top-end prestige clé de peau Beauté
brand lineup, including package design and image model. These
efforts helped boost sales.
In the spot counseling category, which centers on mid-priced
items and “one-point counseling” (tips), we stepped up initiatives to foster existing products in the MAQUILLAGE makeup
mega line in its fifth year on the market.
For self-selection and toiletry products, which center on lowpriced items, we achieved long-seller status of various brands.
These included Anessa sunscreens, which offer exceptional
ultraviolet ray protection and are gentle to the skin, and the
Integrate line of mineral foundations, which remained a hit.
Global Business
Sales in the Global Business segment increased 27.6 percent
compared with the previous fiscal year on a local currency
basis, and increased 20.9 percent to ¥302,633 million
($3,639,603 thousand) when translated into yen. Performance
benefitted from recovery of the cosmetics business in Europe
and North America, continued strong growth in Asia, including
China, and a solid performance by the Professional Division.
[Overseas Cosmetics Division]
Division sales increased 32.0 percent on a local currency
basis and increased 25.0 percent on a yen basis compared with
the previous fiscal year.
In the prestige market, sales of the global brand
increased in various countries. Key performers included the
Future Solution LX premium skincare line and the
We also achieved some success with Senka, a strategic skincare
brand targeting the growing market for low-priced products.
However, the domestic cosmetics business in general faced
difficult challenges. These included weak consumer sentiment,
contraction of the market for mid-priced products, intensified
competition, reduction of inventories by retailers, and the
impact of the Great East Japan Earthquake.
[Healthcare Division]
Sales in the Healthcare Division continued to expand, increasing 2.6 percent compared with the previous fiscal year. During
the year, we stepped up efforts to cultivate brands. For example, we augmented The Collagen, the top-selling line of supplements in the collagen market in terms of over-the-counter sales,
with the addition of High-Activated Beauty Powder, which can
be taken by dissolving it in food and beverages. We also
launched new products, including Kirei no Susume, a balanced
beverage product, and IHADA, a pharmaceutical for skin problems that cosmetics cannot resolve.
BOP (Bio-Performance) high-performance skincare
line. In the United States, sales of the NARS makeup brand
grew substantially. In addition, growth recovered in designer
fragrances sold by Beauté Prestige International S. A. and in the
travel retail business.
Moreover, sales of Bare Escentuals, a new addition to the
Shiseido Group, increased as planned. Our first move to maximize the benefits of the acquisition was to enhance Groupwide
efficiency by integrating production functions and distribution
facilities.
In the core Chinese market, Shiseido generated sales growth
that was higher than that of the market through ongoing active
channel-specific marketing. In the specialty store channel, highlights included continued solid performance by URARA, a brand
sold only in cosmetics specialty stores, and Pure & Mild, a
brand targeting middle-income earners in China. We also maintained strong growth by introducing d’ici là, a high-end brand,
during the year. In the department store channel, AUPRES, a
China-only brand, continued to perform well.
64
0
0
2007
2008
2009
2010
7.2
7.8
2011
Management’s
Discussion
and50.4
Analysis
50.0 63.5 49.9
44.5
Operating Income
7.2
8.8
6.6
Net Income/Return on Equity
(Billions of yen)
(%)
15
50
In the Asian masstige market, sales of Za, which targets
[Frontier Sciences Division]
middle-income earners, were firm. Sales of Aqua Label, a
Division sales decreased compared with the previous fiscal
self-selection skincare line, also increased significantly. In addi-
year due to the discontinuation of sales of certain medical-use
tion, examples of success in the Asian masstige market includ-
pharmaceuticals that20were not very profitable. However, bio-
ed a marketing campaign in collaboration with retailers for
hyaluronic acid, a raw10material for cosmetics and pharmaceuti-3
MAJOLICA MAJORCA, a self-selection makeup line, in the core
0
0 in Japan and overseas. Sales of Navision,
cals, performed solidly
market of Thailand.
a lineNet
ofIncome
cosmetics for medical
increased.
25.3 institutions,
35.5 19.4 also33.7
12.8
In newly industrialized economies, we generated sales
6.6 income)
9.2 from
5.4 other
9.8 businesses
3.9
Return onincome
Equity (operating
Segment
growth by significantly increasing the number of stores handling
increased 7.9 percent compared with the previous fiscal year to
our products in Russia. We also began doing business in the
¥1,838 million ($22,105 thousand) and segment profitability was
three Balkan countries of Albania, Kosovo and Macedonia, and
11.4 percent. This was due to efficient management of selling,
commenced sales in Mongolia, Georgia, Colombia and Moldova,
general and administrative expenses.
40
12
30
9
6
2007
2008
2009
2010
2011
thus steadily expanding our operations in new markets. As a
result of these efforts, the global brand
was avail-
able in 82 countries and regions (including Japan) as of
(Billions of yen)
750
December 31, 2010, and 85 countries and regions (including
Japan) as of March 31, 2011.
500
[Overseas and Domestic Professional Divisions]
Division sales increased 5.1 percent on a local currency basis
250
but decreased 0.3 percent on a yen basis compared with the
0
previous fiscal year.
In Japan, we focused on achieving recovery in the hair product and esthetic categories, but business conditions remained
difficult amid economic recession and intense competition.
Overseas, sales grew in Asia, where market expansion continues. Zotos International, Inc., which provides our products to
2010
2011
241.0
Global Business
22.7
Others
423.9 397.6
278.8 275.7
20.8 17.0
383.8
250.4
10.0
358.4
302.6
9.7
Total
723.5 690.3
644.2
670.7
2007
694.6
(Billions of yen)
ed sales by implementing aggressive marketing activities. As a
11.0
Global Business
2.2
Others
Divisions grew steadily.
Despite higher sales due to recovery in European and Asian
markets, segment income (operating income) for the Global
Business segment decreased 5.4 percent to ¥9,026 million
($108,551 thousand) because of nonrecurring expenses associated with the acquisition of Bare Escentuals. Segment profitability was 3.0 percent.
2009
Income by Reportable Segment
beauty salons globally with a focus on North America, expandresult, sales of the Overseas and Domestic Professional
2008
2007
2008
2009
2010
2011
43.3
17.8
1.9
32.7
15.4
1.5
38.9
9.5
1.7
33.6
9.0
1.8
2008
2009
2010
2011
10.1
3.8
10.5
9.3
3.0
11.4
Profitability by Reportable Segment
(%)
2007
Global Business
Others
8.5
4.5
4.7
10.1
6.3
4.8
8.1
5.5
5.1
Note: N
et profitability by reportable segment is calculated against
sales for the segment, including intersegment sales.
Others
Sales in other businesses decreased 3.7 percent compared with
the previous fiscal year to ¥9,660 million ($116,176 thousand).
65
Liquidity and
Capital Resources
Results by Geographic Area
Financing and Liquidity Management
Shiseido seeks to generate stable operating cash flow and
Net Sales by Geographic Area
(Billions of yen)
2007
2008
2009
2010
2011
ensure a wide range of funding methods, with the aims of
Japan
471.2
460.7 430.0
408.1
383.8
securing sufficient capital for operating activities and maintain-
Americas
Europe
Asia/Oceania
Outside Japan
51.7
88.4
83.3
223.4
56.6 50.7
103.8 100.0
102.4 109.6
262.8 260.3
45.7
82.4
108.0
236.1
85.5
84.3
117.1
286.9
ing sufficient liquidity and a sound financial position. We fund
working capital, capital expenditures, and investments and
loans needed for sustainable growth by supplementing cash
on hand and operating cash flow with bank borrowings and
bond issues.
Operating Income by Geographic Area
(Billions of yen)
2007
2008
2009
2010
2011
One of our targets for short-term liquidity is to maintain cash
Japan
27.3
31.8
18.4
24.0
16.7
on hand at a level of approximately 1.5 months of consolidated
Americas
Europe
Asia/Oceania
Outside Japan
2.8
6.3
11.2
20.3
4.0
9.0
15.9
28.9
3.3
8.3
16.8
28.4
3.2
5.6
15.1
23.9
1.6
6.4
16.9
24.9
net sales. As of March 31, 2011, cash and time deposits together with short-term investments in securities totaled ¥105,058
million ($1,263,476 thousand). It represented 1.9 months of
consolidated net sales.
Operating Profitability by Geographic Area
(%)
2007
Japan
Americas
Europe
Asia/Oceania
Outside Japan
2008
As of March 31, 2011, interest-bearing debt totaled ¥197,518
2009
2010
2011
5.5
6.5
4.0
5.6
4.1
4.7
6.8
13.4
8.6
6.1
8.3
15.5
10.4
5.6
7.8
15.3
10.3
6.0
6.5
13.9
9.6
1.6
7.2
14.3
8.2
Note: Operating profitability is calculated against sales for the
geographical area, including interarea sales.
million ($2,375,442 thousand), mainly reflecting fund procurement in connection with the acquisition of Bare Escentuals.
Shiseido has diversified funding methods. These include an
unused shelf registration in Japan for ¥80.0 billion of straight
bonds. Moreover, Shiseido Co., Ltd. and two subsidiaries in the
United States and Europe have established a syndicated loan
program with unused commitments totaling $240 million. A
Overseas Sales (by Destination)
financial subsidiary in the United States has also established an
(Billions of yen)
unused commercial paper program totaling $100 million.
300
As of March 31, 2011, Shiseido maintained a sufficient level
of liquidity and a high level of financial flexibility as a result of
200
its diversified funding methods.
100
0
2010
2011
54.0
79.3
91.5
59.4 54.9
92.8 88.5
112.1 118.6
48.5
73.8
115.2
87.6
78.2
122.0
224.8
264.3 262.0
237.5
287.8
2007
Americas
Europe
Asia/Oceania
Total
2008
2009
Credit Ratings
Shiseido recognizes that it needs to maintain a certain level
of credit rating to secure financial flexibility that is consistent
with its capital/liquidity policies and to secure access to sufficient capital resources through capital markets. Shiseido has
acquired ratings from Moody’s Investors Service Inc. (Moody’s)
and Standard and Poor’s (S&P) to facilitate fund procurement in
global capital markets.
66
Moody’s
S&P
Long-term
A1 (Outlook: Stable)
A (Outlook: Stable)
Short-term
P-1
A-1
(As of June 15, 2011)
2010
2011
694.6
32.4
723.5 690.3
36.5 38.0
644.2
36.9
670.7
42.9
469.8
224.8
459.2 428.3
264.3 262.0
406.7
237.5
382.9
287.8
2007
Sales
rseas Sales Ratio
mestic Sales
rseas Sales
2008
2009
2007
2008
2009
2010
2011
25.8 24.9 24.9
25.2
Management’s
Discussion
and67.3
Analysis
66.1
65.4 67.9
68.2
SG&A Expense Ratio (Right scale)
Marketing Costs
Personnel Expenses
Other Expenses
M&A-related Amortization Expenses
23.6
21.6
20.6
0.3
22.9
21.4
20.9
0.2
23.7
22.4
21.5
0.3
22.7
23.0
21.3
0.3
21.5
23.7
21.7
1.3
ng Income/Operating Profitability
(Billions of yen)
(%)
10
80
Cash Flows
60
7.5
40
5
Cash Flows from Operating Activities/Acquisition of Fixed Assets
(Property, Plant and Equipment + Intangible Assets + Long-term Prepaid Expenses)
(Billions of yen)
Cash and cash equivalents (net cash) as of March 31, 2011
80
2.5
20
totaled ¥88,592 million ($1,065,448 thousand), an increase of
0
50.0 fiscal
63.5year-end.
49.9 50.4
rating Income previous
7.2
8.8
7.2
7.8
rating Profitability
20
(Billions of yen)
2009
2010
42.8
Cash Flows from Investing Activities
(28.2) (204.9) (30.3)
Cash Flows from Financing Activities
(32.3) Cash and Cash Equivalents at End of Year
(Billions of yen)
91.9
(%)
69.4
67.6
120.4
(39.6)
77.2
88.6
15
50
12
40
Cash Flows from Operating Activities
9
30
20
6 totaled ¥67,587 milNet cash provided by operating activities
10lion
($812,832 thousand). Income before
income taxes of
3
0¥28,695
million ($345,099 thousand), depreciation
of ¥29,511
0
2007
2008
2009
2010
0
2011
Cash Flows from Operating Activities
ome/Return on Equity
40
44.5
6.6
Cash Flows Summary
Income
urn on Equity
60
0
¥11,435
million
($137
,523
thousand)
compared with the
2007
2008
2009
2010
2011
2011
2007
Activities
2008
2009
2010
2011
75.3
42.8
69.4
67.6
27.7
28.2
25.5
26.3
(Billions of yen)
Assets, Liabilities
and Net Assets
800
(%)
[Assets]
7.5
10
600
As of March 31, 2011, total assets decreased 4.5 percent
400
5
200
2.5
compared with the previous fiscal year-end to ¥740,184 million
($8,901,792 thousand).
0
Current assets decreased
1.2 percent to ¥314,279 million
0
2007
2008
2009
2010
2011
million ($354,913 thousand) and amortization of goodwill of
25.3
35.5 19.4 33.7 12.8
¥5,2046.6million9.2
($62,586
contributed to cash provided
5.4 thousand)
9.8
3.9
by operations. Uses of cash included income taxes paid of
($3,779,663 thousand). Investments and other assets decreased
739.8 675.9 606.6 775.4 740.2
Total Assets
62.4Operating
percentROA
to ¥108,629 7.4
million9.4($1,306,422
8.2
7.5thousand)
6.1 as
¥16,903 million ($203,283 thousand) and an increase of ¥2,084
Net Assets/Interest-bearing
Debt
Bare
Escentuals, primarily to
intangible assets.
million ($25,063 thousand) in working capital.
[Liabilities]
Cash Flows from Investing Activities
Net cash used in investing activities totaled ¥30,304 million
es by Reportable Segment
thousand), due to factors including the acquisition of
(Billions ($364,450
of yen)
750
Shiseido finished allocating the assets of the acquired company
(Billions of yen)
500
Total liabilities as400
of March 31, 2011 increased 2.1 percent
compared with the300
previous fiscal year-end to ¥418,993 million
($5,039,002 thousand).
200
[Net Assets]
100
property, plant and equipment of ¥26,333 million ($316,693
Total net assets as
0 of March 31, 2011 decreased 12.1 percent
thousand) and acquisition of stock from minority interest of
compared with the previous fiscal year-end to ¥321,191 million
403.8 399.7 352.0 365.2 321.2
Net Assets
($3,862,790
thousand).
Interest-bearing
Debt 127.8 63.2 62.1 214.4 197.5
As a result, as of March 31, 2011 net assets per share
500
Shiseido Hong Kong Cosmetics Ltd. of ¥5,724 million ($68,839
250thousand).
2007
2008
2009
2010
2011
Equity Ratio/Interest-bearing
Debt
Ratio
decreased
¥100.9 compared
with
the previous fiscal year-end
0
Cash Flows from Financing Activities
2007
2008
2009
2010
2011
430.9
397.6
383.8 activities
358.4 totaled ¥39,572 million
estic Cosmetics Business
Net
cash423.9
used in
financing
241.0 278.8 275.7 250.4 302.6
bal Business
($475,911 thousand), due to factors including cash dividend
22.7
20.8 17.0 10.0
9.7
ers
paid694.6
of ¥19,879
thousand) and repayment of
al
723.5 million
690.3 ($239,074
644.2 670.7
long-term debt of ¥12,861 million ($154,672 thousand).
by Reportable Segment
ns of yen)
2007
estic Cosmetics Business 37.0
11.0
bal Business
2.2
ers
ility by Reportable Segment
2008
2009
2010
2011
43.3
17.8
1.9
32.7
15.4
1.5
38.9
9.5
1.7
33.6
9.0
1.8
(%)
(%)
to ¥774.8 ($9.3). The
equity ratio decreased 3.2 percentage
50
100
points to 41.7 percent from 44.9 percent a year earlier.
