Annual Report 2009 [PDF:2.7MB]

Transcription

Shiseido commenced operations as Japan’s first Western-style pharmacy in Tokyo’s
Ginza district in 1872. 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, our founding spirit of “serving our customers and contributing
to society by integrating all things on Earth to create new value” lives on in our corporate mission of “We seek to identify new, richer sources of value and use them to create a beautiful
lifestyle.” This policy has led to high-value products and services in the cosmetics and
other businesses promoting people’s beauty and well-being.
Shiseido will advance reforms and continue to “improve quality of activities across the
board” under the Three-Year Plan to “become a global player representing Asia with its origins in Japan.” By successfully implementing these reforms, we aim to assist society, customers and all people in experiencing “This moment. This life. Beautifully.”
Contents
Financial Highlights ············································ 4
Shiseido at a Glance ············································ 6
Financial Section ·················································· 39
Six-Year Summary of
To Our Stakeholders ··········································· 8
Selected Financial Data ····························· 40
An Interview with President Maeda ················· 9
Management’s Discussion and Analysis ····· 41
Business Review
Domestic Cosmetics Business ····················· 14
Overseas Cosmetics Business ······················ 18
Feature: Shiseido’s Strengths in China ··········· 22
Corporate Governance ········································ 28
Contributing to Society ······································· 32
Environmental Initiatives ··································· 34
Board of Directors, Corporate Auditors and
Corporate Officers ············································ 36
Main Subsidiaries and Affiliates························ 38
Consolidated Financial Statements ·············· 54
Notes to the Consolidated
Financial Statements ·································· 59
Independent Auditors’ Report ······················· 75
Investor Information············································ 76
Corporate Information ········································ 77
Forward-Looking Statements
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.
Financial Highlights
Shiseido Company, Limited, and Subsidiaries
For the years ended March 31, 2007, 2008 and 2009
●
Net sales decreased 4.6 percent to ¥690.3 billion due in part to a decline in domestic sales
caused by cooling consumer sentiment in Japan and overseas and the impact of the strong
yen on otherwise solid overseas sales.
●
Despite the progress of cost reductions, operating income decreased 21.4 percent to ¥49.9
billion due to a significant decrease in gross profit resulting from the decrease in net sales.
As a result, operating margin decreased 1.6 percentage points to 7.2 percent.
●
Return on equity decreased 3.8 percentage points to 5.4 percent.
●
Cash dividend per share for the fiscal year increased ¥16.0 to ¥50.0.
Millions of yen
(Except per share data)
Percent change
Thousands of U.S. dollars
(Note 1)
2009/2008
2009
2007
2008
2009
Net sales ········································
¥694,594
¥723,485
¥690,256
Operating income ····························
50,005
63,465
49,914
– 21.4
507,979
Net income ·····································
25,293
35,460
19,373
– 45.4
197,161
Total assets ····································
¥739,833
¥675,864
¥606,569
Net assets ······································
403,797
399,739
351,951
Net income (Note 2) ························
¥ 60.9
¥ 86.1
¥ 48.0
Net assets (Note 2)··························
940.8
946.2
839.9
– 11.2
8.55
Cash dividend ·································
32.0
34.0
50.0
+47.1
0.51
Operating Results:
– 4.6%
$7,024,791
Financial Position:
–10.3%
$6,173,102
–12.0
3,581,834
Per Share Data (In yen and U.S. dollars):
– 44.3%
$0.49
Financial Ratios:
Operating profitability ······················
7.2%
8.8%
7.2%
Return on equity······························
6.6
9.2
5.4
Total return ratio (Note 3) ·················
52.6
108.8
127.2
Notes:
1. All dollar amounts herein refer to U.S. currency. Yen amounts have been translated, solely for the convenience of the reader, at the rate of ¥98.26 to US$1 prevailing
on March 31, 2009.
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 based on the number of shares outstanding at the end of each respective year.
3. Total return ratio = (Cash dividends + Share buybacks*) ÷ Consolidated net income
*Excluding odd-lot purchases
Please refer to page 40 for an in-depth six-year summary of selected financial data.
4
SHISEIDO ANNUAL REPORT 2009
Net Sales
Operating Income /
Operating Profitability
(Billions of yen)
(Billions of yen)
694.6
639.8 671.0
723.5
Net Income (Loss)
(%)
63.5
(Billions of yen)
35.5
690.3
49.9
50.0
38.9
19.4
8.8
7.2
25.3
7.2
14.4
5.8
26.5
4.1
(8.9)
05
06
07
08
05
09
06
07
Operating Income
Return on Equity
（%）
08
09
05
06
07
08
09
Net Income (Loss) per Share
Cash Dividends per Share
(Yen)
(Yen)
86.1
9.2
50.0
60.9
6.6
48.0
5.4
34.4
30.0
32.0
34.0
06
07
08
24.0
3.9
(21.5)
(2.4)
05
06
07
08
09
05
06
07
08
09
05
Business Segment Information
(Year ended March 31, 2009)
Geographic Segment Information
(Year ended March 31, 2009)
Overseas Sales /
Overseas Sales Ratio
Net Sales (Outer circle)
Operating Income (Inner circle)
Net Sales (Outer circle)
(Billions of yen)
2.5
(%)
37.8
30.3
15.9
14.5
59.7
36.5
32.4
(%)
66.7
7.3
35.9
29.4
27.5
39.4
62.3
175.7
Overseas Cosmetics Business
Others
38.0
264.3
262.0
08
09
224.8
197.2
17.7 7.0
05
Domestic Cosmetics Business
(%)
Operating Income (Inner circle)
3.0
09
06
Japan
Americas
Americas
Europe
Asia/Oceania
Europe
07
Asia/Oceania
Note: 1. Segment sales represent sales to external customers only and do not include intersegment sales or transfers.
2. Segment operating income does not include eliminations/corporate.
5
Shiseido at a Glance
Domestic Cosmetics Business
Net Sales
(Billions of yen)
447.6 439.0
Share of
total net
sales
59.7%
The domestic cosmetics business segment handles products/
services for the Japanese market, primarily cosmetics. The core
cosmetics division manufactures and markets cosmetics, cosmetics equipment and toiletries. The professional division manufactures and markets products/services for hair and beauty
salons. The healthcare division manufactures and markets health
and beauty foods and over-the-counter drugs. The non-Shiseido and
mail-order division manufactures and markets cosmetics that are not
branded as Shiseido products.
07
08
412.3
09
Cosmetics
Counseling
clé de peau BEAUTÉ
Elixir Prior
Maquillage
Self-selection
Toiletries
Aqua Label
Integrate
Professional
Renascent
Bénéfique
Uno
Tsubaki
Healthcare
Qi
The Collagen
Sengan Senka
Non-Shiseido and Mail-Order
Ferzea
Dicila
Soka-Mocka
Others
Share of
total net
sales
2.5%
The others business segment includes the frontier sciences division,
which manufactures and markets cosmetic raw materials, medical-use
drugs and beauty care cosmetics, and conducts a variety of other activities
including restaurant operation.
Notes: Segment sales represent sales to external customers only and do not include intersegment sales or transfers.
6
Overseas Cosmetics Business
Net Sales
(Billions of yen)
Composed of the cosmetics division and the professional division,
the overseas cosmetics business segment handles products for overseas markets. It manufactures and markets cosmetics and other
products/services in the Americas, Europe and Asia/Oceania.