75
30
50
20
25
10
0
Equity Ratio (Left scale)
Interest-bearing
Debt Ratio (Right scale)
40
0
2007
2008
2009
2010
2011
52.5
56.6
55.6
44.9
41.7
24.0
13.7
15.0
37.0
38.1
67
(Billions of yen)
80
Overseas Sales (by Destination)
60
(Billions of yen)
300
40
20
200
0
2007
Activities
2008
2009
2010
2011
75.3
42.8
69.4
67.6
27.7
28.2
25.5
26.3
Research and Development
100
0
2007
2008
2009
(Billions of yen)
(%)
54.0
59.4 54.9
Americas
To develop superior products
support
79.3 that92.8
88.5
Europe and offer services
112.1 R&D
118.6
Asia/Oceania
global customers’ beauty
and health, Shiseido91.5
conducts
10
Total
224.8 264.3
activities at locations worldwide,
with two research
centers262.0
in
600
7.5
Yokohama, Kanagawa Prefecture, Japan, the Beauty Solution
400
5
200
2.5
800
research facilities in the Americas (the United States), Europe
0
0
2007
2008
2009
739.8 675.9 606.6
7.4
9.4
8.2
Total Assets
Operating ROA
Development Center in Shinagawa Ward, Tokyo, Japan, and
2010
2011
775.4
7.5
740.2
6.1
(France), and Asia (China and Thailand). Shiseido has received
numerous Grand Prizes as a global manufacturer from the
International Federation of the Societies of Cosmetic Chemists
(IFSCC), the world’s most authoritative congress for cosmetic
science and technology. At the 26th IFSCC Congress held in
Net Assets/Interest-bearing Debt
September 2010 in Buenos Aires, Argentina, Shiseido won top
(Billions of yen)
500
honors in three categories, demonstrating the regard the inter-
400
national community holds for Shiseido technology.
In the fiscal year ended March 31, 2011, R&D expenses for
300
the Shiseido Group totaled ¥14,467 million ($173,987 thou-
200
sand), and represented 2.2 percent of net sales. R&D objec-
100
tives, primary initiatives, results and expenses by reportable
0
2007
Net Assets
Interest-bearing Debt
2008
2009
403.8 399.7 352.0
127.8 63.2 62.1
2010
2011
segment were as follows. R&D expenses include basic research
365.2
214.4
321.2
197.5
costs and other expenses totaling ¥4,786 million ($57,559 thousand) that cannot be allocated to specific businesses.
Equity Ratio/Interest-bearing Debt Ratio
(%)
(%)
50
100
40
75
30
50
20
25
10
0
0
Equity Ratio (Left scale)
Interest-bearing
Debt Ratio (Right scale)
With the goal of contributing to beautiful skin and beautiful
lifestyles, Shiseido conducts research in basic dermatology and
interface science. The broad range of Shiseido’s R&D activities
includes developing cosmetics ingredients, developing and
evaluating products, developing beauty methods, and research
into sensitivity and the senses.
2007
2008
2009
2010
2011
52.5
56.6
55.6
44.9
41.7
During the fiscal year ended March 31, 2011, Shiseido discov-
38.1
ered that degeneration (carbonylation) of proteins in the dermal
24.0
13.7
15.0
37.0
layer of the skin due to factors such as hyperoxidized substances is a major factor in the yellowing of skin with age. Moreover,
Shiseido examined approximately 200 candidates to identify an
olive leaf extract as an ingredient that inhibits carbonylation of
dermal proteins. As a result of this discovery, we have complemented existing approaches to beautiful skin involving melanin
R&D Expenses/Ratio of R&D Expenses to Net Sales
(%)
15
3
of the Elixir White line and the clé de peau BEAUTÉ brand.
10
2
In addition, as a result of many years of research into dark
5
1
4
20
0
0
68
and the flow of blood (complexion) with ways to handle dermal
(Billions of yen)
2007
SHISEIDO ANNUAL REPOR
T2008
2011 2009
16.1 14.6 15.2
R&D Expenses
Ratio of R&D Expenses
2010
2011
14.5
14.5
yellowing. We applied this research finding to the development
spots on the skin, we discovered that excessive cell proliferation
2010
201
48.5
73.8
115.2
87
78
122
237.5
287
50
15
40
12
30
9
20
6
10
0
Income
urn on Equity
2007
2008
2009
2010
2011
25.3
6.6
35.5
9.2
19.4
5.4
33.7
9.8
12.8
3.9
10
800
7.5
600
Management’s
Discussion and Analysis
400
5
3
200
2.5
0
0
0
2007
2008
2009
739.8 675.9 606.6
7.4
9.4
8.2
Total Assets
Operating ROA
2010
2011
775.4
7.5
740.2
6.1
Net Assets/Interest-bearing Debt
In foundation, we500
used base and ingredient development and
production in an undesirable self-perpetuating cycle we call the
400 to successfully develop a unique base
production technology
“darkening spiral.” We applied this knowledge to effectively
that has the soft, natural
feel global customers prefer and also
300
excessive melanin production in various ways, developes by Reportableinhibit
Segment
(Billions ing
of yen)HAKU Melanofocus W to break the darkening spiral and
750
help make skin clear and bright.
In makeup, taking a hint from the phenomenon in which light
500
from orange light bulbs appears more beautiful than white light,
250we
0
(Billions of yen)
at spot sites on the skin is a factor that stimulates melanin
developed Red Translucent Powder that lets more red light
Perfect
moisturizes the skin,
200 and applied it to
Refining Foundation.
100
R&D expenses for0 the fiscal year ended March 31, 2011 in the
2011
2007
2008
2009
2010
Global Business segment totaled
¥2,511
million
($30,198
thousand).
403.8 399.7 352.0 365.2 321.2
Net Assets
Interest-bearing Debt 127.8 63.2 62.1 214.4 197.5
Others
into the skin, and applied it to the MAQUILLAGE makeup line.
Equity Ratio/Interest-bearing Debt Ratio
The Frontier Sciences Division conducts R&D in areas including
This development resolves an issue in foundation that has per-
medical-use pharmaceuticals,
cosmetics raw materials, chroma50
100
2007
2008
2009
2010
2011
sisted
for many
providing
430.9
423.9 years
397.6 by
383.8
358.4 both effective cover and
241.0 278.8
275.7 beautifully
250.4 302.6
bal Business
translucency
to achieve
clear, natural skin.
22.7
20.8 17.0 10.0
9.7
ers
In hair styling, we developed Straight Styling Ingredient, an
l
694.6 723.5 690.3 644.2 670.7
innovative new material that resolves the traditional contra-
(%)
(%)
tography, and beauty therapy cosmetics.
40
75
In beauty therapy cosmetics, Shiseido succeeded in develop30
50 applies existing microneedle technology
ing an ingredient that
20
as a beauty therapy
25 cosmetics treatment designed to make
10
diction between highly effective straight styling and soft,
by Reportable Segment
ns of yen)
silky 2007
texture,2008
and applied
it
to Ma2011
Chérie.
2009
2010
37.0
43.3
32.7
38.9
33.6
In the healthcare business, Shiseido discovered the cause of
11.0
17.8 15.4
9.5
9.0
bal Business
recurring skin problems: Proteins that exacerbate inflammation
2.2
1.9
1.5
1.7
1.8
ers
in the epithelium of the skin and inflammatory cytokines are
skin beautiful. This treatment consists of numerous minute
mutually
ility by Reportable
Segmentreinforcing. This creates a negative spiral that
anti-wrinkle product.
2007in chronic
2008
2009
2010
2011 this knowledge, Shiseido
results
inflammation.
Using
10.1
8.1 10.1
9.3
estic Cosmetics Business 8.5
developed IHADA, a medicinal skincare brand that promotes
4.5
6.3
5.5
3.8
3.0
bal Business
healthy
4.7skin. 4.8
5.1 10.5
11.4
ers
R&D expenses for the fiscal year ended March 31, 2011 in
the Domestic Cosmetics Business segment totaled ¥6,906
0
0
2007 the2008
2009
2010 moisturizer
2011
needles made solely of
effective
skin
52.5
56.6
55.6
44.9
41.7
(Left
scale)
Equity
Ratio
hyaluronic acid. These needles are arrayed on a single sheet
Interest-bearing
37.0We 38.1
that Debt
is placed
around
eyes to13.7
treat 15.0
wrinkles.
deployed
scale) the 24.0
Ratio (Right
this ingredient in Navision, a line for medical institutions, as an
R&D expenses for the fiscal year ended March 31, 2011 in
other businesses totaled ¥264 million ($3,175 thousand).
R&D Expenses/Ratio of R&D Expenses to Net Sales
(Billions of yen)
(%)
15
3
Global Business
10
2
Aiming for high quality in overseas cosmetics brands,
5
1
million ($83,055 thousand).
Shiseido develops products from its unique and sophisticated
science and its leading-edge technologies.
During the fiscal year ended March 31, 2011, Shiseido discovered that ultraviolet rays stimulate production of the enzyme
4
20
0
0
2007
16.1
R&D Expenses
Ratio of R&D Expenses 2.3
to Net Sales
2008
2009
2010
2011
14.6
15.2
14.5
14.5
2.0
2.2
2.2
2.2
heparanase, leading to damage of the epidermal basement
membrane and dermal layers of the skin resulting in wrinkle
formation and other signs of light-induced aging. Based on this
discovery, Shiseido examined approximately 22,300 candidates
to identify the ingredient Soapnut Extract, which inhibits the
activity of heparanase. We have employed the results of this
research in the high-level skincare brand Benefiance.
69
Outlook for the Fiscal Year Ending March 31, 2012
The Shiseido Group’s operating environment will remain very
challenging due to various factors. These include damage to
stores caused by the Great East Japan Earthquake, the subsequent radiation fallout from nuclear power plants, the impact of
these events on the supply chain, and lackluster consumer sentiment. However, with the goal of becoming a global player
representing Asia with its origins in Japan, the Group will act in
concert to actively promote its Three-Year Plan covering the
period from April 2011 to March 2014.
The fiscal year ending March 31, 2012 is the first year of the
Three-Year Plan for getting into a growth trajectory. During the
year, we will continue promoting the three Visions stated in the
previous three-year plan: “Rebirth as a 100% CustomerOriented Company,” “Brighten Our Brand, a Valuable
Management Resource,” and “Fill the Shiseido Organization
with People with Their Own Appeal.” We will employ four strategies: “Global Mega-Brand Strategy,” “Asian Breakthrough
Strategy,” “New Frontier Strategy,” and “Customer-First
Strategy.” With these strategies, we aim to achieve further
growth through globalization.
We forecast a year-on-year increase in consolidated net sales.
In the fiscal year ending March 31, 2012, in the Domestic
Cosmetics Business segment Shiseido will undertake a drastic
reassessment of our marketing and business operation styles
with the aim of modernizing our traditional cosmetics sales
store business model. We will also focus on activities to bring
our products to long-seller status, in order to foster brands and
products with overwhelming appeal. In addition, we will
undertake forward-looking investments aimed at establishing
a Web-based marketing business in April 2012.
We expect segment sales for the fiscal year ending March
31, 2012 to be essentially unchanged year on year because of
these initiatives, although the earthquake and radiation leakage
from nuclear power plants will affect many aspects of our operations, especially in the first half. We also forecast a year-onyear decrease in segment income (operating income) due to an
increase in costs associated with the establishment of the Web
marketing business.
Global Business
The negative impact of the earthquake on the domestic econ-
In this segment, we will promote our Global Mega-Brand
omy notwithstanding, we anticipate continued recovery in
Strategy by concentrating investment in three brands in the
European and North American markets, and sales growth in
prestige category in Europe and North America, and three
Asia, centered on China. We project a decrease in operating
brands in the prestige and masstige categories in Asia. China
income despite increased marginal income from higher net
is an engine of growth for Shiseido, and will remain a priority in
sales. This forecast takes into account additional marketing
deploying management resources.
investments in Japan and overseas and expanded investments
Overseas, we expect continued economic recovery and sus-
aimed at future growth. We also forecast an increase in net
tained growth in Asia, driven by China. We therefore expect
income as a result of lower other expenses.
segment sales to increase year on year on a local currency
For the year ending March 31, 2012, Shiseido forecasts that
basis. We also expect year-on-year growth in segment sales on
consolidated net sales will increase 1.4 percent year on year to
a yen basis despite our forecast that the yen will appreciate
¥680.0 billion, operating income will decrease 10.0 percent to
further compared with the fiscal year ended March 31, 2011.
¥40.0 billion, and net income will increase 64.2 percent to
We also forecast year-on-year growth in segment income
¥21.0 billion.
(operating income) despite the negative effect of the appreciation of the yen.
70
Shareholder Return Policy
Others
Going forward, Shiseido will continue expanding its presence
in the Frontier Sciences Division, which includes cosmetics
raw materials, medical-use pharmaceuticals, chromatography
and cosmetics for medical institutions. Shiseido forecasts
that segment sales and segment income (operating income)
will remain essentially unchanged.
We base our forecasts on the following assumptions: expansion of Japan’s real GDP by around 1 to 1.5 percent in the fiscal
year ending March 31, 2012 and exchange rates of ¥80 per U.S.
dollar, ¥110 per euro, and ¥12.5 per Chinese yuan.
The total shareholder return policy of Shiseido Co., Ltd. aims
to maximize returns to shareholders through direct means and
by generating medium- and long-term share price gains. To this
end, our fundamental policy is to make strategic investments
that drive earnings growth while raising capital efficiency, which
will lead to medium- and long-term increases in dividends and
share price.
Shiseido’s goal for returns over the medium term is a consolidated payout ratio of 40 percent. Based on this target, we
will prioritize payment of stable dividends while implementing
share buybacks in a flexible manner.
For the fiscal year ended March 31, 2011, Shiseido paid an
annual cash dividend of ¥50 per share, consisting of an interim
and year-end dividend of ¥25 per share each. The consolidated
payout ratio was 155.5 percent.
71
Business and Other Risks
performance and financial position of Shiseido are summarized
4. The Competitive Environment of the
Cosmetics Industry
below. We feel that these risks could have a major impact on
Shiseido operates in the cosmetics industry, in which com-
investors’ decisions. Items that deal with future events are
petition is intensifying on a global scale. Zero sum competition
based on our judgment as of June 24, 2011. Please note that
for share among Japanese cosmetics companies in the mature
the potential risks are not limited to those listed below.
domestic market is intensifying because of factors including the
The various risks that could potentially affect the business
expanding influence of global competitors in the prestige mar-
1. Decrease in Value of the
Corporate Brand
ket, and the entry of new competitors from other industries. In
addition, in overseas markets such as China and other Asian
corporate brand is shared by all Group com-
economies, which Shiseido has positioned as central to its
panies in Shiseido’s domestic and overseas business activities.
growth strategy, the competitive environment is becoming
We will continue working to enhance the value of this brand,
increasingly challenging as global competitors are aggressively
but a decline in the brand’s value from an unforeseen event
conducting mergers and acquisitions and expanding market
could negatively affect Shiseido’s business performance and
share by executing marketing activities to raise consumer
financial position.
awareness of their brands. Consequently, inability to respond
The
to this competitive environment as effectively as global com-
2. Customer Services
petitors could negatively affect Shiseido’s business performance
Shiseido places high priority on its relationships with custom-
and financial position.
ers. The Shiseido Group Corporate Philosophy “Our Mission,
Values and Way” clearly states that we shall act in a manner
5. Overseas Business Activities
that earns the satisfaction and trust of customers, and we will
As of March 31, 2011, Shiseido conducted business in 85
continue working to ensure that all employees are aware of
countries and regions (including Japan), and overseas sales
these standards. However, an unforeseen event could cause
account for a growing percentage of consolidated net sales
loss of such satisfaction and trust, leading to a decline in the
each year, totaling 42.9 percent in the fiscal year under review.
value of Shiseido Group brands. Shiseido’s business perfor-
In the course of conducting overseas business, Shiseido’s busi-
mance and financial position could negatively be affected as
ness performance and financial position could be negatively
a result.
affected by various factors. These include the occurrence of
sudden and unpredictable economic, political and social crises;
3. Strategic Investment Activities
terrorism, war and civil war; economic and civil upheaval result-
When making decisions about investments in strategic mar-
ing from the spread of contagious diseases such as new strains
kets, such as China and other Asian economies, mergers and
of influenza; and severe or abnormal weather.
acquisitions, and expansion in new businesses and new markets, Shiseido endeavors to collect sufficient information and
6. Market Risk
undertake due diligence prior to making rational judgments.
[Raw material prices]
Due to various unforeseeable factors that may cause the oper-
International market conditions affect the price of raw
ating environment to deteriorate, however, we may not achieve
materials used in Shiseido products. Factors affecting market
the results originally anticipated. This could negatively affect
conditions include geopolitical risk, the impact on supply and
Shiseido’s business performance and financial position.
demand from increasing demand in developing countries and
speculative capital flows, weather abnormalities and changes
in exchange rates. Shiseido constantly works to limit the
impact of rising raw material prices by reducing cost of sales
72
and other means. However, changes in market conditions and
its sales and earnings. To respond to market needs, we con-
prices that exceed projections could negatively affect
tinuously develop appealing new products and brands/lines;
reinforce and cultivate new and existing products and brands/
lines through marketing activities; and withdraw existing prod-
[Exchange rates]
ucts and brands/lines that no longer meet market needs.
Export, import and other transactions denominated in for-
However, by nature these activities entail uncertainties that
eign currencies expose Shiseido to foreign exchange rate
may prevent Shiseido from achieving its intended results,
risk. Although we hedge foreign exchange rate risk through
which could negatively affect Shiseido’s business performance
means such as limiting export and import transactions by
establishing production bases to serve local markets, we are
unable to completely eliminate risk. Moreover, the financial
8. Specific Business Partners
statements of consolidated subsidiaries and equity affiliates
Significant changes are taking place in retail and wholesale
domiciled overseas are denominated in local currencies that
distribution channels in Shiseido’s core domestic cosmetics
are translated into yen upon inclusion in the consolidated
business. Failure to respond effectively to these changes
financial statements. This has the potential to exert a nega-
could negatively affect Shiseido’s business performance and
tive impact on operating performance if the yen appreciates
financial position.
versus foreign currencies when revenues exceed expenses.
Moreover, Shiseido’s investments in overseas subsidiaries
9. Regulatory Risk
and equity affiliates are subject to foreign currency translation
Shiseido is subject to a range of domestic and overseas
adjustments that reduce shareholders’ equity if the yen
legal provisions in the course of conducting its business.
strengthens. Foreign exchange fluctuations that exceed
These include pharmaceuticals laws, as well as quality-related
assumptions could negatively affect Shiseido’s business per-
standards, environmental standards, accounting standards,
formance and financial position.
and tax regulations. We aspire to be completely ethical based
on legal compliance and corporate social responsibility.
[Stock prices]
However, future regulatory changes or the establishment of
As of March 31, 2011, Shiseido held investments in secu-
unanticipated new regulations may limit Shiseido’s activities,
rities and is therefore exposed to the risk of changes in share
which could negatively affect Shiseido’s business performance
price, which can increase or decrease unrealized gains or
losses and expose Shiseido to the risk of impairment losses.
In addition, a portion of the pension plan assets of Shiseido’s
10. Material Litigation
retirement benefit plan is invested in shares with a market
In the fiscal year ended March 31, 2011, Shiseido was not
price. Lower share prices could therefore reduce pension
involved in material litigation other than the litigation discussed
plan assets and negatively affect operating performance by
in Notes to the Consolidated Financial Statements, “10.
increasing retirement benefit expenses. Unforeseen situa-
Contingent Liabilities.” In the future, unfavorable judgments
tions such as this could negatively affect Shiseido’s business
resulting from material litigation could negatively affect
performance and financial position.
7. Responding Appropriately to Market Needs
11. Information Security Risk
Shiseido’s ability to develop and cultivate products and
Shiseido takes various measures aimed at protecting its infor-
brands/lines and to conduct marketing activities that respond
mation assets, which include customers’ personal information
appropriately to market needs exerts a significant impact on
and industrial secrets. For example, in April 2005, the Personal
Information Protection Law was fully enacted in Japan. In antic-
73
Significant Accounting
Estimates
ipation of this, Shiseido Co., Ltd. in March 2004 obtained
Shiseido prepares its consolidated financial statements in
Privacy Mark certification, a Japanese Industrial Standard that
accordance with accounting principles generally accepted in
recognizes the appropriateness of a company’s systems for
Japan. In preparing these financial statements, we select and
protecting personal information. However, unforeseeable
apply accounting policies and necessarily make estimates that
events, such as leakage of information due to unauthorized
affect the presentation of reported amounts for assets, liabili-
access, could negatively affect Shiseido’s business performance
ties, revenue and expenses. We consider information including
historical data in making rational estimates. However, due to
the unpredictable nature of these estimates, actual results
12. Natural Disasters and Accidents
may vary.
Shiseido has developed a business continuation plan covering
Shiseido considers the following significant accounting policies
issues critical to the continued operation of production bases,
to exert a large effect on key decisions regarding the estimates
distribution bases, information systems and the head office to
used in the consolidated financial statements.
minimize loss due to interruption of production, distribution or
sales resulting from the occurrence of a natural disaster or acci-
Property, Plant and Equipment
dent, such as a major earthquake. However, a natural disaster
Shiseido reviews fixed assets, primarily property, plant and
or accident that exceeds the assumptions of this plan and dis-
equipment, for impairment whenever circumstances indicate
rupts production, distribution or sales could negatively affect
that their carrying value may not be recoverable. Business-use
assets are pooled by business division to estimate future cash
flow, and the net sales value of idle assets is estimated for each
separate property. Based on these estimates, assets are devalued from book value to recoverable value. We consider information including estimates of future cash flow and recoverable
value in making rational estimates. However, unpredictable factors could cause changes in underlying assumptions and estimates. This could change our estimates, decrease future cash
flow and recoverable value, and require us to recognize impairment losses.
Goodwill, Trademark Rights and Other
Intangible Assets
Shiseido reviews goodwill, trademark rights and other intangible assets for impairment. Shiseido employs the opinions of
external experts and other data in estimating fair value and
examining impairment for goodwill, trademark rights and other
intangible assets. The discounted cash flow method primarily
used to estimate fair value relies extensively on estimates and
assumptions regarding future cash flow and discount rate.
These estimates and assumptions may significantly affect measurement and recognition of the amount of impairment. We
consider the estimates of fair value used for measuring impairment to be rational. However, unforeseen changes to underlying assumptions and estimates could occur. This could reduce
fair value and require us to recognize impairment losses.
74
Investments in Securities
date for long-term fixed-rate bonds that carry little or no risk.
Shiseido recognizes impairment for securities reported as
Expected return on pension plan assets is determined based
available-for-sale securities for which fair value or market price
on an expected weighted-average return for the various types
has fallen substantially below acquisition cost. Securities
of assets held within the plan. We consider these assumptions
deemed recoverable are excluded. Securities with a fair value
to be appropriate. However, actual results may vary and chang-
that is more than 50 percent below acquisition cost as of the
es in the underlying assumptions could occur. This could affect
balance sheet date are deemed unrecoverable. The recover-
pension costs and obligations.
ability of securities with a fair value from 30 to 50 percent
below acquisition cost is evaluated according to the performance and financial condition of the issuing entity. Impairment
is recognized for securities for which fair value is not available
if market price has fallen to more than 50 percent below the
acquisition cost due to the financial condition of the issuing
entity. Securities deemed recoverable are excluded. We consider the estimates of recoverability to be appropriate. However,
in the future the market price of securities deemed recoverable
may decrease and the performance and financial condition of
the issuing entity may deteriorate. This could require us to recognize impairment losses.
Deferred Tax Assets
Shiseido has established a valuation allowance for deferred
tax assets deemed unrecoverable using appropriate deferred
tax asset accounting. Historical data and future projections are
used to evaluate the recoverability of deferred tax assets to
sufficiently determine taxable status. We consider these to be
appropriate. However, unpredictable factors could cause changes in underlying assumptions that could reduce or eliminate
deferred tax assets. This could require us to provide additional
allowances for deferred tax assets.
Retirement Benefits and Obligations
Shiseido’s domestic retirement benefit plans consist primarily of corporate pension plans and termination allowance plans.
Employee benefits and obligations are calculated based on
assumptions including discount rate, employee turnover rate,
mortality rate and projected rate of return on pension plan
assets. These assumptions are revised annually. Discount rate
and expected return on plan assets are two critical assumptions
in determining benefits and obligations. The discount rate is
determined based on to the market rate as of the balance sheet
75
CONSOLIDATED BALANCE SHEETS
March 31, 2010 and 2011
Millions of yen
2010
Thousands of
2011
2011
ASSETS
Current Assets:
Cash and time deposits (Notes 3, 4 and 7)
Short-term investments in securities (Notes 3, 4 and 5)
Notes and accounts receivable (Note 4):
Trade
Unconsolidated subsidiaries and affiliates
Less: allowance for doubtful accounts
Inventories (Note 6)
Deferred tax assets (Note 9)
Other current assets (Note 14)
Total current assets
¥ 70,102
24,723
¥ 90,007
15,051
111,795
1
111,796
(1,050)
110,746
67,342
28,390
16,939
318,242
$ 1,082,465
181,010
102,998
5
103,003
(939)
102,064
67,575
26,658
12,924
314,279
812,688
320,601
155,431
3,779,663
33,590
158,552
28,740
17,477
10,327
14,164
25,732
288,582
26,242
1,273
24,560
—
9,744
19,577
27,233
108,629
315,598
15,310
295,370
—
117,186
235,442
327,516
1,306,422
157,282
133,374
11,094
301,750
(208,561)
93,189
160,045
136,844
9,818
306,707
(211,801)
94,906
1,924,774
1,645,749
118,076
3,688,599
(2,547,216)
1,141,383
35,274
4,322
132,785
33,491
2,824
131,221
402,778
33,963
1,578,124
11,852
372
7,913
15,700
35,837
94,123
348
42,628
48,956
186,055
1,131,966
4,185
512,664
588,768
2,237,583
¥ 775,446
¥ 740,184
$ 8,901,792
1,238,701
60
1,238,761
(11,293)
1,227,468
Investments and Other Assets (Note 17):
Investments in securities (Notes 4, 5 and 7)
Investments in subsidiaries and affiliates (Note 4)
Prepaid pension expenses (Note 8) Long-term loans receivable (Note 4)
Long-term prepaid expenses
Deferred tax assets (Note 9)
Other investments (Note 7)
Total investments and other assets
Property, Plant and Equipment, at Cost (Note 17):
Buildings and structures (Note 7)
Machinery and equipment
Lease assets
Less: accumulated depreciation
Land
Construction in progress
Total property, plant and equipment
Intangible Assets (Note 17):
Goodwill (Note 20)
Lease assets
Trademarks
Other intangible assets
Total intangible assets
Total Assets
The accompanying notes are an integral part of the consolidated financial statements.
76
Millions of yen
2010
LIABILITIES AND NET ASSETS
Current Liabilities:
43,130
642
43,772
518,701
7,721
526,422
37,980
12,215
11,447
11,550
374
765
923
26
24,263
159,676
456,765
146,903
137,667
138,906
4,498
9,200
11,100
313
291,798
1,920,337
181,156
41,286
350
495
29,166
6,864
259,317
418,993
2,178,665
496,524
4,209
5,953
350,764
82,550
3,118,665
5,039,002
64,507
775,791
¥105,966
6,727
43,445
876
44,321
Other payables Accrued income taxes
Reserve for sales returns
Accrued bonuses for employees
Accrued bonuses for directors
Provision for liabilities and charges
Reserve for disaster
Deferred tax liabilities (Note 9)
Other current liabilities
Total current liabilities
46,989
10,277
11,821
11,320
318
1,026
—
22
22,725
261,512
101,754
40,130
350
499
3,382
2,611
148,726
410,238
Total Liabilities
2011
Long-term debt (Notes 4 and 7)
Accrued retirement benefits (Note 8)
Allowance for losses on guarantees
Allowance for environmental measures
Deferred tax liabilities (Note 9)
Other long-term liabilities
Total long-term liabilities
2011
5,595
10,766
Short-term debt (Notes 4 and 7)
Current portion of long-term debt (Notes 4 and 7)
Notes and accounts payable (Note 4):
Trade
Unconsolidated subsidiaries and affiliates
Long-Term Liabilities:
Thousands of
¥
$
67,288
129,477
CONTINGENT LIABILITIES (Note 10)
NET ASSETS (Note 11)
Shareholders’ Equity:
64,507
Common stock
Authorized: 1,200,000,000 shares as of March 31, 2010 and 2011
Issued: 410,000,000 shares as of March 31, 2010 and
400,000,000 shares as of March 31, 2011
70,258
Capital surplus
259,064
Retained earnings
(23,112)
Less: treasury stock, at cost
Treasury stock: 12,241,810 shares as of March 31, 2010 and
2,052,792 share as of March 31, 2011
370,717
Total shareholders’ equity
70,258
232,400
(3,875)
844,955
2,794,949
(46,603)
363,290
4,369,092
84
(55,041)
(54,957)
591
12,267
321,191
1,010
(661,948)
(660,938)
7,108
147,528
3,862,790
Accumulated Other Comprehensive Income:
Unrealized gains (losses) on available-for-sale securities,
net of taxes (Note 5)
Foreign currency translation adjustments
Total accumulated other comprehensive income
Stock Acquisition Rights (Note 12)
Minority Interests in Consolidated Subsidiaries
Total Net Assets
1,055
(23,448)
(22,393)
430
16,454
365,208
Total Liabilities and Net Assets
¥775,446
¥740,184
$8,901,792
77
CONSOLIDATED STATEMENTS OF INCOME
Millions of yen
2009
2010
2011
2011
Net Sales (Note 20)
¥690,256
¥644,201
¥670,701
$8,066,158
Cost of Sales
Gross profit
171,752
518,504
160,166
484,035
168,692
502,009
2,028,768
6,037,390
Selling, General and Administrative Expenses (Note 13) Operating income (Note 20)
468,590
49,914
433,684
50,351
457,551
44,458
5,502,718
534,672
2,821
(1,812)
(275)
58
24
71
1,515
(1,569)
(3)
62
163
—
Other Income (Expenses):
Interest and dividend income
Interest expense
Foreign exchange gain (loss)
Equity in earnings of affiliates
Gain (loss) on sales of investments in securities (Note 5)
Gain (loss) on sales of shares in affiliates
Write-down of investments in securities and
other investments
Gain (loss) on sales and disposal of property,
plant and equipment
Impairment loss (Notes 17 and 20)
Restructuring expenses (Note 18)
Loss on adjustment for changes of accounting
standard for lease transactions
Environmental expenses
Loss on adjustment for changes of accounting
standard for asset retirement obligations
Purchasing-related expenses
Loss on adjustment for changes of estimate for
samples and promotional items (Note 2(2))
Loss on disaster (Note 19)
Other, net
1,400
(2,166)
(590)
33
(22)
—
16,837
(26,049)
(7,096)
397
(265)
—
(206) (356) (4,199) (50,499)
(884) (6,073) (6,074) (463) (3,469) — (609) (458) — (7,324)
(5,508)
—
(216) — — (507) —
—
—
—
—
—
(844) (1,233) Income before income taxes
—
—
1,138
(11,428)
38,486
—
—
1,015
(3,612)
46,739
(6,752)
(1,669)
1,346
(15,763)
28,695
(81,203)
(20,072)
16,188
(189,573)
345,099
Income Taxes (Note 9)
Current
Deferred
Income before minority interests
12,028
3,109
15,137
23,349
14,660
(5,167)
9,493
37,246
18,615
(5,287)
13,328
15,367
223,873
(63,584)
160,289
184,810
Minority Interests in Net Income of
Consolidated Subsidiaries
(3,976) (2,576) (30,980)
Net income
¥ 19,373
Per Share (Note 2 (9))
Net income — basic
— fully diluted
Cash dividend
Weighted Average Number of Shares (thousands)
(3,575) ¥ 33,671
¥ 12,791
Yen
¥48.0
48.0
50.0
¥84.6
84.5
50.0
¥32.1
32.1
50.0
403,240
397,886
397,864
78
Thousands of
—
—
(10,150)
(14,829)
$ 153,830
$0.39
0.39
0.60
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
For the years ended March 31, 2010 and 2011
Millions of yen
2010
Income before Minority Interests
Other Comprehensive Income
Unrealized gains (losses) on available-for-sale
securities, net of taxes (Note 5)
Foreign currency translation adjustments
Share of other comprehensive income of
associates accounted for using equity method
Total other comprehensive income
¥37,246
Thousands of
2011
¥ 15,367
2011
$ 184,810
772
3,724
(1,003) (32,565) (12,062)
(391,642)
10
4,506
(60) (33,628) (721)
(404,425)
Comprehensive Income
41,752
(18,261) (219,615)
(Breakdown)
Comprehensive income attributable to
shareholders’ equity
Comprehensive income attributable to
minority interests
37,533
(19,833) (238,521)
4,219
1,572
18,906
79
CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS
ThousandsMillions of yen
Number
Unrealized gains
of shares Common
Capital
Retained
Treasury stock, (losses) on available-
of common stock surplus earnings
at cost