Share of
total net
sales
224.3
263.7 260.9
37.8%
07
Cosmetics
08
09
Professional
Global brand
SHISEIDO
White Lucent
SHISEIDO
Future Solution LX
SHISEIDO
Perfect Rouge
DECLÉOR
ISSEY MIYAKE
NARS
CARITA
URARA
PURE & MILD
JOICO
Non-Shiseido
Jean Paul GAULTIER
China
AUPRES
Net Sales
(Billions of yen)
22.7
20.8
17.0
07
08
09
Bio-hyaluronic acid
Shiseido Parlour
7
To Our Stakeholders
In fiscal 2008, the year ended March 2009, sales and
income decreased due to factors including worsening
market conditions. However, we will assiduously resolve
the issues highlighted by the challenging operating environment and step up distinction and concentration to
improve the quality of activities across the board.
Shiseido is moving forward with the goal of being a company that earns the suppor t of all stakeholders as it
works to increase corporate and shareholder value.
In 2008, Shiseido announced its goal to become a global player representing Asia with its origins in Japan
in 10 years, and the aggressive growth strategies and reforms it would implement to do so. In line with the
objectives we set for our new Three-Year Plan, in the year ended March 2009, the first year of the plan, we
worked to improve quality of activities across the board while accelerating globalization and distinction and
concentration to optimize the allocation of resources from a worldwide perspective.
However, Shiseido’s performance during the year was impacted by factors such as the global economic
slowdown and rapid cooling of consumer sentiment. Unfortunately, the result was lower sales and
income. Behind the decrease in domestic sales were not only the deteriorating market conditions but also
dramatic changes in the environment that highlighted the unique issues that Shiseido must address.
Going forward, we forecast that the external environment will remain challenging, but we will overcome the
challenges we face, and by stepping up distinction and concentration we will enhance our ability to generate
strong growth in the future. At the same time, we will raise cost efficiency even further in working to increase
our operating margin.
Faced with challenging times, we will not be distracted by short-term pressures. Rather, we will proceed
steadily toward our objectives. At the same time, we will resolutely re-examine our mission vis-à-vis society
and move forward with the aim of being a company that earns the support of all stakeholders as we work to
increase corporate and shareholder value. Shiseido’s medium-term target for the total return ratio, which is
the sum of dividends and share buybacks divided by consolidated net income, is 60 percent. The
Company will continue to flexibly buy back and retire treasury stock while emphasizing stable cash dividends.
We look forward to the continuing support of our valued shareholders.
June 24, 2009
SHINZO MAEDA
President & CEO (Representative Director)
8
An Inter view with President Maeda
Shiseido aims to become a global player
representing Asia with its origins in
Japan, and is promoting improved quality
of activities across the board under its
Three-Year Plan that started in the year
ended March 2009. In Japan, we will
sharpen our focus on reducing the number of core brands/lines and retail outlets in
each of our channels to step up distinction
and concentration. Overseas, we will cultivate the global brand
and
continue working to further strengthen
our business base in Asia.
9
Overview of the Year Ended March 2009
Against a backdrop of cooling consumer sentiment, the
Sales and income decreased due to the
domestic over-the-counter cosmetic market decreased
impact of the rapidly worsening external
an estimated 2 to 3 percent overall. However, the
environment. What is your overall view of
decrease in sales in Shiseido’s domestic cosmetics busi-
the first year of the Three-Year Plan?
ness exceeded the contraction of the overall market.
Simply put, the past fiscal year highlighted the
issues we must address. During the year ended March
2009, the first year of the Three-Year Plan, we concentrated on creating a brand loved by customers throughout
the world. We also strengthened the global brand
and deployed our expertise to develop
The sharp deterioration of the market environment has
revealed underlying structural issues in the domestic
cosmetics business, and we realize that future growth
is contingent upon resolving these issues.
The Three-Year Plan
business in Asia. In our home market of Japan, we
Has Shiseido changed its vision and the
focused on cultivating core brands/lines. Moreover, we
Three-Year Plan due to the changing market
promoted reform of our profit structure and raised
environment? What policies will guide
organizational capabilities, cultivated human resources
Shiseido in the future?
and strengthened corporate governance in working to
In line with the Three-Year Plan, we aim to become a
establish an unsurpassed, world-class quality of busi-
global player representing Asia with its origins in Japan and
ness management.
will promote improved quality of activities across the
However, despite devoting all of our strengths to
board. Our goal is to “realize the beauty of customers
these corporate activities, we were affected by the global
and enrich their hearts to complement their outer beauty.”
economic slowdown. Market conditions kept us from
To ensure that customers around the world recognize
achieving the full benefit of reforms continuing from
our mission, we will hone our three strengths: richness,
the previous three-year plan.
human science, and spirit of omotenashi (hospitality).
The deteriorating economic environment has a par-
Based on these core strengths, we will continue working on
ticularly strong impact on our performance in Japan.
two tasks: creating a brand loved by customers throughout
Net sales decreased 4.6 percent year on year, and oper-
the world and establishing an unsurpassed, world-class
ating income decreased 21.4 percent year on year.
quality of business management.
Under the Three-Year Plan, our targets for the year ending March 2011 are an overseas sales ratio of 40 percent or
higher, an operating margin of 10 percent or higher and
return on equity that is 1 to 2 percentage points above the
operating margin. However, the global financial crisis
has been worse than expected, and we do not see market
conditions recovering until after the year ending March
2011. We will move forward without changing our management vision or our Three-Year Plan, and we will do the
best we can to achieve the targets as soon as possible
during the next three-year plan that will begin in the
year ending March 2012.
10 SHISEIDO ANNUAL REPORT 2009
Issues in the Domestic Cosmetics Business
sales and support activities were not sufficient to achieve
Why was the domestic cosmetics busi-
results in the recession.
In marketing, we have strengthened our portfolio of
ness so challenging during the year ended
brands/lines by establishing the two pillars of mega
March 2009?
lines and relationship-building brands/lines. However,
During the year ended March 2009, we nurtured
the large-scale promotions cutting across brands/lines
existing brands/lines centered on mega lines1 and con-
and channels that we have traditionally executed have
centrated on strengthening our relationship-building
proven to be unsuited to the current environment. In
brands/lines.2 However, apart from solid results for
sales counter creation and sales activities, Shiseido’s
those we promoted heavily, our brands/lines generally
organization may not yet be strong enough to consis-
struggled.
tently succeed in securing retail shelf space, for which
Looking at our products by price point and channel,
competition is intense, particularly at structured retail-
Shiseido’s mid-priced counseling cosmetics and low-
ers. In value creation, although we have made our manu-
priced self-selection cosmetics struggled given the
facturing system more customer-oriented, our efforts to
growing market trend toward low-priced items. In the
develop and communicate information regarding prod-
high-priced cosmetics market, which has consistently
uct value were not consistently sufficient to induce cus-
performed well, sales were below expectations.
tomers to select Shiseido products.