for-sale securities,
stock net of taxes
Minority
interests in
consolidated
subsidiaries
Balance as of March 31, 2008
410,000
¥64,507
¥70,258
¥248,921
¥(11,197)
¥ 5,274
¥(57)
¥ 4,764
¥154
¥17,115
Net income for the year ended March 31, 2009
Cash dividend from retained earnings Acquisition of treasury stock
Disposal of treasury stock
Change in scope of consolidation
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(5,386)
19,373
(16,982)
—
(430)
49
—
—
—
(6,546)
903
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(4,921)
—
—
—
—
—
—
—
—
—
—
57
—
—
—
—
—
—
410,000
—
—
—
—
—
—
—
—
64,507
—
—
—
—
—
—
—
—
70,258
—
—
—
—
—
—
—
—
245,545
33,671 (19,975)
—
(170)
(7)
—
—
—
(16,840)
—
—
(6,830)
558 —
—
—
—
353
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(31,363)
—
—
(26,599)
—
—
—
—
—
—
102
—
256
—
—
—
—
—
—
—
(2,644)
14,471
—
—
—
—
—
—
—
—
—
—
702 —
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
410,000 ̶
—
—
—
—
64,507 ̶
—
—
—
—
70,258 ̶
—
—
—
—
259,064 12,791 (19,891)
—
—
—
(23,112)
̶
—
—
—
—
1,055 ̶
—
—
—
—
̶
̶
—
3,151 —
—
(23,448)
̶
—
—
174 —
430 ̶
—
—
—
1,983
16,454
̶
—
—
—
—
(10,000)
—
—
—
—
—
—
—
—
—
—
—
(535)
—
(150)
(18,879)
—
—
(13)
371 18,879 —
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(971) —
—
—
—
—
—
—
—
—
—
—
—
—
—
Balance as of March 31, 2011 —
—
—
400,000 —
—
—
¥64,507 —
—
—
¥70,258 —
—
—
—
—
—
¥232,400 ¥ (3,875)
—
—
—
84 —
—
—
—
—
161 —
¥591 —
—
(4,187)
¥12,267
Deferred
currency
Stock losses on Foreign
translation acquisition
hedges, net
adjustments
rights
of taxes Minority
interests in
consolidated
subsidiaries
Effect of changes in accounting policies
applied to foreign subsidiaries
Change in unrealized gains (losses) on
available-for-sale securities, net of taxes
Change in fair market value of derivatives,
net of taxes
Change in foreign currency translation
adjustments
Issuance of stock acquisition rights
Increase in minority interests
Cash dividend from retained earnings Acquisition of treasury stock
net of taxes
adjustments
Cash dividend from retained earnings
Equity transactions with noncontrolling
interests and others
Acquisition of treasury stock
Retirement of treasury stock
net of taxes
adjustments
¥
(31,593) —
—
¥(55,041)
ThousandsThousands of U.S. dollars (Note 1)
Number
Unrealized gains
of shares Common
Capital
Retained
Treasury stock, (losses) on available-
of common stock surplus earnings
at cost
for-sale securities,
stock net of taxes
Balance as of March 31, 2010 410,000 $775,791 $844,955 $3,115,622 $(277,956)
—
—
—
153,830 —
Cash dividend from retained earnings —
—
—
(239,218)
—
Equity transactions with noncontrolling
—
—
—
(6,434)
—
interests and others
—
—
—
—
(156)
—
—
—
(1,804)
4,462 Retirement of treasury stock
(10,000)
—
—
(227,047) 227,047 Change in scope of consolidation
—
—
—
—
—
available-for-sale securities, net of taxes —
—
—
—
—
net of taxes
—
—
—
—
—
adjustments
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
Balance as of March 31, 2011 400,000 $775,791 $844,955 $2,794,949 $ (46,603)
80
Deferred
currency
Stock losses on Foreign
translation acquisition
hedges, net
adjustments
rights
of taxes SHISEIDO ANNUAL REPOR T 2011
$ 12,688 —
—
—
—
—
$(281,996)
—
—
$5,171 —
—
$197,883
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(11,678)
—
—
—
—
—
—
—
—
—
—
—
—
$ 1,010 —
—
—
—
(379,952)
—
—
$(661,948)
—
1,937 —
$7,108 —
—
(50,355)
$147,528
CONSOLIDATED STATEMENTS OF CASH FLOWS
Millions of yen
2009
Cash Flows from Operating Activities:
Income before income taxes
Depreciation
Amortization of goodwill
Impairment loss
Restructuring expenses
Loss on adjustment for changes of accounting standard
for lease transactions
Environmental expenses
Loss on adjustment for changes of accounting standard for
asset retirement obligations
Purchasing-related expenses
Loss on adjustment for changes of estimate for samples and
promotional items
Loss on disaster
Increase (decrease) in allowance for doubtful accounts
Increase (decrease) in reserve for sales returns
Increase (decrease) in accrued bonuses for employees
Increase (decrease) in accrued bonuses for directors
Increase (decrease) in provision for liabilities and charges
Increase (decrease) in accrued retirement benefits
(Increase) decrease in prepaid pension expenses
Interest and dividend income
Interest expense
Equity in earnings of affiliates
(Gain) loss on sales of investments in securities
(Gain) loss on sales of shares in affiliates
Write-down of investments in securities and other investments
(Gain) loss on sales and disposal of property, plant and equipment
(Increase) decrease in notes and accounts receivable
(Increase) decrease in inventories
Increase (decrease) in notes and accounts payable
Other
Subtotal
Interest and dividend received
Interest paid
Income taxes paid
Net cash provided by operating activities·
Cash Flows from Investing Activities:
Transfers to time deposits
Proceeds from maturity of time deposits
Acquisition of short-term investments in securities
Proceeds from sales of short-term investments in securities
Acquisition of investments in securities
Proceeds from sales of investments in securities
Acquisition of property, plant and equipment
Proceeds from sales of property, plant and equipment
Acquisition of intangible assets
Payments of long-term prepaid expenses
Payments of long-term loans receivable
Net proceeds from acquisition of shares in subsidiaries
resulting in change in consolidation scope
Net proceeds from acquisition of shares in subsidiaries
Net proceeds from sales of shares in subsidiaries
resulting in change in consolidation scope (Note 3)
Other
Net cash used in investing activities
Cash Flows from Financing Activities:
Net increase (decrease) in short-term debt
Proceeds from long-term debt
Repayment of long-term debt
Cash dividend paid
Cash dividend paid to minority shareholders
Other
Net cash provided by (used in) financing activities
Effect of Exchange Rate Changes on Cash and Cash Equivalents
Net Change in Cash and Cash Equivalents
Cash and Cash Equivalents at Beginning of Year (Note 3)
Increase (Decrease) in Cash and Cash Equivalents due to
the Change in Consolidation Scope of Subsidiaries (Note 3)
Cash and Cash Equivalents at End of Year (Note 3)
2010
Thousands of
2011
2011
¥ 38,486
28,289
1,562
6,073
6,074
¥ 46,739
26,350
1,041
3,469
—
¥ 28,695
29,511
5,204
458
—
216
—
—
507
—
—
—
—
—
—
—
—
844
1,233
10,150
14,829
—
—
(230)
2,175
(2,466)
10
(19)
1,990
553
(2,821)
1,812
(58)
(24)
(71)
206
884
(5,053)
(10,340)
(4,698)
(3,255)
59,295
2,823
(1,808)
(17,542)
42,768
—
—
(73)
693
1,735
198
363
745
5,620
(1,515)
1,569
(62)
(163)
—
356
463
(8,472)
2,015
(9,085)
4,403
76,896
1,563
(1,529)
(7,498)
69,432
6,752
1,669
(53)
(5)
455
56
(79)
1,517
4,180
(1,400)
2,166
(33)
22
—
4,199
609
3,323
728
(6,135)
1,203
85,119
1,431
(2,060)
(16,903)
67,587
81,203
20,072
(637)
(60)
5,472
673
(950)
18,244
50,271
(16,837)
26,049
(397)
265
—
50,499
7,324
39,964
8,755
(73,782)
14,467
1,023,680
17,210
(24,775)
(203,283)
812,832
(31,738)
27,668
(935)
1,639
(3,816)
3,927
(16,133)
757
(5,671)
(6,419)
—
(33,151)
28,668
(1,365)
1,502
(157,574)
318
(15,545)
818
(4,685)
(5,287)
(20,841)
(28,066)
27,821
(1,191)
942
(30)
1,352
(17,702)
987
(4,578)
(4,053)
0
(337,535)
334,588
(14,324)
11,329
(361)
16,260
(212,892)
11,870
(55,057)
(48,743)
0
—
—
—
—
(752)
(5,724)
(9,044)
(68,839)
343
2,220
(28,158)
—
2,257
(204,885)
—
8,298
(364,450)
101,335
70,879
(23,855)
(6,830)
388
(19,955)
(1,905)
302
120,359
393
(14,701)
91,858
—
690
(30,304)
670
28,669
(36,623)
(6,546)
473
(16,972)
(2,065)
111
(32,283)
(10,753)
(28,426)
120,394
(99,817)
100,022
(15,700)
(14)
221
(19,879)
(4,405)
—
(39,572)
(6,936)
(9,225)
77,157
(1,200,445)
1,202,910
(188,815)
(168)
2,658
(239,074)
(52,977)
—
(475,911)
(83,415)
(110,944)
927,925
(110)
¥ 91,858
—
¥ 77,157
20,660
¥ 88,592
$
345,099
354,913
62,586
5,508
—
248,467
$ 1,065,448
81
1. BASIS OF PRESENTING CONSOLIDATED FINANCIAL STATEMENTS
Accounting Principles and Presentation
The financial statements of Shiseido Company, Limited (the ”Company”) and its consolidated subsidiaries have been
prepared in accordance with the provisions set forth in the Financial Instruments and Exchange Law and Companies Act
and in conformity with accounting principles generally accepted in Japan. Therefore, application and disclosure requirements are different from International Financial Reporting Standards in certain respects.
Certain items presented in the consolidated financial statements filed with the Director of the Kanto Finance Bureau
in Japan have been reclassified for the convenience of the reader.
Certain reclassifications have been made in the consolidated financial statements for the years ended March 31, 2009
and 2010 to conform to the presentation for the year ended March 31, 2011.
Amounts in U.S. dollars are included solely for the convenience of the reader. The rate of ¥83.15 = US$1 prevailing on
March 31, 2011 has been used in translating the consolidated financial statements expressed in Japanese yen into U.S.
dollars. Such translations should not be construed as representations that the Japanese yen amounts could be readily
converted, realized or settled in U.S. dollars at this rate.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(1) Scope of Consolidation
The Company has 97 subsidiaries (companies over which the Company exercises control over operations) as of March 31,
2011 (91 and 99 as of March 31, 2009 and 2010, respectively). The accompanying consolidated financial statements as of
March 31, 2011 include the accounts of the Company and its 95 (86 and 97 as of March 31, 2009 and 2010, respectively)
significant subsidiaries (the “Companies”).
The Company has 14 affiliates (companies that are not subsidiaries but over which the Company exercises significant
influence) as of March 31, 2011 (20 and 17 as of March 31, 2009 and 2010, respectively). Investments in 3 affiliates (3 as
of March 31, 2009 and 2010) are accounted for by the equity method as of March 31, 2011.
The Shiseido Group acquired the outstanding shares of Shiseido S.A. (Switzerland). Therefore, Shiseido S.A. (Switzerland)
is included in the scope of consolidation in the current fiscal year.
Three companies — MD Beauty Sales, Inc., ID Direct, Inc., and Carita UK Ltd. — are excluded from the scope of consolidation in the current fiscal year because they were liquidated during the period.
The major consolidated subsidiaries are listed in “Main Subsidiaries and Affiliates” on page 58.
Since the fiscal year end for certain consolidated subsidiaries is December 31, their financial statements as of that date are
used in the preparation of the Company’s consolidated financial statements. When significant transactions occur at those
subsidiaries between their fiscal year end and the Company’s fiscal year end, these transactions are included in consolidation.
Investments in 2 unconsolidated subsidiaries and 11 affiliates not accounted for under the equity method are stated at
cost as they are immaterial to the consolidated financial statements.
The Company has adopted the “full fair value method” so that all of the assets and liabilities of the subsidiaries are
marked to fair value as of the date of acquisition of control.
All significant intercompany balances and transactions have been eliminated in consolidation. All material unrealized
profits included in assets resulting from intercompany transactions are eliminated.
(2) Inventories
Previously, inventories held by the Company for normal sales in the ordinary course of business were valued at cost, determined by the average method, while inventories held by domestic consolidated subsidiaries were valued at cost, determined
primarily by the last purchase price method. Effective from the fiscal year ended March 31, 2009, however, the Company
applied “Accounting Standard for Measurement of Inventories” (Accounting Standards Board of Japan (“ASBJ”), Statement
No. 9, issued July 5, 2006) and unified accounting policies between the Company and its consolidated subsidiaries. The
effect of this change on operating income, income before income taxes and net income for the year ended March 31, 2009,
was immaterial. Accordingly, such inventories are generally valued at cost, determined by the average method. (Carrying
amount in the balance sheet is calculated with consideration of write-downs due to decreased profitability).
(Additional Information)
Accounting Estimation for Samples and Promotional Items
Several consolidated subsidiaries in Europe and certain other countries have recognized samples and promotional items
associated with marketing activities at stores as assets if they are saleable. As part of its efforts to promote enhanced efficiency, the Shiseido Group introduced its core business processing system overseas and successively expanded it, which has
enhanced management clarity and standardized operations globally. Consequently, the consolidated subsidiaries in Europe and
certain other countries improved the accuracy of their estimates for the saleability of samples and promotional items.
As a result of this change in estimate recorded in the current fiscal year, income before income taxes and net income
decreased ¥6,751 million and ¥4,805 million, respectively, compared with the previous method applied in the fiscal year
ended March 31, 2010.
82
(3) Property, Plant and Equipment (Excluding Lease Assets)
Buildings (excluding leasehold improvements) are depreciated using the straight-line method. Other tangible fixed assets
are, in principle, depreciated using the declining-balance method at the Company and its domestic consolidated subsidiaries and the straight-line method at overseas consolidated subsidiaries. Major fixed assets in Japan are depreciated over
specific useful lives based on durability, level of deterioration, and special characteristics, which represent an approximate
20-30% reduction from useful lives utilized for tax purposes.
(4) Intangible Assets (Excluding Lease Assets)
Intangible assets are mainly amortized using the straight-line method over the following estimated useful lives:
Software: 5 years, mainly
Customer relationship: 10 years, mainly
(5) Lease Assets
Finance lease assets that are not deemed to transfer ownership of the leased property to the lessee are depreciated using
the straight-line method over the period of the lease, with zero residual value.
Previously, the Company and its domestic consolidated subsidiaries treated finance leases that do not transfer ownership as operating leases. Effective from the year ended March 31, 2009, however, the Company and its domestic consolidated subsidiaries have applied “Accounting Standard for Lease Transactions” (ASBJ, Statement No. 13, March 30,
2007; revised from the standard originally issued by the Corporate Accounting Council on June 17, 1993) and “Guidance
on Accounting Standard for Lease Transactions” (ASBJ, Guidance No. 16, March 30, 2007; revised from the standard
originally issued by the Japanese Institute of Certified Public Accountants on January 18, 1994).
Accordingly, from the year ended March 31, 2009, the Company and its domestic consolidated subsidiaries have
treated such leases as capital leases. As a result of this change, operating income increased ¥285 million, income before
income taxes increased ¥180 million, and net income decreased ¥106 million in the year ended March 31, 2009.
The effects of this change in specific segments are described in Segment Information (Note 20).
(6) Long-Term Prepaid Expenses
Long-term prepaid expenses are primarily amortized using the straight-line method.
(7) Goodwill
Amortization of goodwill is determined on a case by case basis and is generally amortized using the straight-line method
over a period not exceeding 20 years.
(8) Securities
The Company and its domestic consolidated subsidiaries categorize their existing securities as available-for-sale securities.
Those securities with market prices are carried at fair value prevailing at the fiscal year end, with net unrealized gains and
losses, net of taxes, reported separately in net assets. The cost of securities sold is mainly calculated using the movingaverage method. If fair value is not available, securities are carried at cost, which is determined mainly by the movingaverage method. Investments in limited partnerships are recorded as investments in securities at the amount of interest
in such partnerships calculated based on ownership percentage. Investment gain or loss is included in net income or loss
in proportion to the ownership interests in the net asset value of the partnership.
Securities with remaining maturities of one year or less and securities that are recognized as cash equivalents are classified as short-term investments in securities. Those with maturities extending beyond one year are included in investments
in securities as non-current assets.