An analysis of these results shows that promotion,
Ten-Year Roadmap
Sustained growth as a global player representing Asia with its origins in Japan
Three-Year Plan
Previous Three-Year Plan
Phase 1
Establish foundation
Improve quality of
as a global player
activities across the board
Establish foundation
FY2005
Phase 3
Make a leap forward
Phase 2
Get into growth
trajectory
Become a global player
Establish an undisputed presence in Asia
FY2008
FY2011
FY2014
FY2017
FY2017: Net sales in excess of ¥1 trillion (over 50% overseas sales); Consistently generate solid operating
margins (12% or higher); ROE comparable to that of global competitors (15% or higher)
Overview of Three-Year Plan
Become a global player representing Asia with its origins in Japan; Improve quality of activities across the board
Keywords
Expand growth potential and improve profitability
Globalization
Utilization of external
knowledge and resources
Distinction and concentration
Create solid brands
Improve quality of business management
Strategic direction
Strengthen cultivation of the global brand
Nurture human resources on global basis
Establish an undisputed presence in Asia
Raise organizational capabilities
・Full-scale rollout of “masstige” marketing ・Further expand business in China
・Solidify No.1 position in Japan
Advance corporate governance
Strengthen foundation for raising the Shiseido Group’s corporate value
Pursue structural reforms
・Accelerate innovation of Beauty Consultant activities
・Reinforce value creation power ・Establish global production systems
Target proactive CSR initiatives
Strengthen global solidarity
SHISEIDO ANNUAL REPORT 2009 11
In the year ending March 2010, we intend to resolve
department store channel. In the cosmetics specialty
these issues as soon as possible, because doing so is
store channel, we will expand the number of stores and
sure to boost Shiseido’s competitiveness. Our present
promote policies to increase sales at existing stores.
difficulties are an opportunity to move one step closer to
Fortifying Shiseido’s Business Base in the
attaining the ideal corporate form we are aiming for.
Year Ending March 2010
Initiatives in the Year Ending March 2010
How does Shiseido plan to establish
What are Shiseido’s initiatives in the year
unsurpassed, world-class quality of busi-
ending March 2010?
ness management, which is a key theme
We forecast that the challenging market environment
of the Three-Year Plan?
will continue in the domestic cosmetics market. Our
To achieve sustained growth, Shiseido must work
main priority is therefore executing our distinction and
diligently to build a high-quality global management
concentration strategy even more thoroughly. Mega
foundation. We will enhance profitability by conducting
lines and relationship-building brands/lines will continue
ongoing production process improvements and other
to be the two pillars of Shiseido’s brand strategy. We
efforts to optimize our supply chain. At the same time, we
will match brands/lines and channels even more pre-
will reduce costs by implementing other structural
cisely than in the past to achieve distinction and concen-
reforms such as modifying our materials-ordering sys-
tration by narrowing down our core fields and then con-
tem. The Shiseido Group will also work to set up a system
centrating management resources in them. In addition, we
that attracts the most suitable people for the most suitable
will reinforce our basic sales process, including our
roles by removing barriers related to age, gender, and
shelf-space procurement capabilities and our ability to
nationality. We will also move to further enhance man-
create sales counters. We will also work to upgrade our
agement transparency and objectivity while clarifying
product information and sales counter activities with an
authority and responsibility by continuously strengthening
emphasis on market competitiveness.
corporate governance.
In the overseas cosmetics business, we will position
Moreover, we will step up our environmental and
Shiseido as a company that represents Asia and pro-
CSR activities. In the year ending March 2010, we
mote a strategy of ranking among the top global com-
launched the Shiseido Earth Care Project, an envi-
petitors. We will reinforce the global brand
,
ronmental initiative in which all Group employees will
which is the symbol of the Shiseido Group, to further
participate. In April 2009, we gave our program for
enhance its presence as a prestige brand. In addition,
contributing to society through beauty a new name,
Concept,3
a
Life Quality Beauty Program, in tandem with global
key strategy for overseas business under the Three-
expansion of activities. At the same time, we implemented
Year Plan. We will also aggressively develop business in
a system under which Shiseido employees and retirees
emerging markets. In Asia, we will conduct promotional
give beauty seminars in elderly care and other facilities. I
activities across the entire region, with an emphasis on
sometimes participate in seminars and put lipstick on
“anti-aging” and “skin-brightening” products, in which
elderly people, which makes them happy. Every time I par-
the Shiseido Group is strong. We will also enhance
ticipate in seminars, I realize that they do not just con-
we will continue to promote our core City
“masstige” 4
business. In
tribute to society, but also enable us to reaffirm the
China, we will maintain a high rate of growth by
power of cosmetics and beauty. They inspire our efforts by
strengthening our presence in the makeup field in the
reminding us of the significance of the cosmetics business
efforts to fully develop the
and the happiness that comes from being involved in it.
With this in mind, we will keep moving forward so that
people will continue to trust and select Shiseido worldwide.
Please see pages 28 to 31 for more detail on corporate governance, pages 32 to 33 for more detail on CSR and pages 34
to 35 for more detail on environmental activities.
Shareholder Returns
Shiseido increased the total cash dividend per
share by ¥16.00 to ¥50.00, as per its forecast at
the beginning of the fiscal year, and the payout
ratio exceeded 100 percent. Please explain
Shiseido’s dividend policy going forward.
Message to Shareholders and Investors
Our basic policy for shareholder returns will continue
Please conclude by giving shareholders
to be a target total return ratio of 60 percent over the
and investors a summary of Shiseido’s
medium term, meaning that we will use 60 percent of
future role.
consolidated net income for the dividend and share buybacks. With an emphasis on a stable total cash dividend,
we will also continue to buy back and retire treasury
stock while taking account of changes in the stock market.
Although income was below the level initially planned in
the Three-Year Plan, we emphasized stable shareholder
returns with a total cash dividend per share of ¥50.00 for
the year ended March 2009, and we expect to maintain the
total cash dividend per share at that amount for the year
ending March 2010.
In addition, in May 2009 we bought back 4 million
shares of stock valued at about ¥6.8 billion. As a result, we
project that the total return ratio for the year ending
2010 will be 80 percent.
The operating environment ahead will remain challenging, but it presents the perfect opportunity to
improve the quality of activities across the board. The
difficult times we now face are a strong reminder of the
importance of re-examining our mission vis-à-vis society.
The unique strength that sets Shiseido apart from other
global players is our commitment to “realize the beauty of
customers and enrich their hearts to complement their
outer beauty.” Shiseido will deal rapidly and flexibly
with its changing environment, with the ongoing aim of
becoming a global player representing Asia with its origins
in Japan.
We are counting on the continued support of shareholders and investors as we implement further reforms.
■ Dividend and Total Return Ratio
(¥)
Dividend
Total Return Ratio
50
105.1
30
127.2
(%)
50
108.8
34
32
80.0
2. Relationship-building brands/lines: Brands/lines that deepen relationships with customers through counseling.
24
52.6
05
1. Mega lines: Lines aimed at expanding points of contact with customers, in which Shiseido concentrates advertising and sales promotion by skincare and makeup category in order to attain category
leadership.
06
07
3. City Concept: A strategy in which the world’s major markets are considered as city-based rather than country-based units, and marketing
is concentrated in target cities.
08
09
10
4. Masstige: Coined word from “mass” and “prestige.” Masstige
products are positioned as more expensive than mass-produced
products, but more moderately priced than prestige products.
(Forecast)
Business Review
Domestic
Cosmetics
Business
In the domestic cosmetics business, we will promote further
distinction and concentration in brand strategy while innovating
sales and Beauty Consultant activities in order to firmly secure
the number one position in Japan.