(9) Net Income and Cash Dividend per Share
Net income per share of common stock is based on the weighted average number of shares of common stock outstanding during each year. The computation of fully diluted net income per share of common stock reflects the maximum possible dilution that could occur if securities or other contracts to issue common stock were exercised or converted into
common stock or resulted in the issuance of common stock.
Cash dividend per share shown for each year in the consolidated statements of income represent the dividend declared
as applicable to the respective year, rather than that paid in each year.
(10) Accounting for Consumption Tax
In Japan, consumption tax is imposed at a flat rate on all domestic consumption of goods, assets and services (with
certain exemptions). The consumption tax withheld upon sales is recorded as a liability. Consumption tax, which is paid
by the Company and its domestic consolidated subsidiaries on purchases of goods, assets and services, is offset against
the balance withheld, and the net amount is subsequently paid to the national government.
Transactions subject to consumption taxes are recorded at amounts exclusive of consumption taxes.
(11) Allowance for Doubtful Accounts
The Company and its domestic consolidated subsidiaries provide the allowance for doubtful accounts based on the historic percentage of actual bad debt losses against the balance of total receivables and the amount of uncollectible receivables estimated on an individual basis. Overseas consolidated subsidiaries record the allowance based primarily on the
amount of uncollectible receivables estimated on an individual basis.
(12) Reserve for Sales Returns
The Companies provide reserve for sales returns for future losses considering the past return ratios and market distribution
status.
83
(13) Accrued Bonuses for Employees
The Companies provide accrued bonuses for employees based on the estimated amounts to be paid in respect of the
fiscal year. This reserve includes bonuses for corporate officers who are non-Board members, for whom the calculations
are the same as those for the Accrued Bonuses for Directors.
(14) Accrued Bonuses for Directors
The Companies provide accrued bonuses for members of the Board of Directors (except for external directors) based on
the estimated amounts to be paid in respect of the fiscal year.
(15) Provision for Liabilities and Charges
To provide for losses due to legal risks, product guarantee risks, tax risks, and other factors, certain overseas consolidated
subsidiaries make provision, the amount of which is based on estimated losses to be incurred considering the likelihood
of such losses in the future.
(16) Reserve for Loss on Disaster
The Company and its certain domestic consolidated subsidiaries provide reserves mainly for expenses associated with
products damaged by the Great East Japan Earthquake using estimates of future expenditures.
(17) Accrued Retirement Benefits
The Companies have obligations to pay retirement benefits to their employees and, therefore, the Company, its domestic
consolidated subsidiaries and certain overseas consolidated subsidiaries provide accrued retirement benefits based on
the estimated amount of projected benefit obligation and the fair value of plan assets.
Unrecognized prior service cost is primarily amortized on a straight-line basis over a 10-year period, which is shorter
than the average remaining years of service of the eligible employees. Unrecognized net actuarial gain or loss is primarily
amortized from the following year on a straight-line basis over a 10-year period, which is shorter than the average remaining years of service of the eligible employees.
The Company and its domestic consolidated subsidiaries have applied “Partial Amendments to Accounting Standards
for Retirement Benefits (Part 3)” (ASBJ Statement No. 19, July 31, 2008) from the fiscal year ended March 31, 2010. The
adoption of this accounting standard had no effect on projected benefit obligations, operating income and income before
income taxes in the fiscal year ended March 31, 2010.
(18) Allowance for Losses on Guarantees
The Company provides an allowance for estimated probable losses on guarantees based on the financial status of the
parties for which guarantees have been provided.
(19) Allowance for Environmental Measures
The Company and its domestic consolidated subsidiaries provide a reserve for the estimated cost to treat polychlorinated
biphenyl (PCB) waste as required by the Act on Special Measures Concerning Promotion of Proper Treatment of PCB
Wastes.
(20) Foreign Currency Translation
Receivables and payables denominated in foreign currencies are translated into Japanese yen at the exchange rate prevailing on
the respective balance sheet dates, and resulting exchange gains or losses are included in net income or loss for the fiscal year.
Investments in unconsolidated subsidiaries and affiliates denominated in foreign currencies are translated at the historical exchange rates prevailing at the time of the transaction.
(21) Derivatives and Hedging Activities
The Companies use derivatives such as foreign exchange forward contracts, foreign currency options, interest rate swap
contracts, and interest rate and currency swap contracts to reduce market risks and maintain stable profits. The Companies
limit their use of foreign exchange forward contracts related derivative transactions to the amounts of foreign currency
denominated receivables and payables, and do not use derivatives for speculative trading.
The Companies execute and manage derivatives within the limits of established internal rules and regulations, and
reduce credit risk by limiting counterparties to highly creditworthy financial institutions.
Derivatives are carried at fair value with gains or losses recognized in the consolidated statements of income. For derivatives used for hedging purposes, gains or losses on derivatives are deferred until recognition of the hedged transactions.
Also, if interest rate swap contracts are used as a hedge and meet certain hedging criteria, the interest rate swaps are
not remeasured at market price, and the amount to be received under the interest rate swap contract is added to or
deducted from the interest on the liabilities for which the swap contract was executed (special accounting). And if interest
rate and currency swap contracts are used as a hedge and meet certain hedging criteria, the interest rate and currency
swap contracts are not re-measured at market price, and the amount to be received under the interest rate and currency
swap contracts is added to or deducted from the interest on the liabilities for which the swap contracts are executed, and
the liabilities denominated in foreign currencies, for which the interest rate and currency swap contracts are executed, are
translated at the contracted rate (integral accounting).
The Companies’ policy is to evaluate the effectiveness of derivatives used for hedging purpose based on either the difference between the accumulated amount of cash flows from the hedging instrument and from the corresponding hedged
item or variance between the market value of the hedging instrument and the hedged item. However, measurement of
hedge effectiveness is not considered necessary for interest rate swap contracts that meet the requirements for special
accounting and interest rate and currency swap contracts that meet the requirements for integral accounting.
84
(22) Foreign Currency Determined Financial Statements
Financial statements of overseas consolidated subsidiaries and affiliates that are denominated in foreign currencies are
translated into Japanese yen at the exchange rates prevailing at the respective balance sheet dates of those subsidiaries for
assets and liabilities, and at the historical exchange rates for shareholders’ equity. All income and expense amounts are
translated at the average rates of exchange during the fiscal year of those subsidiaries and affiliates.
The resulting translation adjustments are included in net assets as foreign currency translation adjustments and
minority interests.
(23) Definition of “Cash and Cash Equivalents” in Consolidated Statements of Cash Flows
Cash and cash equivalents as shown in the consolidated statements of cash flows are composed of cash in hand, readily
available time deposits, and short-term investments with maturities of 3 months or less at the time of purchase that are
exposed to insignificant risk of change in value.
(24) Practical
Solution on Unification of Accounting Policies Applied to Foreign Subsidiaries
for Consolidated Financial Statements
Effective from the year ended March 31, 2009, the Company has applied “Practical Solution on Unification of Accounting Policies
Applied to Foreign Subsidiaries for Consolidated Financial Statements” (ASBJ, Practical Issues Task Force No. 18, issued May
17, 2006), and necessary modifications have been made for consolidation. As a result of this change, in the year ended March
31, 2009, operating income decreased ¥1,095 million, income before income taxes decreased ¥950 million, and net income
increased ¥456 million. The effects of this change in specific segments are described in Segment Information (Note 20).
(25) Application of Consolidated Taxation System
The Company and certain domestic consolidated subsidiaries have received permission from the Commissioner of the
National Tax Agency to apply a consolidated taxation system for the fiscal year ending March 31, 2012.
In addition, as of the current fiscal year the Company implemented accounting treatment and disclosure based on the
“Practical Solution on Tentative Treatment of Tax Effect Accounting Under Consolidated Taxation System (Part 1)” (ASBJ,
Practical Issues Task Force No. 5, March 18, 2011) and “Practical Solution on Tentative Treatment of Tax Effect Accounting
Under Consolidated Taxation System (Part 2)” (ASBJ, Practical Issues Task Force No. 7, June 30, 2010) under the assumption that they will apply a consolidated taxation system.
(26) Application of Accounting Standard for Asset Retirement Obligations
Effective from the current fiscal year, the Company applied “Accounting Standard for Asset Retirement Obligations” (ASBJ
Statement No. 18, March 31, 2008) and “Guidance on Accounting Standard for Asset Retirement Obligations” (ASBJ
Guidance No. 21, March 31, 2008). As a result of this change, operating income decreased ¥131 million, and income before
income taxes decreased ¥976 million, in the current fiscal year.
(27) Application of Accounting Standard for Business Combinations
Effective from the current fiscal year, the Company applied “Accounting Standard for Business Combinations” (ASBJ
Statement No. 21, December 26, 2008), “Accounting Standard for Consolidated Financial Statements” (ASBJ Statement
No. 22, December 26, 2008), “Partial Amendments to Accounting Standard for Research and Development Costs” (ASBJ
Statement No. 23, December 26, 2008), “Revised Accounting Standard for Business Divestitures” (ASBJ Statement No.
7 (Revised 2008), December 26, 2008), “Revised Accounting Standard for Equity Method of Accounting for Investments”
(ASBJ Statement No. 16, December 26, 2008) and “Revised Guidance on Accounting Standard for Business Combinations
and Accounting Standard for Business Divestitures” (ASBJ Guidance No. 10, December 26, 2008).
(28) Disclosure of Consolidated Statements of Comprehensive Income
Effective from the current fiscal year, the Company applied “Accounting Standard for Disclosure of Comprehensive Income”
(ASBJ Statement No. 25, June 30, 2010). However, “Accumulated Other Comprehensive Income” and “Total accumulated
other comprehensive income” for the fiscal year ended March 31, 2010 are equivalent to “Valuation, Translation
Adjustments and Others” and “Total valuation, translation adjustments and others.” In addition, the Company has prepared
the consolidated statements of comprehensive income for the fiscal year ended March 31, 2010 as well as that for the
fiscal year ended March 31, 2011.
3. CASH FLOW INFORMATION
The reconciliation of cash and time deposits shown in the consolidated balance sheets and cash and cash equivalents
shown in the consolidated statements of cash flows as of March 31, 2009, 2010 and 2011 is as follows:
Cash and time deposits
Short-term investments in securities
Total
Time deposits with maturities exceeding 3 months
Debt securities with maturities exceeding 3 months
Cash and cash equivalents
Millions of yen
2009
¥ 57,411
47,344
¥104,755
(11,536)
(1,361)
¥ 91,858
2010
¥ 70,102
24,723 ¥ 94,825
(16,287)
(1,381)
¥ 77,157
Thousands of
U.S. dollars ( Note 1)
2011
2011
¥ 90,007 15,051 ¥105,058 (14,834)
(1,632)
¥ 88,592 $1,082,465
181,010
$1,263,475
(178,400)
(19,627)
$1,065,448
85
The assets and liabilities on the date of sale of Shiseido Real Estate Development Co., Ltd., which was sold during the
year ended March 31, 2009, and the relationship between the proceeds from sale of shares and net cash proceeds from
sale of shares is as follows:
Millions of yen
Current assets
¥ 3,638
Non-current assets
559
Current liabilities
(3,396)
Non-current liabilities
(350)
Remaining investment balance after sale of shares
(49)
Increase in retained earnings resulting from exclusion of consolidated subsidiaries
4
Profit on sale of shares of Shiseido Real Estate Development Co., Ltd.
71
Proceeds from sale of shares of Shiseido Real Estate Development Co., Ltd. ¥ 477
Cash and cash equivalents of Shiseido Real Estate Development Co., Ltd.
(134)
Net cash proceeds from sale of shares of Shiseido Real Estate Development Co., Ltd. ¥ 343
The Company acquired the shares of Bare Escentuals, Inc. through a U.S. subsidiary in March 2010. The investment in
Bare Escentuals, ¥157,236 million, is included in acquisition of investments in securities in the consolidated statements
of cash flows in the year ended March 31, 2010. Note 21 “Business Combinations” provides additional detail.
The Company accounted for the components of the purchase price of Bare Escentuals, which was its consolidated
subsidiary on March 8, 2010, on a provisional accounting treatment at March 31, 2010. The purchase price allocation was
finalized in the current fiscal year. Cash and cash equivalents which increased in relation to this are recorded as “Increase
(Decrease) in Cash and Cash Equivalents due to the Change in Consolidation Scope of Subsidiaries”. Note 21 “Business
Combinations” provides additional detail.
The important non-cash transactions are as follows:
The amounts of assets and obligations related to finance lease transactions that were newly recorded in the year ended
March 31, 2009 are ¥9,281 million and ¥9,497 million for lease assets and lease obligations, respectively.
The amounts of assets and obligations related to finance lease transactions that were newly recorded in the year ended
March 31, 2010 are ¥3,831 million and ¥3,831 million for lease assets and lease obligations, respectively.
The amounts of assets and obligations related to finance lease transactions that were newly recorded in the current
fiscal year are ¥1,415 million ($17,017 thousand) and ¥1,415 million ($17,017 thousand) for lease assets and lease obligations, respectively.
4. FINANCIAL INSTRUMENTS
Effective from the year ended March 31, 2010, the Company applied “Accounting Standards for Financial Instruments”
(ASBJ Statement No. 10, March 10, 2008) and “Implementation Guidance on Disclosures about Fair Value of Financial
Instruments” (ASBJ Guidance No. 19, March 10, 2008).
(1) Financial Instruments
1 Policy for financial instruments
The Companies limit fund management to short-term deposits, investments in securities and other methods.
As a matter of policy, the Companies procure funds using bank loans, commercial paper, bonds and other methods. The Companies use derivatives to avoid the risk of foreign exchange rate fluctuations associated with receivables and payables denominated in foreign currencies and the risk of interest rate fluctuations associated with
loans. The Companies limit the use of derivatives to the volume of receivables and payables and actual requirements, and do not engage in speculative transactions.
2 Financial instruments content, risks and risk management system
Notes and accounts receivable are exposed to customer credit risk. The Companies avoid this risk by managing settlement date and amount due for each counterparty.
Investments in securities, primarily the equity securities of corporations with which the Companies do business, are exposed to the risk of fluctuations in market price. The Companies avoid this risk by periodically examining market prices and the financial condition of the issuing entities.
Notes and accounts payable are due within one year.
Interest-bearing debt includes short-term borrowings and commercial paper, which the Companies use to
procure funds for operating transactions, as well as long-term borrowings, bonds and lease obligations, which
the Companies use to fund investments and loans, capital expenditures and operating transactions. Floating-rate
debt is exposed to the risk of interest rate fluctuations. The Companies hedge this risk for specific long-term
borrowings by using derivatives (interest rate swap contracts and interest rate and currency swap contracts from
the year ended March 31, 2011) to avoid the risk of interest rate fluctuations and fix interest payments.
The Companies use foreign exchange forward contracts and foreign currency options to hedge the risk of
foreign exchange fluctuations associated with receivables and payables denominated in foreign currencies and
interest rate swap contracts to hedge the risk of interest rate fluctuations associated with floating-rate debt, and
86
interest rate and currency swap contracts to hedge the risk of foreign exchange fluctuations and fluctuations in
interest rates associated with debt in foreign currencies. (21) Derivatives and Hedging Activities in Note 2.
Summary of Significant Accounting Policies explains hedge accounting, hedging instruments and methods, hedging policy, hedged items, and assessment of hedging effectiveness.
The Companies execute and manage derivatives within the limits of established internal rules and regulations,
and reduce credit risk by limiting counterparties to highly creditworthy financial institutions.
Payables and interest-bearing debt are exposed to liquidity risk that the Companies manage in ways such as
preparing monthly capital deployment reports.
3 Supplemental information on the fair value of financial instruments
The Companies calculate the fair value of financial instruments based on market prices, or by using reasonable
estimates when market prices are not available. These estimates include variable factors, and are subject to
fluctuation due to changes in the underlying assumptions. The contract amounts of the derivatives discussed in
Note 16. Derivative Financial Instruments below are not an indicator of the market risk associated with derivatives
transactions.
(2) Fair Value of Financial Instruments
Fair value and variance with carrying value presented on the balance sheets are as follows. Fair values that are not readily determinable are not included in the following table. (See *2 for additional information.)