Net Sales
Operating Income
(Billions of yen)
Sales by Division
Non-Shiseido and
Mail-Order 8.2%
(Billions of yen)
445.3 453.4 447.6 439.0
43.1
412.3
34.3
36.9
Healthcare 3.6%
33.0
25.5
05
06
07
08
09
05
06
07
08
09
Professional
3.6%
Toiletries 12.1%
Self-selection
cosmetics
21.5%
Counseling
cosmetics
51.0%
Note: Segment sales represent sales to external customers only and do not include intersegment sales or transfers.
Cosmetics
84.6%
Market Environment
struggled due to competition from discount sales
The domestic over-the-counter cosmetics market
products and the challenge from products priced at
contracted between 2 and 3 percent due to a rapid
less than ¥1,000. Amid a strong trend toward low-priced
cooling of consumer sentiment and a trend toward
items, sales of products in the previously solid high
low-priced items as the economy deteriorated.
price range slowed due to an inability to fully capitalize
Shiseido conducts business centered on the vol-
on the strength of relationship building brands/lines.
untary chain store channel, the structured retail
store channel including drug stores and general
merchandise stores, and the department store channel.
Please see the Management’s Discussion and
Analysis (pages 41 to 53) for a detailed discussion
of the results of the domestic cosmetics segment.
However, severe competition with other companies
continues to increase.
Initiatives in the Year Ending March 2010:
Results in the Year Ended March 2009
Brand Strategy
In the year ended March 2009, Shiseido promoted a
Under the assumption that the market environ-
strategy focused on measures to strengthen sales of 21
ment in the year ending March 2010 will be at least as
core mega lines and relationship building brands/lines
severe as in the previous year, Shiseido will further
while continuing to innovate sales and Beauty
promote distinction and concentration by targeting
Consultant activities.
stores and brands/lines to strengthen sales by channel.
However, sales in each of the sub-segments of
At voluntary chain stores, department stores and
counseling cosmetics, self-selection cosmetics and toi-
general merchandise stores, Shiseido will concen-
letries fell short of the previous year against the back-
trate on high price range and skincare, where growth is
drop of a rapid deterioration in the consumer environ-
forecast. Products at drug stores will center on the
ment, resulting in a 6.1 percent decrease in sales.
self-selection
and
toiletry
product
domains
in
Specifically, counseling-based cosmetics in the medium
response to the trend toward low-priced items, partic-
price range of ¥2,001 to ¥5,000 and self-selection
ularly in haircare, skincare and men’s products,
cosmetics in the low price range of ¥1,000 to ¥2,000
where Shiseido has significant room for growth.
6 Mega Lines
5 Relationship-Building Brands/Lines
21 Core Brands/Lines
Further Distinction and Concentration of Channels and Brands/Lines
Channels
Stores
Voluntary chain
stores
“Power Shops”
Department stores
Bénéfique
REVITAL GRANAS
General
merchandise stores
Drugstores
Tsubaki, Aqua Label, Uno
Lines and
merchandise
domains
Relationship building domain
・High price range products
・Skincare
Self-selection/toiletry domains
・Low price range
・Haircare, skincare and men s products
We will position stores in the voluntary chain
core beauty essence products to all basic skincare
store channel that strengthen ties with us as Power
items. In department stores, we will continue to create
Shops, and will focus on boosting sales there.
separate counters for clé de peau BEAUTÉ and
Initiatives will concentrate on measures specializing in
expand the number of stores carrying the SYN-
Bénéfique, innovative area advertisements focused
ERGIQUE line, which sold well in 2008 as the high-
on individual stores, support to create sales coun-
end line of the brand. Meanwhile, the global brand
ters, and increasing sample giveaways. After start-
will undergo renewal to expand its in-
ing with around 600 Power Shops and developing
store share.
best practices, we will expand the number of shops to
around 2,000 to rebuild a powerful network of voluntary chain stores within three years.
Shiseido is creating separate counters for clé de peau BEAUTÉ to increase its share of
in-store sales.
Shiseido will focus on
strengthening sales by
positioning 600 voluntary chain stores as
Power Shops.
In the drugstore channel, especially in major
chains, Shiseido will focus on strengthening haircare, skincare and men’s products. We will intro-
In the department store and general merchandise
duce seamless marketing that takes advantage of
store channels, Shiseido will focus on sales at base
the momentum gained in haircare products from the
stores of the relational line REVITAL GRANAS,
renewal of the full line of Tsubaki products in late
which was launched last year. We will continue to
March 2009 to kick off a renewal of skincare brand
steadily cultivate this line to expand the momentum of
Aqua Label products and communication in skincare in
Business Review
autumn 2009. Following this we will launch a
organizational structure capable of collectively han-
groundbreaking UNO hair styling product.
dling the proposals and challenges of each chain.
Dedicated teams for developing shelving allocation
patterns and sales techniques will be strengthened in
addition to the sales divisions of the home office
and sales subsidiaries. Meanwhile, brand managers
Sales of the new Tsubaki,
innovated in March 2009
with the addition of
Camellia Oil EX, have
remained steady since it
was first launched.
in charge of developing products and initiatives
will participate in task forces formed to customize
proposals to each chain.
In order to reliably bring marketing content to
stores, Shiseido will develop a front-line system
that enables counters to display merchandise
simultaneously and within a short period of time.
Management Strategy
Shiseido will further strengthen its measures to
innovate sales and Beauty Consultant activities. To
innovate sales activities, Shiseido will further bolster the Diamond Sales system for structured
retailers in order to secure sales by store. As
opposed to the Butterfly Sales system, in which
organizations negotiate at a single point through
representatives, the Diamond Sales system enables
multi-layer interaction by function and hierarchy,
from head office negotiations on individual proposals
that consider the character and needs of each store
chain to measures and counter arrangement at
actual stores. To that end, Shiseido will implement an
In addition, renewal of basic training in professional
sales skills, particularly for young sales staff, will
further advance sales reforms.
To innovate Beauty Consultant activities, we will
strengthen information development and customer
service education service that give greater priority to
competition at the counter. This will include accurately conveying points that make Shiseido products superior to those of competitors and the
effects of products through concise communication
and demonstrations. In addition, we will develop
systems for Beauty Consultants to fully demonstrate their strengths by improving benefits and
the work environment.
Top/regional head
Top
Top/regional head
Top
Manager
Head of
merchandise
Manager
Head of
merchandise
Salesperson
in charge
Manager
Manager
Sales staff
Buyer in charge
Person in charge
of store
Head office staff
Head office staff
Store manager,
employees
Person in charge of
products, marketing
Sales staff
Salesperson
in charge
Buyer
in charge
Person in charge
of store
Head office staff
Store manager,
employees
Information,
distribution
Butterfly Sales
Diamond Sales
Overseas
Cosmetics
Business
In the overseas cosmetics business, we will innovate and strengthen
the global brand
, accelerate our City Concept strategy
and establish an undisputed presence in Asia in order to
further enhance our competitiveness in the global market.
Net Sales
Operating Income
(Billions of yen)
(Billions of yen)
282.9*
263.7 260.9
17.9
224.3
174.5
Sales by Division
196.3
19.3*
Professional
12.7%
15.0
10.4
Cosmetics
87.3%
2.8
0.7
05
06
07
08
09
05
06
07
08
09
Note: Segment sales represent sales to external customers only and do not include intersegment sales or transfers.
* Sales and operating income on a local currency basis are translated into yen at 2008 exchange rates.