Millions of yen
2010
Carrying value (*)
Fair value (*)
1 Cash and time deposits
2 Notes and accounts receivable
(less allowance for doubtful accounts)
3S
hort-term investments in securities and investments in securities
Available-for-sale securities
4 Long-term loans receivable
5 Notes and accounts payable
6 Short-term bank borrowings
7 Bonds
8 Long-term borrowings from banks and other financial institutions
9 Lease obligations
0 Derivative instruments
i. Hedge accounting not applicable
ii. Hedge accounting applicable
¥ 70,102
¥ 70,102
—
110,746
110,746
—
45,876
17,477
(91,310)
(105,966)
(50,000)
(52,053)
(6,428)
45,876
17,477
(91,310)
(105,966)
(49,830)
(52,143)
(6,538)
—
—
—
—
¥ 170
(90)
(110)
(259)
—
(259)
(474)
—
(474)
Millions of yen
2011
Carrying value (*)
Fair value (*)
2 Notes and accounts receivable
3S
hort-term investments in securities and investments in securities
7 Bonds
8 Long-term borrowings from banks and other financial institutions
9 Lease obligations
Variance
Variance
¥ 90,007
¥ 90,007
—
102,064
102,064
—
31,982
—
(81,752)
(5,595)
(90,000)
(96,847)
(5,075)
31,982
—
(81,752)
(5,595)
(90,112)
(95,025)
(5,159)
—
—
—
—
¥ (112)
1,822
(84)
(39)
—
(39)
(2,556)
—
(2,556)
87
Thousands of U.S. dollars (Note 1)
2011
Carrying value (*)
Fair value (*)
$ 1,082,465 2 Notes and accounts receivable
3 Short-term investments in securities and investments in securities
7 Bonds
8 Long-term borrowings from banks and other
financial institutions
9 Lease obligations
$ 1,082,465 Variance
—
—
1,227,468 1,227,468 384,630 —
(983,187)
(67,288)
(1,082,381)
384,630 —
(983,187)
(67,288)
(1,083,728)
—
—
—
—
$ (1,347)
(1,164,726)
(61,034)
(1,142,814)
(62,044)
21,912
(1,010)
(469)
—
(469)
(30,740)
—
(30,740)
*Liabilities are in parentheses. Derivative transactions are presented as net amounts receivable or payable, with net amounts payable in
parentheses.
*1: Method for calculating the fair value of financial instruments, short-term investments in securities and derivative transactions
1Cash and time deposits; 2 Notes and accounts receivable
Carrying value is used for fair value for these short-term items because these amounts are approximately the same.
3Short-term investments in securities and investments in securities
Short-term investments in securities are held as available-for-sale securities. Market prices on exchanges are used to determine
the fair value of equity securities. Prices quoted by financial institutions are used to determine the fair value of bonds. Carrying
value is used for fair value for instruments with short-term maturities included in available-for-sale securities because these
amounts are approximately the same.
4Long-term loans receivable
Floating-rate long-term loans receivable reflect market interest rates. Carrying value therefore approximates fair value of long-term
loans receivable.
5Notes and accounts payable; 6 Short-term bank borrowings
Carrying value approximates fair value for these short-term items.
7Bonds
Fair value of bonds issued by the Company is calculated based on market prices.
8Long-term borrowings from banks and other financial institutions
Floating-rate long-term borrowing reflects market interest rates. In addition, fair value approximates carrying value because the
Company’s creditworthiness does not vary significantly after assuming long-term borrowings. Therefore, carrying value is used
for fair value of floating-rate long-term borrowing. Fair value of fixed-rate long-term borrowing is the discounted value of total
principal and interest using an assumed interest rate on equivalent new borrowings.
9Lease obligations
The fair value of lease obligations is the discounted present value of total principal and interest using an assumed interest rate on
equivalent new lease transactions.
0Derivative instruments
Please refer to Note 16. Derivative Financial Instruments.
*2: Fair values that are difficult to determine as of March 31, 2010 and 2011.
Millions of yen
Thousands of
2010
2011
2011
Carrying value
Carrying value
Carrying value
¥158,552
10,771
1,666
¥1,273 8,160 1,151 $15,310
98,136
13,842
Shares of subsidiaries and affiliates
Unlisted equity securities
Investment in limited partnership, etc.
Market prices do not exist for these items, or the cost of estimating future cash flows is considered prohibitive. These items are not
included in 3 Short-term investments in securities and investments in securities, because their fair values are not readily determinable.
88
*3: The carrying value of monetary assets as of March 31, 2010 and 2011
Millions of yen
2010
Due in 1 year or less
Cash and time deposits Notes and accounts receivable
Short-term investments in securities and
investments in securities
The one with expiration of available-for-sale securities
Long-term loans receivable
Due after 1 year through 5 years
—
—
—
—
—
—
17,499 —
¥198,347 ¥ 1,636
17,466 ¥19,102
—
¥11 ¥11
¥4,500
—
¥4,500
Due after 5 years
through 10 years
Due after 10 years
Millions of yen
2011
¥ 90,007 102,064 —
—
—
—
—
—
6,148 ¥198,219 ¥1,296 ¥1,296 —
—
¥4,500
¥4,500
2011
Cash and time deposits Notes and accounts receivable
Due after 10 years
¥ 70,102 110,746 Cash and time deposits Notes and accounts receivable
Due after 5 years
through 10 years
Due after 5 years
through 10 years
Due after 10 years
$1,082,465 1,227,468 —
—
—
—
—
—
73,939 $2,383,872 $15,586
$15,586 —
—
$54,119
$54,119
5. SECURITIES
The acquisition cost, carrying amount, and gross unrealized gains and losses for securities stated at fair value by security
type at March 31, 2010 and 2011 are as follows:
Available-for-sale securities:
Millions of yen
2010
Equity securities
Corporate bonds
Other
Cost
¥12,189 5,603 26,218 ¥44,010 Carrying amount
Gross unrealized gains
¥14,922 4,732 26,222 ¥45,876 ¥4,255 4
72 ¥4,331 Millions of yen
2011
Equity securities
Corporate bonds
Other
Cost
¥ 9,645 5,845 16,256 ¥31,746 Carrying amount
¥11,025 4,682 16,275 ¥31,982 ¥2,245 8
116 ¥2,369 Gross unrealized losses
¥1,522
875
68
¥2,465
Gross unrealized losses
¥ 865
1,171
97
¥2,133
89
2011
Cost
Carrying amount
Gross unrealized losses
Equity securities
$115,995 $132,592 $27,000 $10,403
Corporate bonds
70,295 56,308 96 14,083
Other
195,502 195,730 1,395 1,166
$381,792 $384,630 $28,491 $25,652
Impairment for securities stated at fair value was recognized in the amounts of ¥164 million, ¥24 million and ¥1,587
million ($19,086 thousand) for the years ended March 31, 2009, 2010 and 2011, respectively.
Also, impairment for securities stated at cost was recognized in the amounts of ¥23 million, ¥332 million and ¥2,608
million ($31,365 thousand) for the years ended March 31, 2009, 2010 and 2011, respectively.
Proceeds from sales, and gross realized gains and losses from the sale of available-for-sale securities in the years ended
March 31, 2009, 2010 and 2011 are as follows:
Millions of yen
Proceeds from sales
Gross realized gains
Gross realized losses
Thousands of
2009
2010
2011
2011
¥1,980 36 12 ¥1,820
199
36
¥2,294 177 199 $27,589
2,129
2,393
6. Inventories
Inventories held by the Companies as of March 31, 2010 and 2011 are as follows:
Millions of yen
2010
Merchandise and products
Work in process
Raw materials and supplies
¥37,957
3,273 26,112 ¥67,342
Thousands of
2011
2011
¥45,667 3,066 18,842 ¥67,575 $549,212
36,873
226,603
$812,688
7. SHORT-TERM AND LONG-TERM DEBT
Short-term and long-term debt as of March 31, 2010 and 2011 are as follows:
Millions of yen
Short-term bank borrowings
(weighted average interest rate 4.33%)
Short-term debt
Long-term borrowings from banks and other financial institutions
(Borrowings due within one year, weighted average interest rate 0.52%)
(Borrowings due after one year, weighted average interest rate 0.66%)
0.65% unsecured yen bonds due in December 2014
0.55% unsecured yen bonds due in June 2015
Lease obligations
(Borrowings due within one year, weighted average interest rate 3.01%)
(Borrowings due after one year, weighted average interest rate 3.04%)
Less: portion due within one year
Long-term debt
90
2010
¥105,966 ¥105,966
Thousands of
2011
¥
¥
5,595 5,595 4,273
47,780 50,000 —
8,509 88,338 50,000 40,000 2,454
3,974 ¥108,481
(6,727)
¥101,754
2,257 2,818 ¥191,922 (10,766)
¥181,156 2011
$
$
67,288
67,288
102,333
1,062,393
601,323
481,058
27,144
33,891
$2,308,142
(129,477)
$2,178,665
The aggregate annual maturities of long-term debt as of March 31, 2011 are as follows:
For the years ending March 31
Millions of yen
2012
2013
2014
2015
2016
2017 and thereafter
¥ 10,766 7,343 30,790 55,354 45,156 42,513 ¥191,922 Thousands of
$ 129,477
88,310
370,295
665,712
543,067
511,281
$2,308,142
Assets pledged as collateral as of March 31, 2011 are as follows:
Millions of yen
2011
Buildings and structures
Other investments
Investments in securities
Cash and time deposits
¥16,606 15,200 1,512 1,218 2
¥34,538 Thousands of
2011
$199,712
182,802
18,184
14,648
24
$415,370
The above assets are pledged as collateral for derivative transactions (interest rate swaps) and the following collateralized liabilities as of March 31, 2011:
Millions of yen
Current portion of long-term debt
Long-term debt
2011
¥ 800 24,050 ¥24,850 Thousands of
2011
$ 9,621
289,236
$298,857
8. ACCRUED RETIREMENT BENEFITS
The Company and its domestic consolidated subsidiaries have contributory funded pension plans, unfunded
termination allowance plans, defined contribution plans and retirement benefit prepayment plan. In some cases, additional voluntary retirement benefits are paid when an employee retires, which are accounted for as retirement benefit
expenses when incurred.
Also, certain overseas consolidated subsidiaries have defined benefit pension plans, unfunded termination allowance
plans and defined contribution plans.
The reconciliation of projected benefit obligations, plan assets, funded status of the pension benefit plans, prepaid
pension expenses and accrued retirement benefits recognized in the accompanying balance sheets as of March 31, 2010
and 2011 is as follows:
Millions of yen
Projected benefit obligations
Fair value of plan assets
Funded status of the pension benefit plans
Unrecognized net actuarial loss
Unrecognized prior service cost
Net retirement benefit obligation
Prepaid pension expenses
Accrued retirement benefits
Thousands of
2010
2011
2011
¥(203,578)
158,407
(45,171)
36,743
(2,962)
¥ (11,390)
28,740
¥ (40,130)
¥(205,565)
159,368 (46,197)
30,816 (1,345)
¥ (16,726)
24,560 ¥ (41,286)
$(2,472,219)
1,916,633
(555,586)
370,607
(16,175)
$ (201,154)
295,370
$ (496,524)
91
The net periodic pension benefit costs for the years ended March 31, 2009, 2010 and 2011 are as follows:
Millions of yen
Service cost
Interest cost
Expected return on plan assets
Amortization of net actuarial loss
Amortization of prior service cost
Net periodic pension benefit cost
2009
¥ 8,712
4,965
(7,011)
5,500
(2,125)
¥10,041
2010
¥ 7,971
5,022
(5,853)
9,031
(2,125)
¥14,046
Thousands of
2011
¥ 8,116 5,099 (6,362)
7,899 (1,783)
¥12,969 2011
$ 97,607
61,323
(76,513)
94,997
(21,443)
$155,971
The discount rate used to determine the actuarial present value of projected benefit obligations as of March 31,
2010 and 2011 is mainly 2.5%. The expected rate of return on plan assets of those plans as of March 31, 2010 and
2011 is mainly 4.0%. Allocation of pension benefits to each year of service of the employees is based on the “benefits/years-of-service” approach, whereby the same amount of benefits is allocated to each year. Certain overseas
consolidated subsidiaries have adopted the corridor approach for the amortization of actuarial gains and losses.
9. Income taxes
Income tax applicable to the Company and its domestic consolidated subsidiaries consist of corporation, inhabitants’ and
enterprise taxes. The statutory income tax rate is approximately 41.0% for the years ended March 31, 2009, 2010 and
2011.
Since the difference between the statutory tax rate and the effective tax rate for the fiscal year ended March 31,
2009 is less than 5%, a reconciliation of these two rates is not presented.
Reconciliations between the statutory tax rate and the effective tax rate for the fiscal years ended March 31, 2010 and
2011 are as follows:
92
2010
2011
Statutory tax rate
Increase (decrease) due to:
Permanently nondeductible expenses
Dividend income not taxable
Unrealized intercompany profit
Effects of realignment of subsidiaries
Tax credits
Differences of tax rates for overseas consolidated subsidiaries
Valuation allowance
Others
Effective tax rate
41.0%
41.0%
1.2
(1.5)
(11.6)
4.5
(4.4)
(7.1)
(1.3)
(0.5)
20.3%
1.7
4.4
6.5
(0.6)
(3.8)
(4.5)
(0.5)
2.2
46.4%
Deferred tax assets and liabilities (both current and non-current) as of March 31, 2010 and 2011 are as follows:
Millions of yen
Deferred tax assets:
Inventories
Depreciation
Unrealized intercompany profit in inventory and property, plant and equipment
Accrued expenses
Accrued retirement benefits
Accrued bonuses for employees
Write-down of investments in securities and other investments
Tax losses carried forward
Reserve for sales returns
Accrued enterprise tax
Other
Total gross deferred tax assets
Less: valuation allowance
Total deferred tax assets
Deferred tax liabilities:
Goodwill and other intangible assets
Special tax-purpose reserve
Unrealized gains (losses) on available-for-sale securities
Removal cost of asset retirement obligation
Undistributed earnings of overseas consolidated subsidiaries
Other
Total deferred tax liabilities
Net deferred tax assets
2010
Thousands of
2011
2011
¥ 8,406
7,998
7,613 4,819
4,637
4,592 2,918
2,802
1,670 831
2,751
49,037
(4,739)
¥44,298 ¥ 8,542 7,015 6,818 4,777 6,294 4,240 5,076 3,146 1,562 570 3,915 51,955 (4,131)
¥47,824 $102,730
84,366
81,996
57,450
75,695
50,992
61,046
37,835
18,785
6,855
47,084
624,834
(49,681)
$575,153
¥ 2,507 996 709 —
359 577
¥ 5,148 ¥39,150
¥28,158 967 258 124 621 653 ¥30,781 ¥17,043 $338,641
11,630
3,103
1,491
7,468
7,854
$370,187
$204,966
10. CONTINGENT LIABILITIES
As of March 31, 2010, the Company was contingently liable as a guarantor for SDL Co., Ltd.’s own guarantees of the
lease liabilities of third-party customers, amounting to ¥11 million.
11. Net Assets
Under Japanese laws and regulations, the entire amount paid for new shares is required to be designated as common
stock. However, a company may, by a resolution of the Board of Directors, designate an amount not exceeding one
half of the price of the new shares as additional paid-in capital, which is included in capital surplus.
Under the Japanese Companies Act (“the Act”), in cases where dividend distribution of surplus is made, the lesser of
an amount equal to 10% of the dividend or the excess, if any, of 25% of common stock over the total of additional paidin capital and legal earnings reserve, must be set aside as additional paid-in capital or legal earnings reserve. Legal earnings
reserve is included in retained earnings in the accompanying consolidated balance sheets. Under the Act, both legal earnings reserve and additional paid-in capital used to eliminate or reduce a deficit generally require a resolution of the shareholders’ meeting.
Additional paid-in capital and legal earnings reserve may not be distributed as dividends. Under the Act, all additional
paid-in capital and legal earnings reserve may be transferred to other capital surplus and retained earnings under certain
conditions. The maximum amount that the Company can distribute as dividends is calculated based on the non-consolidated financial statements of the Company in accordance with the Act. Under the Act, companies can pay a dividend at
any time during the fiscal year in addition to the year-end dividend upon resolution at the shareholders’ meeting. For
companies that meet certain criteria such as: (1) having a Board of Directors, (2) having accounting auditors, (3) having a
Board of Corporate Auditors, and (4) the term of service of the directors is prescribed as one year rather than two years
as the normal term by its articles of incorporation, the Board of Directors may declare a dividend if the company has
prescribed so in its articles of incorporation.
A semiannual interim dividend may also be paid once a year upon resolution by the Board of Directors if the articles of
incorporation of the company so stipulate. Cash dividends charged to retained earnings during the fiscal year were the
year-end cash dividend for the preceding fiscal year and the interim cash dividend for the current fiscal year.
93
Appropriations are not accrued in the consolidated financial statements for the corresponding period, but are
recorded in the subsequent accounting period after shareholders’ meeting approval has been obtained.
Retained earnings at March 31, 2011 include amounts representing year-end cash dividend of ¥9,949 million ($119,651
thousand), ¥25.0 ($0.30) per share, which was approved at the shareholders’ meeting held on June 24, 2011.
12. STOCK OPTION PLAN
Summarized information on the stock options granted as of March 31, 2011 is as follows:
1 Stock option plan approved by the shareholders on June 27, 2002
Stock options granted on
July 16, 2002
Number of shares for options granted
Number of shares for options outstanding
Exercise price
Exercisable period
578,000 shares
196,000 shares
¥1,669
July 1, 2004 - June 26, 2012
Total
578,000 shares
196,000 shares
July 31, 2003
Number of shares for options granted Number of shares for options outstanding
Exercise price
Exercisable period
878,000 shares
105,000 shares
¥1,287
July 1, 2005 - June 26, 2013
Total
878,000 shares
105,000 shares
July 26, 2004
Total
1,004,000 shares
461,000 shares
1,004,000 shares
461,000 shares
July 1, 2006 - June 28, 2014
Exercise price
Exercisable period
¥1,427
July 28, 2005
July 28, 2005
Exercise price
Exercisable period
408,000 shares
5,000 shares
¥1
July 1, 2008 - June 30, 2011
261,000 shares
246,000 shares
¥1,481
July 1, 2007 - June 28, 2015
Total
669,000 shares
251,000 shares
5 Stock option plan approved by the shareholders on June 29, 2006 and resolved by the Board of Directors on July 31, 2006.
Exercise price
Exercisable period
August 23, 2006
August 23, 2006
67,000 shares
67,000 shares
¥2,300
August 1, 2008 - July 30, 2016
74,000 shares
74,000 shares
¥2,300
August 1, 2008 - July 30, 2016
Total
141,000 shares
141,000 shares
Number of shares for
options granted
Number of shares for
options outstanding
Exercise price
Exercisable period
94
August 23, 2007
15,000 shares
1,000 shares
¥1
July 1, 2008 - June 30, 2011
August 23, 2007
August 23, 2007
81,000 shares
78,000 shares
81,000 shares
¥2,615
August 1, 2009 - July 30, 2017
78,000 shares
¥2,615
August 1, 2009 - July 30, 2017
Total
174,000 shares
160,000 shares
August 21, 2008
August 21, 2008
Exercise price
Exercisable period 46,000 shares
46,000 shares
40,000 shares
40,000 shares
¥1
August 1, 2011 - July 30, 2018
Total
86,000 shares
86,000 shares
¥1
August 1, 2011 - July 30, 2018
Exercise price
Exercisable period Stock options granted on
August 28, 2009
August 28, 2009
81,400 shares
81,400 shares
¥1
August 1, 2012 - July 31, 2019
53,500 shares
53,500 shares
¥1
August 1, 2012 - July 31, 2019
Total
134,900 shares
134,900 shares
Exercise price
Exercisable period
August 30, 2010
August 30, 2010
59,100 shares
59,100 shares
¥1
August 1, 2013 - July 31, 2020
46,800 shares
46,800 shares
¥1
August 1, 2013 - July 31, 2020
Total
105,900 shares
105,900 shares
13. RESEARCH AND DEVELOPMENT
Research and development expenses are expensed as incurred.
Research and development expenses, which are included in selling, general and administrative expenses, totaled
¥15,243 million, ¥14,460 million and ¥14,467 million ($173,987 thousand) for the years ended March 31, 2009, 2010 and
2011, respectively. There are no research and development expenses included in total manufacturing expenses for the
years ended March, 31, 2009, 2010 and 2011.
14. TRANSACTIONS WITH RELATED PARTIES
Effective from the year ended March 31, 2009, the Company has applied “Accounting Standard for Disclosure of Related
Party Transactions” (ASBJ, Statement No. 11, October 17, 2006) and “Guidance on Accounting Standard for Related Party
Disclosures” (ASBJ, Guidance No. 13, October 17, 2006). As a result, transactions between the Company and the executives of important subsidiaries are disclosed in addition to those related party transactions disclosed previously.
The Company paid advisory services fees of ¥14 million to Remy Gomez, the President and CEO of Beauté Prestige
International, a consolidated subsidiary, for the year ended March 31, 2009 and the ending balance was ¥7 million as prepaid
expenses in other current assets as of March 31, 2009. The advisory services fee conforms to customary practices.
The Company received ¥11 million from Yasuhiko Harada, Director, Corporate Senior Executive Officer of the Company,
in connection with the exercise of new stock acquisition rights (stock options), for the current fiscal year.
15. ACCOUNTING FOR LEASES
The Companies have various lease agreements whereby the Companies act both as a lessee and a lessor.
Finance leases of the Company and its domestic consolidated subsidiaries other than those deemed to transfer the
ownership of the leased assets to the lessee, which previously were not recorded on the balance sheets, are recorded
on the balance sheets from the year ended March 31, 2009.
95
Lease obligation under operating leases at March 31, 2009, 2010 and 2011 are as follows:
Millions of yen
1 As lessee:
The scheduled maturities of future lease
rental payments on such lease contracts
are as follows:
Due within one year
Due after one year
2 As lessor:
The scheduled maturities of future lease
rental receipts on such lease contracts are
as follows:
Due within one year
Due after one year
Thousands of
2009
2010
¥2,655
5,944
¥8,599
¥2,411
6,176
¥8,587
¥ 3,910 19,532 ¥23,442 $ 47,023
234,901
$281,924
—
—
—
¥ 214
6,093
¥6,307
¥ 214 5,886 ¥6,100 $ 2,574
70,788
$73,362
2011
2011
16. DERIVATIVE FINANCIAL INSTRUMENTS
The contract amount, estimated fair value and unrealized gain (loss) of the derivative instruments as of March 31, 2010 is
as follows:
1 Derivatives that do not meet the criteria for hedge accounting
Millions of yen
2010
Contract amount
Total
Foreign exchange contracts: Put US$
GBP
AU$
Foreign exchange contracts: CallUS$
EUR
GBP
Interest rate swap contracts:
To receive variable/to pay fixed
Settled over
one year
Estimated
fair value
Unrealized
gain (loss)
¥4,453 1,976 88 1,174 165 223 —
—
—
—
—
—
¥4,601 1,981 91 1,207 160 215 ¥(148)
(5)
(3)
33
(5)
(8)
1,841 —
¥1,841 —
(124)
—
(124)
¥(260)
2 Derivatives that meet the criteria for hedge accounting
Millions of yen
2010
Contract amount
Total
96
¥25,650 Settled over
one year
¥24,850 Estimated
fair value
¥(474)
The contract amount, estimated fair value and unrealized gain (loss) of the derivative contracts as of March 31, 2011
is as follows:
1 Derivatives that do not meet the criteria for hedge accounting
Millions of yen
2011
Contract amount
Total
Foreign exchange contracts: Put US$
GBP
AU$
Foreign exchange contracts: CallUS$
EUR
Settled over
one year
Estimated
fair value
Unrealized
gain (loss)
¥4,498 1,300 62 1,198 425 —
—
—
—
—
¥4,522 1,288 66 1,219 423 ¥(24)
12
(4)
21
(2)
1,629 —
—
—
(41)
—
(41)
¥(39)
2011
Contract amount
Total
Foreign exchange contracts: Put US$ GBP AU$ Foreign exchange contracts: CallUS$ EUR Interest rate swap contracts:
Settled over
one year
Estimated
fair value
Unrealized
gain (loss)
$54,095 15,634 746 14,408 5,111 — — — —
—
$54,384 15,490 794 14,660 5,087 $(289)
144
(48)
252
(24)
19,591 — —
—
(493)
— (493)
$(469)
2 Derivatives that meet the criteria for hedge accounting
Millions of yen
2011
Contract amount
Total
Interest rate and currency swap contracts:
To receive variable U.S.$/to pay fixedyen
Settled over
one year
¥25,000 ¥25,000 ¥(2,149)
24,850 24,050 (407)
2011
Contract amount
Total
Interest rate and currency swap contracts:
To receive variable U.S.$/to pay fixed yen
Estimated
fair value
Settled over
one year
Estimated
fair value
$300,661 $300,661 $(25,845)
298,857 289,236 (4,895)
17. IMPAIRMENT LOSS
For impairment accounting purposes, the Companies pool their business-use assets separately from their idle assets.
Business-use assets are generally pooled according to the minimum independent cash-flow-generating unit, based on
business classification. Idle assets are pooled according to each separate property. Business-use assets mainly have been
devalued from the book value to the recoverable value, with the differences reported as other expenses. Idle assets whose
market value have declined, mainly due to be sold, have been devalued from the book value to the recoverable value, with
the differences reported as other expenses. Recoverable values are calculated according to estimated net sale values,
which are mainly based on their expected sale value.
Impairment loss on overseas assets is mainly recognized at other, net due to decreasing profitability of subsidiaries in Indonesia.
97
Impairment losses for the years ended March 31, 2009, 2010 and 2011 are as follows:
Millions of yen
Domestic
Business-use assets:
Land
Buildings and structures, etc.
Idle assets:
Land
Overseas
Long-term prepaid expenses
Goodwill
Trademark rights
Thousands of
2009
2010
¥ 168 605 —
¥ 592 2,725 —
—
¥ 79 1
—
$ 950
12
291 58 —
82 59 — 11 8
10 133
96
120
—
23 —
1,653 3,275 ¥6,073 —
11 —
—
—
¥3,469 82 264 3
—
—
¥458 986
3,175
36
—
—
$5,508
2011
2011
18. Restructuring expenses
Restructuring expenses are business costs incurred in streamlining the Companies’ operations, including downsizing and
withdrawing from brands and businesses that contribute little to profitability.
Restructuring expenses for the year ended March 31, 2009 mainly consisted of liquidation expenses of ¥2,689 million
of Shiseido Beautech Co., Ltd. and withdrawing expenses of ¥2,465 million of THE GINZA boutique business.
19. LOSS ON DISASTER
Loss on disaster represents the costs and expenses that were incurred as a result of the Great East Japan Earthquake.
The amounts recorded mainly consist of the provision for reserve for loss on disaster of ¥923 million and the fixed costs
incurred during the period of emergency shutdown that occurred subsequent to the disaster of ¥215 million.
20. SEGMENT INFORMATION
(1) General information about reportable segments
With respect to its reportable segments, the Company is able to obtain delineated financial data from among its structural units. Accordingly, its segments are subject to regular examination in order to assist decision-making on allocation
of managerial resources and evaluation of business performance by the Board of Directors.
The Company’s main business is the production and sale of cosmetics. Under a business structure classified according
to domestic and global regions, various business departments in the head office formulate comprehensive strategies and
promote business activities. Consequently, the Company has classified its operations into two segments along geographical lines: Domestic Cosmetics Business and Global Business.
The Domestic Cosmetics Business segment includes the domestic cosmetics business (production and sale of cosmetics, cosmetics accessories, and toiletries), the healthcare business (production and sale of health & beauty foods and overthe-counter drugs), and the production and sale of non-Shiseido-brand products and mail-order products, etc. The Global
Business segment covers the overseas cosmetics business (production and sale of cosmetics, cosmetics accessories, and
toiletries) and the domestic and overseas professional business (production and sale of beauty salon products), etc.
(2) Basis of measurement for reported segment profit or loss, segment assets and other
material items
The accounting treatment method for the Group’s reported business segments is generally the same as described in “2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES”. Also, segment income is based on operating income.
The prices of inter-segment transactions and transfers are determined by price negotiations based on the Company’s
submission of preferred prices after taking market conditions into account.
98
(3) Information about reported segment profit or loss, segment assets and other material items
Segment information as of and for the fiscal years ended March 31, 2009, 2010 ad 2011 is as follows:
Millions of yen
2009
Domestic Cosmetics
Business Net sales
Sales to outside customers
Intersegment sales or transfers
Total
Segment Income *1,*2,*3
Segment Assets *4
Other Items
Depreciation and Amortization
Amortization of Goodwill
Increase in Tangible and Intangible Fixed Assets
Global
Business
Others*5
¥17,003 11,601 ¥28,604 ¥ 1,469 ¥50,522 ¥690,256 19,417 ¥709,673 ¥ 49,637 ¥529,191 —
¥(19,417)
¥(19,417)
¥
277 ¥ 77,378 ¥690,256
—
¥690,256
¥ 49,914
¥606,569
¥ 17,087 ¥
142 ¥ 15,846 ¥ 9,540 ¥ 1,420 ¥ 13,068 ¥ 1,625 —
¥ 476 ¥ 28,252 ¥ 1,562 ¥ 29,390 ¥
¥ 28,289
¥ 1,562
¥ 29,462
¥
37 —
72 Millions of yen
2010
Domestic Cosmetics
Business Net sales
Total
Segment Assets *4
Other Items
Global
Business
Others*5
Subtotal
Adjustment*6
Total
¥383,780 1,507 ¥385,287 ¥ 38,948 ¥232,607 ¥250,388 2,716 ¥253,104 ¥ 9,536 ¥429,729 ¥10,033 6,225 ¥16,258 ¥ 1,704 ¥48,660 ¥644,201 10,448 ¥654,649 ¥ 50,188 ¥710,996 —
¥(10,448)
¥(10,448)
¥
163 ¥ 64,450 ¥644,201
—
¥644,201
¥ 50,351
¥775,446
¥ 16,493 ¥
142 ¥ 17,935 ¥ 8,466 ¥
899 ¥ 10,422 ¥ 1,339 —
¥ 247 ¥ 26,298 ¥ 1,041 ¥ 28,604 ¥
¥ 26,350
¥ 1,041
¥ 28,658
¥
52 —
54 Millions of yen
2011
Domestic Cosmetics
Business
Net sales
Total
Segment Assets *4
Other Items
Global
Business
Others*5
Subtotal
Adjustment*6
Total
¥358,408 1,829 ¥360,237 ¥ 33,573 ¥212,505 ¥302,633 2,480 ¥305,113 ¥ 9,026 ¥424,427 ¥ 9,660 6,428 ¥16,088 ¥ 1,838 ¥47,439 ¥670,701 10,737 ¥681,438 ¥ 44,437 ¥684,371 —
¥(10,737)
¥(10,737)
¥
21 ¥ 55,813 ¥670,701
—
¥670,701
¥ 44,458
¥740,184
¥ 15,351 ¥
142 ¥ 11,175 ¥ 12,918 ¥ 5,062 ¥ 15,686 ¥ 1,205 —
¥ 350 ¥ 29,474 ¥ 5,204 ¥ 27,211 ¥
¥ 29,511
¥ 5,204
¥ 27,211
37 —
—
Total
¥275,718 2,873 ¥278,591 ¥ 15,421 ¥229,274 Adjustment*6
¥397,535 4,943 ¥402,478 ¥ 32,747 ¥249,395 Subtotal
2011
Domestic Cosmetics
Business
Net sales
$4,310,379 Sales to outside customers
21,996 Intersegment sales or transfers
$4,332,375 Total
$ 403,764 Segment Income *1,*2,*3
$2,555,682 Segment Assets *4
Other Items
$ 184,618 Depreciation and Amortization
$
1,708 Amortization of Goodwill
Increase in Tangible and Intangible Fixed Assets $ 134,396 Global
Business
Others*5
Subtotal
$3,639,603 29,826 $3,669,429 $ 108,551 $5,104,354 $116,176 77,306 $193,482 $ 22,105 $570,523 $8,066,158 129,128 $8,195,286 $ 534,420 $8,230,559 $ 155,358 $ 60,878 $ 188,647 $ 14,492 $ 354,468 — $ 62,586 $ 4,209 $ 327,252 Adjustment*6
—
$(129,128)
$(129,128)
$
252 $ 671,233 $
Total
$8,066,158
—
$8,066,158
$ 534,672
$8,901,792
445 $ 354,913
— $ 62,586
— $ 327,252
Notes:1.Effective from the year ended March 31, 2009, the Company has applied “Practical Solution on Unification of Accounting Policies
Applied to Foreign Subsidiaries for Consolidated Financial Statements.” As a result of this change, total segment income decreased
¥1,095 million for the year ended March 31, 2009.