Business Review
Market Environment
As a result of these measures, Asia and Oceania
In the overseas cosmetics market, competition
achieved high growth and all regions achieved higher
with global competitors became even more intense
sales on a local currency basis, including the U.S.
amid a worldwide economic slowdown. Although the
and Europe. All together, overseas cosmetics sales
market grew steadily, driven in Asia mainly by
increased 7.3 percent year on year on a local currency
China and in Eastern Europe, especially by Russia, the
basis. However, sales on a yen basis decreased by
pace of growth is projected to decline in the year
1.1 percent due to the strong yen.
ending March 2010.
Results in the Year Ended March 2009
Please see the Management’s Discussion and
Analysis (pages 41 to 53) for a detailed discussion of
the results of the overseas cosmetics segment.
To further enhance its competitiveness in the
global market, Shiseido strengthened the global
brand
and deployed its expertise to
develop business in Asia.
Global Development
In China, a key market, Shiseido continued to
Shiseido will promote the following three key
implement a channel-specific brand marketing strategy.
measures in the year ending March 2010 as it fur-
In the extremely competitive department store channel,
ther enhances its market strengths to rank among
AUPRES, which underwent a full renewal for the first
the top global competitors.
time in 14 years, performed well according to plan. In
The first measure is innovating the global brand
the cosmetic specialty store channel, the number of
. To follow the launch of a new makeup
contracts for Shiseido Chain Stores increased and
line in January 2009, we will introduce the new premium
sales grew smoothly at existing stores.
skincare line SHISEIDO Future Solution LX in 70
In other regions of Asia, Europe and the U.S.,
countries and regions in autumn 2009. In addition,
development of the City Concept strategy, in which
initiatives such as remodeling the functions and
we view the world’s major markets as city-based
design of counters and introducing a new symbolic
rather than country-based units, centered on the
sign1 will further strengthen the presence of the global
global brand
brand
. In some targeted cities in
as a prestige brand. To enhance
the U.S., we expanded new customer numbers and
the service ability of the approximately 9,000 Beauty
increased sales in 2008. In the European and U.S.
Consultants overseas who convey product value to
cosmetics markets, fragrances comprise a significant
customers, we will introduce behavioral indicators to
share of sales. Our French subsidiary Beauté
quantify our expertise in customer service based on
Prestige International S.A. launched MaDame, a new
the spirit of omotenashi (hospitality) globally, and bol-
line of the Jean Paul GAULTIER designer fragrance
ster training tailored to customers’ purchasing needs.
brand, strengthening cultivation of the fragrance
1. Symbolic sign: A visual for advertisements and stores expressing
Shiseido’s strengths of “Richness,” “Human science,” and “Spirit of
omotenashi,” while representing the core value of the global
brand
.
domain. In the travel retail business, Shiseido worked to
attract new customers by opening new stores at
major airports and expanding the number of products
carried at duty-free stores and in-flight.
plans in Russia, where sales began through a subsidiary in the year ended March 2008. In addition, a
sales subsidiary in Germany assumed operations in
the Netherlands and Poland in January 2009, beginning direct operations. We will further strengthen our
direct sales structure through sales subsidiaries. We
also plan to enter Africa and other emerging markets.
For the global brand
, we
will introduce the new makeup line
SHISEIDO Perfect Rouge (top) and the premium skincare line SHISEIDO Future
Solution LX (bottom).
Asia Development
Shiseido will concentrate on enhancing its dominance in the domains of anti-aging and brightening.
Based on the strong performance of brightening promotions held in Hong Kong during the previous fiscal year,
we will expand these promotions throughout Asia.
At the same time, we will expand sales of the self-
The second measure is acceleration of the City
Concept strategy. Marketing activities focused on
target cities in the year ended March 2009 accomplished solid growth by attracting new customers
and expanding sales. In the year ending March
2010, we will expand development to major cities in
Europe, the Americas and Asia with significant influence globally to increase the ripple effect on neighboring markets.
selection makeup brand MAJOLICA MAJORCA (MJ)
for young customers as part of building expertise in
the masstige business, which we plan to fully develop
over the next three-year plan. Previously marketed
only in Taiwan, MJ was launched in Hong Kong,
Thailand, Malaysia, Singapore and other Southeast
Asian countries at the end of 2008. We are building a
solid business model for masstige by utilizing the
achievements of initiatives such as these.
The third measure is the expansion of operations in
new and emerging markets. Strong results exceeded
A promotion in Miami in the U.S. for the global brand
in
spring 2008, with in-store demonstrations by makeup artists, met with
great success.
Brightening promotions in Hong Kong in the year ended March 2009 were
extremely successful, based on the concept of “A Century of Whitening.”
Business Review
China Development
Shiseido will further strengthen channel-specific
brand marketing and maintain a high rate of growth in
its China business, which has been expanding an
average of over 20 percent per year.
In the department store channel, we will strengthen
the makeup domain, in which needs have increased in
recent years, from a sales foundation built on skincare.
In
targeting
customers
from
the
new
1980s
1
Generation , launches of MAQUILLAGE as a new
makeup line in summer 2009 and AUPRES in the
autumn will follow the roll-out of a new makeup line for
the global brand
.
In the cosmetic specialty store channel, the number
of contracts for Shiseido Chain Stores and sales at
existing stores are both growing steadily. However, we
will redouble measures to expand sales at existing
stores in anticipation of intensifying offensives by
competitors.
At the same time, we will develop new businesses
Shiseido will strengthen the makeup domain with the introduction of the
mega line MAQUILLAGE at
counters in about 150
department stores in mainland China.
and sales channels. The esthetic beauty brand Qi, a
professional division product, was introduced at specialty stores with esthetic booths late in the
previous fiscal year. We will continue to focus on
such initiatives with the aim of generating synergy
with cosmetics.
1. The 1980s Generation: The population segment of approximately 200
million born in the 1980s, now 18 to 28 years of age, that grew up
under China’s one-child and economic reform policies and has progressive
values.
The website for the China-only brand URARA includes a homepage for
responding to customers’ beauty concerns.
Feature: Shiseido’s Strengths in China
Building Momentum as a Global Player Representing Asia with its Origins in Japan
Shiseido is executing a Three-Year Plan with the aim of becoming a global player representing Asia with its origins in Japan. The following feature article covers the strengths
Shiseido has built up in its China business, and the initiatives that Shiseido will execute in
building momentum as a global player representing Asia.
“Giving back to China by delighting customers”
The origin of the company name “Shiseido” is a passage from the Chinese classic, I Ching
(The Book of Changes): “praise the virtues of the great Earth, which nurtures new life and
brings forth new values.” Shiseido has made great progress in China, where its name originates, but not simply by building scale for the sake of scale. Rather, our success in China has
been the result of meticulous channel-specific brand strategies and a focus on activities that
build brand value. Going forward, we will defend and enhance the brands we have built up to
drive further progress and demonstrate even greater leadership in China’s cosmetics market
than in the past. We want to provide even greater beauty and health to our customers in
China, and fill their hearts with a sense of fulfillment. China has given us our name and the
opportunity to nurture our business, and we intend to give back to China.
Masaru Miyagawa
Corporate Officer, Chief Officer of China Business Division and
Chief Area Manager of China
Shiseido’s Progress in China
＞＞＞ Shiseido Has Been in China Longer than Its Competitors
Three Decades of Development in China
Shiseido began its relationship with China in 1981 by exporting
cosmetics for sale in hotels and other outlets in Beijing. In 1983, we concluded an agreement with the city of Beijing to share production technology. Production cooperation began with haircare products, after
The History of Shiseido’s Business in China
1981: Start of sales of about 60 imported products at large
retail shops and hotels in Beijing
1983: First agreement to share production technology
with the city of Beijing; this relationship continues
to the fourth such agreement signed in 1991
which production technology sharing continued for approximately 10
1991: Establishment of Shiseido Liyuan Cosmetics Co., Ltd.,
a joint venture with the city of Beijing
years. The profound trust built in this relationship with Beijing is a
1993: Start of production at Beijing Factory
cornerstone of Shiseido’s business in China today.
In 1991, we established a joint venture, Shiseido Liyuan Cosmetics
Co., Ltd., with government company Beijing Liyuan Co., Ltd. We
launched AUPRES, a brand for high-end department stores, and
strengthened the joint venture’s business base. As a result, Shiseido
established a strong presence as a high-end brand in China. In 2004,
1994: Launch of AUPRES, a brand exclusively for China
1998: Establishment of Shanghai Zotos Citic Cosmetics
Co., Ltd. as a cooperative company
1999: Start of production at Shanghai Zotos Citic
Cosmetics Co., Ltd. factory
2002: Establishment of Shiseido China Research Center
Co., Ltd.
Shiseido launched its cosmetics specialty store organization by con-
2003: Establishment of Shiseido China Co., Ltd., a wholly
owned subsidiary, in Shanghai
cluding formal contracts to handle Shiseido products with cosmetics
2004: Start of cosmetics specialty store business in China
stores operated by sole proprietors, and then steadily and carefully
2006: Launch of the URARA brand for cosmetics specialty
stores
expanded its network of stores, one by one. Shiseido now has a corporate
brand image of high quality, reliability and safety.
Thus Shiseido has long worked to develop a business rooted in
China. This has been a key factor supporting growth to date.
Hua Zi haircare products created for
the technology-sharing agreement
with the city of Beijing
Shiseido Liyuan Cosmetics Co., Ltd. was
established in 1991 as a joint venture
company.
Shiseido established Shanghai Zotos Citic
Cosmetics Co., Ltd. in 1998 with the aim of
adding the new middle mass market to its
presence in the prestige market.
The Hua Zi makeup line launched in 1987
In 1994, Shiseido launched AUPRES, a brand
exclusively for department stores in China that
has gone on to become a popular national
cosmetics brand.
In 2004, Shiseido began sales of cosmetics
through cosmetics specialty stores, and in
2006, launched a brand exclusively for this
channel, URARA.
Advantages Supporting Shiseido’s Growth in China
＞＞＞ Strategy: Develop Products that Meet the Needs of Chinese Women
Product Development in Tune with the Characteristics of
China
Shiseido has been accumulating research worldwide on women’s
skin, and has built a massive volume of data, research materials and
other information on skin and hair. Shiseido has used this data in
developing cosmetics for China, and for approximately 30 years has been
conducting detailed research on subjects including the skin and hair of
Chinese women and China’s weather and climate. In particular, we
have recently been using methods such as group interviews and surveys
at people’s homes and on the street to meticulously research the attitudes
and tastes of Chinese women regarding beauty, which are changing
significantly. Customers have responded enthusiastically to the
AUPRES brand sold only in department stores in China and the
URARA brand sold only in cosmetics specialty stores in China because we
gave these products features that match the tastes of Chinese women.
AUPRES holds top share at many of the department stores that handle it.
Moreover, in 2002 we established Shiseido China Research Center
Co., Ltd., which conducts research in areas such as Chinese medicine
We Pay Attention to Chinese Women
to Make Uniquely Chinese Products
Shiseido deploys its understanding of the diversifying
sensibilities and needs of Chinese women in developing
and beauty not only for the Chinese market, but with an eye on global
markets as well. We plan to add more Chinese staff and enhance
research functions in the future.
its exclusive brands for China. For example, whereas
Japanese women emphasize the entire face when applying
makeup, Chinese women take a different approach that
focuses on the area around the eyes. As part of our
A Solid System for Local Production and Procurement
Shiseido has two production bases in China, in Beijing and
efforts to develop products based
Shanghai. The Beijing factory manufactures all AUPRES and
on the results of such surveys, we
SUPREME AUPRES products, while the Shanghai factory manufac-
will launch products proposing this
tures products including URARA as well as PURE & MILD and Za for the
eye-centric approach, starting with
SUPREME AUPRES and URARA.
middle market. Today, 70 percent of the products Shiseido in sells in China
Going forward, we will continue to
are manufactured there, with the exception of imports such as the global
pay attention to Chinese women in
brand
order to propose new beauty styles
that delight them.
Satomi Ando
Marketing Development Department,
China Business Division
. In addition, Shiseido procures approximately 90
percent of its locally used raw materials in China.
Shiseido’s Strengths in China
＞＞＞ A Channel-Specific Brand Strategy That Is Plugged into Customer Needs
The Department Store Channel Establishes Powerful
Brand Value
Channels and Brands/Lines
in the Chinese Market
Department Stores
In its China business, Shiseido uses a channel-specific brand strategy
that matches products and marketing to customer needs in respective
Ultra-high-end
Global brand
sales channels.
In the department store channel, we focus on developing stores
that can bring out brand value. China has about 1,500 department
stores, but Shiseido has established rigorous standards for stores to
carry its products, which include store location, design, level of service
and customer demographics. Currently, AUPRES is sold in approximately 750 stores, while the global brand
Import
clé de peau BEAUTÉ
is sold in only
about 150 stores. In the year ended March 2010, we will renew
Non-Shiseido
brands such as
IPSA
High-end
Local
production
Standard
Exclusive to
China; Local
production
Brands exclusively
for department
stores
SUPREME AUPRES
AUPRES
Import
regional lines
Aqua Label
Uno
Toiletry lines
Local
production
Non-Shiseido
brands such as Za
Voluntary chain
store brands
such as URARA
and PURE & MILD
AUPRES makeup and introduce a mega line from Japan, Maquillage.
This will strengthen skincare and makeup, thus further enhancing
Structured retailers
Cosmetics specialty stores
the Shiseido Group’s position in the department store channel.
Cosmetics Specialty Store Channel: Expanding
Nationwide
In the cosmetics specialty store channel, store by store Shiseido
has been promoting contracts with cosmetics specialty stores operated by
sole proprietors that share its philosophy and management approach. We
Contributing to the Development of
China’s Cosmetics Market through
Cosmetics Specialty Stores
My relationship with Shiseido began with my recogni-
concluded the first contract in 2004 in Zhejiang, and since then have
tion of the superior quality of the PURE & MILD products I
extended the network of stores to small and medium-sized regional
was selling. When Shiseido initiated the cosmetics specialty
cities and the areas surrounding large cities. Today, Shiseido products are
store business in Fujian in 2004, I concluded a contract. In
turn, Shiseido provided lectures and training for the training
sold from Kashgar in the far west Hsinchiang Uighur Autonomous
manager and sales support for the sales manager prior to
Region to the southernmost island of Hainan.
the actual start of business to help us acquire specialized
Since the year ended March 2009, we have also been establishing
knowledge and revise our sales methods, which has
attracted more customers to the
new “PURE & MILD Excellent Stores,” a format that permits stores to
store. Shiseido has pioneered the
handle only the exclusive cosmetic specialty store brand PURE &
cosmetics specialty store business in
MILD. As planned, the number of stores covered by the two types of con-
China and has contributed significantly
to expanding the cosmetics market.
tracts exceeded 4,000 by March 2009, and we plan to have contracts with
I view Shiseido as the premier cos-
over 5,000 stores by March 2011.
metics company.