2.Effective from the year ended March 31, 2009, the Company and its domestic subsidiaries have applied “Accounting Standard for
Lease Transactions” and “Guidance on Accounting Standard for Lease Transactions.” As a result of this change, segment income in
the Domestic Cosmetics business segment increased ¥196 million, segment income in the Global business segment increased ¥76
million, and segment income in the Others business segment increased ¥13 million for the year ended March 31, 2009.
3.Segment income is adjusted for Operating Income described in Consolidated Statements of Income.
4.Previously, deferred tax assets were included as corporate assets. Effective from the year ended March 31, 2009, however, such
assets are classified by business segment, in order to better clarify assets that should be controlled by the relevant business
segment. Business segment information for the year ended March 31, 2008 has been restated to reflect this change in allocation
of deferred tax assets adopted from the year ended March 31, 2009.
99
5.“Others” include businesses not included in the other units of segment reporting. These include the frontier sciences business
(production and sale of cosmetics raw materials, medical-use drugs, medical cosmetics, etc.) and the restaurant business.
6.Below is a description of adjustments.
(1) The “Segment Income” adjustment refers to inter-segment transaction eliminations.
(2) The “Companywide assets (not allocated to specific segments)” included in the “Segment Assets” adjustment line as of
March 31, 2009, 2010 and 2011 were ¥79,411 million, ¥66,887 million, and ¥58,430 million ($702,706 thousand), consisting
mainly of assets not belonging to specific segments (cash and time deposits, short-term investments in securities, investments
in securities, etc.) and assets related to administrative operations. Moreover, the “Intersegment eliminations” included in the
“Segment Assets” adjustment line as of March 31, 2009, 2010 and 2011 were ¥2,035 million, ¥2,437 million, and ¥2,617 million ($31,473 thousand).
(3) The “Depreciation and Amortization” adjustment refers to depreciation expenses related to companywide assets and intersegment eliminations. Long-term prepaid expenses are included in “Depreciation and Amortization” and “Increase in Tangible and
Intangible Fixed Assets.”
(4) The “Increase in Tangible and Intangible Fixed Assets” adjustment refers to the increase of the companywide assets (not
allocated to specific segment) for the fiscal years ended March 31, 2009 and 2010.
(Additional Information)
Effective from the fiscal year ended March 31, 2011, the Company applied the “Accounting Standard for Disclosures about
Segments of an Enterprise and Related Information” (ASBJ Statement No. 17 on March 27, 2009) and the “Guidance on
Accounting Standard for Disclosures about Segments of an Enterprise and Related Information” (ASBJ Guidance No. 20, issued
on March 21, 2008).
In addition, the Company restates segment information as of and for the fiscal years ended March 31, 2009 and 2010 in
conformity with the requirements of the Standard and the Guidance.
(Related Information)
Fiscal year 2010 (April 1, 2010 to March 31, 2011)
a. Information on products and services
Because sales to outside customers in the cosmetics business exceed 90% of net sales of the consolidated
statements of income, the Company omits this description.
b. Geographical information
1 Net sales
Millions of yen
2011
America
Asia / Oceania
Japan
Europe
U.S.A.
China
¥382,866 ¥87,590 ¥77,430 $4,604,522 ¥122,052
¥81,016 2011
America
$1,053,398 ¥670,701
Asia / Oceania
Europe
U.S.A.
China
Japan
¥78,193 Total
$931,209 $940,385 $1,467,853 $974,336 Total
$8,066,158
* Classification of net sales is determined by country or geographical location.
2 Tangible fixed assets
Millions of yen
2011
America
Japan
Europe
U.S.A.
¥93,345 ¥13,220 ¥13,150 Asia /
Oceania
¥7,583 ¥17,073 2011
America
Japan
Europe
U.S.A.
$1,122,610 $158,990 ¥131,221
Total
$158,148 Asia /
Oceania
$91,196 $205,328 Total
$1,578,124
(4) Loss on impairment of fixed assets
Millions of yen
Loss on impairment of fixed assets
2011
Domestic Cosmetics
Business
¥102 Global Business
Others
Total
¥354 ¥2 ¥458
Loss on impairment of fixed assets
2011
Domestic Cosmetics
Business
Global Business
Others
Total
$1,227 $4,257 $24 $5,508
(5) Goodwill
Millions of yen
Balance at the end of the current fiscal year
2011
Domestic Cosmetics
Business
Global Business
Others
Total
¥1,561 ¥92,562 —
¥94,123
Balance at the end of the current fiscal year
2011
Domestic Cosmetics
Business
Global Business
Others
Total
$18,773 $1,113,193 —
$1,131,966
21. BUSINESS COMBINATION
For the fiscal year ended March 31, 2010
(Application of the purchase method)
On March 8, 2010, the Company completed a tender offer through acquisition subsidiary Blush Acquisition Corporation
(BAC) to acquire all outstanding shares of common stock of Bare Escentuals, Inc. (Bare Escentuals) with cash, and made
Bare Escentuals a subsidiary of the Company. Following the acquisition, BAC implemented a short-form merger under
Delaware law with Bare Escentuals, which is the surviving company.
(1) Name and main business of acquired company; reason, date, and legal method used for
acquisition; name of company after acquisition and share of voting rights acquired
1 Name and main business of acquired company
Name of acquired company: Bare Escentuals, Inc.
Main business of acquired company: Sales of cosmetics and other products
2Reason for business combination
Attain new brand value; achieve a significantly complementary position in distribution, sales and R&D capabilities;
and strengthen the business foundation in North America.
3Date of combination
Purchase of shares with cash: March 8, 2010
Absorption merger: March 12, 2010
4 Legal method used for combination and name of company after combination
Legal method used for combination: purchase of shares with cash and absorption merger (absorption merger of BAC
with and into Bare Escentuals, which is the surviving company)
Name of company after combination: Unchanged
5 Share of voting rights acquired
100.0％
(2) Purchase price and details
The purchase price for the acquired company included approximately US$1.74 billion, comprising cash paid to acquire
tendered shares and the cost of purchasing the stock options of Bare Escentuals employees. The purchase price included contingent consideration that is being measured at fair value in accordance with U.S. accounting standards.
(3) Accounting for contractually obligated contingent consideration
1 Contingent Consideration
The company will make additional payments to the former management of the acquired company using a contractually specified formula if EBITDA exceeds specified benchmarks over the three years beginning the year ending March
31, 2012.
2 Accounting policy
The company plans to recognize the variable portion of the contingent consideration above using U.S. accounting
standards.
(4) Goodwill incurred, assets acquired and liabilities assumed on the date of business combination
As of March 31, 2010, the purchase price allocation was not complete because the specification and measurement of the
fair value of identifiable assets and liabilities included in the assets acquired and liabilities assumed through the acquisition
of and business combination with Bare Escentuals was not complete. A provisional accounting treatment was applied
and the investment of approximately U.S.$1.74 billion in this subsidiary was included in investments in subsidiaries and
affiliates on the consolidated balance sheets as of March 31, 2010. The income and expenses of Bare Escentuals are not
included in the consolidated statements of income in the fiscal year ended March 31, 2010.
SHISEIDO ANNUAL REPOR T 2011 101
For the fiscal year ended March 31, 2011
(Application of the purchase method)
The Company accounted for the components of the purchase price of Bare Escentuals on a provisional accounting treatment at March 31, 2010. The purchase price allocation was finalized in the current fiscal year.
(1) Purchase price of the acquired company
Cash paid to acquire tendered shares
US$1,633,296 thousand
Cash paid to purchase the stock options of Bare Escentuals employees US$66,970 thousand
Contingent consideration
US$30,411 thousand
Total acquisition price
US$1,730,677 thousand
(2) Accounting for contractually obligated contingent consideration
1 Contingent consideration
Contingent consideration consists of contractually stipulated payments after a specified period from the fiscal
year ending March 31, 2012.
2 Accounting policy
The Shiseido Group recognized the contingent consideration discussed above in accordance with accounting
standards generally accepted in the United States
(3) Goodwill recognized, reason for recognition, and amortization method and period
1 Goodwill recognized
¥91,503 million
2 Reason for recognition
The goodwill resulted from reasonable estimates of future excess earnings, including expected synergies, of
the acquired company as a result of anticipated business development
3 Amortization method and period
20 years using the straight-line method
(4) Period for which the acquired company’s financial results are included in the consolidated
financial statements
From March 8, 2010 to December 31, 2010
(5) Summary of assets and liabilities assumed at date of business combination
Current assets
Non-current assets
Total assets
¥34,690 million
¥179,800 million
¥214,490 million
Current liabilities
Long-term liabilities
Total liabilities
¥5,701 million
¥52,305 million
¥58,006 million
Significant intangible assets other than goodwill acquired in the business combination included in the acquisition
price were as follows.
Customer relationship (amortized over 10 years)
¥40,300 million
Trademarks (mostly not subject to amortization)
¥39,985 million
Note: The yen amounts in the table above are calculated using the rate of ¥90.42 to US$1, the rate in effect as of the date of business
combination. Accordingly, the amount of goodwill recorded as a result of this business combination and included in the consolidated balance sheets is different from the amount of the goodwill reported in Note (3) 1 above.
(6) Estimated impact on the consolidated statements of income for the fiscal year ended
March 31, 2011 if the business combination had been completed as of the beginning of the
fiscal year ended March 31, 2011
Net sales
¥8,099 million
Operating loss
¥190 million
(Estimate methodology and main assumptions)
1 Estimated impact on sales and income is the difference between the sale and income of the acquired company and
the Company’s consolidated income statements assuming the business combination had been completed as of
the beginning of the fiscal year ended March 31, 2011. This impact includes customer relationship and the amortization of goodwill from April 1, 2010 until the date of business combination. Advisory fees that Bare Escentuals paid
to its financial advisors and the cost of purchasing the stock options of Bare Escentuals employees paid by Bare
Escentuals during the period from April 1, 2010 to the date of business combination are not included.
2 The above yen amounts are calculated using the rate of ¥90.71 to US$1, the average exchange rate for the
period from January 1, 2010 to March 31, 2010.
3 These notes have not been audited.
22. SUBSEQUENT EVENT
None applicable
Independent Auditors’ Report
To the Board of Directors and Shareholders of
Shiseido Company, Limited:
We have audited the accompanying consolidated balance sheets of Shiseido Company, Limited and consolidated
subsidiaries as of March 31, 2011 and 2010, and the related consolidated statements of income, changes in net assets
and cash flows for each of the years in the three-year period ended March 31, 2011, and the related consolidated
statements of comprehensive income for each of the years in the two-year period ended March 31, 2011 expressed
in Japanese yen. These consolidated financial statements are the responsibility of the Company’s management. Our
responsibility is to independently express an opinion on these consolidated financial statements based on our
audits.
We conducted our audits in accordance with auditing standards generally accepted in Japan. Those standards
require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the
consolidated financial position of Shiseido Company, Limited and subsidiaries as of March 31, 2011 and 2010, and
the consolidated results of their operations and their cash flows for each of the years in the three-year period ended
March 31, 2011, in conformity with accounting principles generally accepted in Japan.
The U.S. dollar amounts in the accompanying consolidated financial statements with respect to the year ended
March 31, 2011 are presented solely for convenience of the reader. Our audit also included the translation of yen
amounts into U.S. dollar amounts and, in our opinion, such translation has been made on the basis described in Note
1 to the consolidated financial statements.
Tokyo, Japan
June 24, 2011
Investor Information
Number of Shareholders
68,266
Common Shares Issued and Outstanding
400,000,000 (including 2,052,792 in treasury stock)
Principal
Shareholders
Composition of Shareholders
Shareholders Number of shares held (thousands) Percentage
of
shareholding
27,899
23,526
16,964
7.01
5.91
4.26
12,072
11,744
11,277
9,055
8,000
7,798
6,815
3.03
2.95
2.83
2.27
2.01
1.95
1.71
The Master Trust Bank of Japan, Ltd. (Trust Account)
Mizuho Bank, Ltd.
Japan Trustee Services Bank, Ltd (Trust Account)
The Bank of New York Mellon as Depositary Bank
for Depositary Receipt Holders*
Asahi Mutual Life Insurance Company
NIPPONKOA Insurance Company, Ltd.
Shiseido Employees’ Stockholding
Mitsui Sumitomo Insurance Company, Limited
Nippon Life Insurance Company
SSBT OD05 OMNIBUS ACCOUNT - TREATY CLIENTS
Other Japanese
Companies 5.18%
Treasury Stock
0.51%
Securities
Companies
Foreign
Investors
2.44%
Financial 25.81%
Institutions Individuals
43.14%
22.90%
Calculations of percentage of shareholding are based on the total number of issued and outstanding shares
and treasury stock.
* T he Bank of New York Mellon as Depositary Bank for Depositary Receipt Holders is an owner of record for
The Bank of New York Mellon, a depositary for American depositary receipts.
Monthly Share Price Range and Trading Volume
(¥)
Share Price
3,500
Trading Volume
Composition of Shareholders (%)
(Nikkei Stock Average)
Nikkei Stock Average (Closing Price)
18,000
3,000
14,000
2,500
10,000
6,000
2,000
(Thousands of shares)
1,500
120,000
1,000
80,000
500
40,000
0
04/08
03/09
03/10
03/11
(By number of shares)
2010
Foreign Investors
25.75
Individuals
19.34
Financial Institutions
44.37
Securities Companies
2.47
Other Japanese Companies 5.05
Treasury Stock
2.98
2011
25.81
22.90
43.14
2.44
5.18
0.51
(By number of shareholders)2010
2011
0.76
97.80
0.27
0.11
1.03
0.00
Foreign Investors
1.12
Individuals
97.12
Financial Institutions
0.36
Securities Companies
0.09
Other Japanese Companies 1.28
Treasury Stock
0.00
0
Stock Price Indicators
Price/Earnings Ratio (PER)
Price/Book Value Ratio (PBR)
Dividend Yield
(Times)
4.0
( Times)
60
(%)
4.0
3.5
44.8
40
39.3
3.0
2.5
30.6
3.0
2.8
2.3
29.9
2.0
2.5
1.9
1.7
24.0
20
03/07
03/08
03/09
03/10
03/11
Note: Price/Earnings Ratio =
Closing stock price at fiscal year-end/Net income per share
0.0
2.0
1.0
1.0
0
03/07
03/08
3.5
03/09
03/10
03/11
Note: Price/Book Value Ratio =
Closing stock price at fiscal year-end/Net assets per share
0.0
1.3
1.3
03/07
03/08
03/09
03/10
03/11
Note: Dividend Yield = Cash dividends per share/
Closing stock price at fiscal year-end
Corporate Information
Head Office
Shiseido Company, Limited
5-5, Ginza 7-chome, Chuo-ku
Tokyo 104-0061, Japan
Tel: +81-3-3572-5111
Foundation
September 17, 1872
Incorporation
June 24, 1927
Capital
¥64,506,725,140
Number of Employees
31,310［12,977］
Note: T he number of employees shown denotes full-time employees. Annual average
number of temporary employees is shown in brackets. Temporary employees are
part-time workers and non-regular staff. Dispatched employees are excluded.
Stock Listings
Common Stock: Tokyo Stock Exchange (Code: 4911)
American Depositary Receipts: U.S. Over-the-Counter
American Depositary Receipts
CUSIP:
824841407
Ratio (ADR:ORD):1:1
Exchange:
OTC (Over-the-Counter)
Symbol:
SSDOY
Depositary:
The Bank of New York Mellon
101 Barclay Street, 22W
New York, NY 10286, U.S.A.
Accounting Auditors
KPMG AZSA & Co.
Share Registrar
The Chuo Mitsui Trust and Banking Company, Ltd.
33-1, Shiba 3-chome, Minato-ku, Tokyo 105-8574,
Japan
Fiscal Year-End
March 31
Shareholders’ Meeting
The Ordinary General Meeting of Shareholders
is normally held in June in Tokyo.
For further information, please contact
Investor Relations Department
Shiseido Company, Limited
6-2, Higashi-shimbashi 1-chome, Minato-ku,
Tokyo 105-8310, Japan
Tel: +81-3-6218-5530
Fax:+81-3-6218-5544
E-mail: [email protected]
Website
Global Website
http://www.shiseido.com/
Investor Relations Website
http://www.shiseido.co.jp/e/ir/
This mark certifies use of the Certificate of Green Electricity through Solar Power
provided by Tuvalu-Forest Corporation.
This report was printed using green electricity generated from solar power, which produces
no CO 2 emissions, thus helping counter global warming.

Annual Report 2011 [PDF:6.13MB]

Transcription

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