Mr. Zheng Lei Yu
Owner of Xin Tian Di,
a cosmetics specialty store in Pu Tian, Fujian
＞＞＞ Omotenashi, the Hospitality that Only Shiseido Can Provide
Introducing Omotenashi
In selling cosmetics, Shiseido believes that enhanced counseling is one
of the best methods for improving customer satisfaction. That is why we
are also implementing our style of customer service, a Shiseido
strength, in China. It was challenging when we first started, but we
knew we would not succeed in China without expanding customer
service based on Shiseido’s unique spirit of omotenashi.
Educating personnel is most important in introducing and institutionalizing omotenashi. Just as in Japan, we are meticulously creating
opportunities for study in areas such as product knowledge, Shiseido’s
approach to customer service and beauty consultation techniques.
These initiatives are not limited to Shiseido beauty consultants; they
are also open to people at cosmetics specialty stores who spend a significant amount of time serving customers. Moreover, a Shiseido instructor
visits cosmetics specialty stores once a week, and area-based training seminars take place once every three months. In these and other ways,
Shiseido works assiduously to ensure that the value of Shiseido brands is
conveyed in all aspects of the business, from the design of stores and sales
Creating a Feeling of Omotenashi for
Customers in China
Not mere product sales, but sales based on proposing
beauty methods. That is the concept the China Business
counters to customer management.
Further Enhancing Customer Satisfaction
Division works hard to instill in its training. Other essential
Shiseido opened the Shiseido China Training Center in Shanghai in
training includes thorough coverage of the effect of cos-
March 2008 to further strengthen its training system. This center provides
metics and how to use them. The other day, I heard that a
a variety of training for Shiseido employees such as beauty consultants,
customer at a cosmetics specialty store commented that
the store had become very professional about beauty.
salespeople and administrative staff, and for managers and salespeople
China continues to change, and in
from Shiseido business partners. In the year following its establish-
order to consistently create a feel-
ment, the center has provided training to more than 10,000 employees and
ing of omotenashi we are working
to cultivate education managers to
prepare the next generation of people
who
will
be
responsible
Shiseido’s business in China.
for
100 people from business partners.
Moreover, we promote efforts to tailor service and beauty consulting
to each customer. We enhance counseling tailored to customer skin
and preferences by using customer data and other information collected
Satomi Takeyama
General Manager,
Training Department
Training Division
Shiseido China Co., Ltd.
from point-of-sale (POS) systems installed at all cosmetics specialty
stores. We also use a unified database of information collected from the
URARA website to encourage customers to visit cosmetics specialty
stores and to strengthen customer service.
Shiseido’s Strengths in China
Continued Progress in the Future
＞＞＞ Enriching the Hearts of Chinese Women
Accelerating Energetic Initiatives in the Constantly
The Growth of China’s Cosmetics Market
Expanding Chinese Cosmetics Market
(Index)
Shiseido
The Chinese Market
China’s cosmetics market is currently valued at approximately ¥1.4 trillion yen. According to Shiseido’s calculations, the number of cosmetics
users in China is about 60 million, which is larger than the number of
users in Japan. Growth in the cosmetics markets parallels real growth in
gross domestic product, meaning strong potential for growth in the
future. The core cosmetics users were born in the 1980s. This demo-
100
2000
2002
2004
2006
2008
(Calendar year)
graphic, nicknamed the New 1980s Generation in China, is very interested
in cosmetics and beauty. Shiseido will step up marketing oriented to
this demographic.
As a symbol of its efforts, Shiseido will continue to take on the challenge
of the Chinese market and actively promote business development.
Together with Chinese Society
Shiseido must deepen its roots and establish a powerful presence in Asia,
particularly in the region’s principal market of China, to achieve its goal of
SHISEIDO LIFE QUALITY BEAUTY CENTER was established in
Shanghai as part of Shiseido’s CSR initiatives in China.
becoming a global player representing Asia with its origins in Japan.
Accordingly, Shiseido is contributing to Chinese society through
cosmetics. Shiseido dispatched Beauty Consultants to China and held local
beauty seminars to support the Chinese League of Women’s “Feminine
from the Heart: Educational Project to Cultivate an Ideal of Beauty for
Chinese Women” program leading up to the 2008 Beijing Olympics. In
2009 and beyond, Shiseido will continue proposing ways for Chinese
women to cultivate their beauty through various programs including
Shiseido China Co., Ltd. has become the official cosmetics product
sponsor for World Expo Shanghai 2010, and was the first Japanaffiliated company to become a sponsor for this expo.
Beauty Seminars at companies, universities, and groups such as the
Association of Women Mayors. In April 2009, we opened SHISEIDO
LIFE QUALITY BEAUTY CENTER to provide makeup advice to people
with serious skin concerns such as birthmarks, vitiligo and scarring.
Going forward, Shiseido will continue taking various approaches in
helping Chinese women enhance their beauty.
Shiseido is also actively conducting environmental initiatives. In
addition to afforestation, in September 2009 Shiseido became the first
major manufacturer of cosmetics in China to use plastic containers
made with eco-friendly polylactic acid. These containers are used for prod-
Afforestation activities at Lanzhou
on the Loess Plateau in China’s
Gansu Province are in their
second year. Shiseido initiated
the 10-year afforestation program
in 2008.
Shiseido helped establish an elementary school as a way to give
back to China.
ucts in the URARA brand sold only in cosmetics specialty stores.
Corporate Governance
Corporate Governance Policy
Management and Execution Structure
Shiseido is setting higher standards of corporate gov-
Since adopting a corporate executive officer system in the
ernance based on the understanding that maximizing cor-
year ended March 2002, Shiseido has worked to strengthen
porate and shareholder value, fulfilling social responsibilities
decision-making functions, enhance management trans-
and achieving sustainable growth and development are
parency and soundness, clarify the allocation of responsi-
key to maintaining support as a valuable company from all
bility and reinforce supervisory and auditing functions.
stakeholders (customers, business partners, shareholders,
employees and society).
The Board of Directors is composed of ten members
including two external directors. The Board of Directors
meets at least once a month to discuss all significant mat-
■ Overview of Corporate Governance Reforms
Strengthen decisionmaking functions
Enhance management
transparency and soundness
2001 Established Corporate
2001 Established Remuneration
Executive Officer Committee
and Policy Meeting of
Corporate Officers
2002 Reduced number of directors
Committee
2005 Established Nomination
Advisory Committee
Management transparency,
fairness and speed
2001 Introduced corporate
2001
2006
2006
2006
executive 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
2005 Increased number of
external corporate auditors
from 2 to 3
2006 Appointed external directors
Clarify allocation of
responsibility
ters. Attendance for external directors at the 14 Board of
Directors meetings in the year ended March 2009 averaged 93 percent. Attendance for other directors was 100 percent. Through the adoption of a corporate executive officer
system, we are separating the decision-making and
supervisory functions of the Board of Directors from the
business execution functions of corporate officers. The
Corporate Executive Officer Committee, which acts as
the final decision-making body regarding corporate officers’ material issues, accelerates operational decision
making. Shiseido’s President & Chief Executive Officer,
who also serves as the Chief Operating Officer, chairs
this Committee.
The term of office of directors is one year, and the
term limit of corporate officers is four years per position in
Reinforce supervisory and
auditing functions
principle and six years maximum.
To obtain an outside point of view and further
strengthen the Board of Directors’ supervisory function
Representative directors and corporate auditors meet
in regard to business execution, Shiseido appointed two
regularly to exchange opinions on actions that will
external directors from the year ended March 2007.
resolve corporate governance issues. Shiseido maintains a
Having external directors has stimulated discussion at
framework to ensure that corporate auditors discharge
Board of Directors meetings and strengthened its supervi-
their duties effectively. For example, the Company
sory capabilities.
arranges liaison meetings with the accounting auditors
In addition, two of the eight directors aside from the
and the Internal Auditing Department in addition to
external directors have built careers outside of Shiseido,
assigning full-time staff to assist in audits. Corporate auditor
promoting diversity among the directors. Wide perspec-
attendance for the 14 Board of Auditors meetings held in
tive and insight based on differing backgrounds and
the year ended March 2009 was 100 percent. For external
areas of expertise will promote objectivity and strengthen
corporate auditors, attendance at Board of Directors
the Board’s supervisory function.
meetings was 95 percent and for standing corporate audi-
We are also handpicking a small and able group of executive officers in addition to recruiting younger members.
tors, attendance was 100 percent. Internal audits of the
entire Group are conducted to ensure that business is
To promote transparency and objectivity in manage-
executed in an appropriate manner, and audit results are
ment, Shiseido established two committees to play an advi-
reported to the Board of Directors and Board of Auditors.
sory role to the Board of Directors: the Remuneration
Committee, which recommends executive remuneration
Remuneration to Directors, Corporate Officers
levels, and the Nomination Advisory Committee, which
and Corporate Auditors
conducts various duties including proposing the list of can-
Remuneration for directors and corporate officers
didates for directors and corporate officers. Both committees
consists of a basic fixed portion and a performance-
are chaired by external directors to maintain objectivity.
linked portion that fluctuates depending on achieving
management targets and share price. Since the year
Audit Structure
ended March 2006, these portions have been nearly
Shiseido’s Board of Auditors consists of two standing
equal. Effective the year ended March 2009, the per-
corporate auditors and three external corporate auditors.
formance-linked portion has been revised upward to
Corporate auditors monitor the legality and adequacy of
60 percent of remuneration in order to further raise
directors’ performance by attending Board of Directors
the
meetings and other important meetings.
Performance-linked remuneration consists of a bonus
incentive
for
attaining
performance
targets.
■ 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
Appointment,
termination
Appointment, termination
Audit
Audit
Board of Auditors
Board of Directors
Advisory committees to the Board of Directors
Advisory committees to the Board of Directors
Remuneration Committee
CSR Committee
Report
Supervision
Compliance Committee
Nomination
Advisory Committee
Corporate Executive Officer Committee
Proposal of material issues based on laws
Resolution,
approval
Proposal
Policy Meeting of
Corporate Officers
Resolution, approval
Decision-Making Meeting of Corporate Officers
based on annual consolidated results, medium-term
remuneration based on the achievement of the final
year targets of the Three-Year Plan, to be paid at the
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-to-long-term perspective, not just a
single-year focus, and to motivate management to
become more aware of Shiseido’s performance and
① Remuneration to two retiring directors
Basic remuneration of ¥15 million and stock options of ¥3 million for the period from
April to June 2008 was paid to two directors that retired as of the conclusion of the
108th Ordinary General Meeting of Shareholders held on June 25, 2008.
② Remuneration to one retiring corporate auditor
Basic remuneration of ¥3 million for the period from April to June 2008 was
paid to one corporate auditor that retired as of the conclusion of 108th Ordinary
General Meeting of Shareholders held on June 25, 2008.
2. In addition to the payments above, two subsidiaries of the Company paid a total of
¥25 million as basic fixed remuneration during the fiscal year to two
directors concurrently serving as directors of the two subsidiaries. The two subsidiaries paid ¥1 million as a bonus for the year ended March 2009.
■ Remuneration to Accounting Auditors for the Year
Ended March 2009
(Millions of yen)
share price.
Item
External directors receive basic fixed remuneration
only 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.
Amount
Remuneration paid for services rendered as
accounting auditors for the fiscal year under review
152
Total cash and other remuneration to be paid by the
Company and its subsidiaries to their accounting auditors
186
Note: In the audit contract between the Company and its accounting auditors, remuneration
paid for audits under the Corporate Law and audits under the Financial Instruments and
Exchange Law are not clearly distinguished and cannot be practically separated.
Therefore, the total payment for both is shown in “Remuneration to Accounting
Auditors” above.
Shiseido sets remuneration levels commensurate
with achievement of performance targets and by making
Management System Unique to Shiseido
comparisons with companies in the same industry and
Guided by the idea that fulfilling corporate social
similar businesses with a high percentage of revenues
responsibility (CSR) is crucial to Shiseido’s sustained
from overseas. Basic remuneration for directors and cor-
development, we have established the CSR Committee
porate auditors is within the monthly remuneration limits
and the Compliance Committee under the jurisdiction
decided by the General Meeting of Shareholders; per-
of the Board of Directors as part of our corporate gover-
formance-linked remuneration, including the bonus,
nance structure. Both committees are headed by the
medium-term remuneration and long-term incentive
Vice President and comprise members elected compa-
stock options, is also set on a case-by-case basis by reso-
nywide. They make proposals for and report on plans
lution at the General Meeting of Shareholders.
and results of activities to the Board of Directors.
The unfunded retirement benefit plan for directors
The CSR Committee carries out comprehensive moni-
and corporate auditors was abolished in the year ended
toring from a companywide perspective, with the aim of
March 2005.
increasing corporate value. The Compliance Committee
works to ensure legitimate and fair business practices in the
■ Remuneration to Directors and Corporate Auditors
ethics, risk management and information security coun-
for the Year Ended March 2009
(Millions of yen)
Basic
Directors (10 people)
External directors
(2 of the 10)
Corporate auditors
(6 people)
External auditors
(4 of the 6)
Total
Bonuses
Group, and promotes activities including corporate
Stock options
Total
283
36
71
390
26
—
—
26
96
—
—
96
termeasures to enhance management quality.
Compliance and Risk Management
We have enacted Group-wide Corporate Ideals, The
Shiseido Way (Corporate Behavior Declaration) and
36
—
—
36
The Shiseido Code (Corporate Ethics and Behavior
379
36
71
486
Standards), which outline the standards of behavior
Notes: 1. The following remuneration to directors and corporate auditors is included in
the above amounts.
that individual Group employees should apply in their
Corporate Governance
work, and are actively promoting legitimate and fair
Department establishes and monitors the management of
business practices.
internal controls throughout the Group. The internal
We hold regular workshops on corporate ethics and
control report is disclosed on the Company’s website.
human rights education, and assign a Code Leader to
each office to ensure observance of The Shiseido Code.
Discontinuation of Anti-Takeover Measures
Code Leaders report on the progress in promoting
Shiseido adopted a plan for countermeasures to large-
legitimate and fair business practices at their respective
scale acquisitions of its shares (anti-takeover measures;
offices. We have also established multiple reporting
hereinafter the “Plan”) based on the approval of its share-
and consultation help lines, which include advice from
holders obtained at the 106th Ordinary General Meeting of
external lawyers, to detect and correct at an early stage
Shareholders held on June 25, 2006. The Plan was effective
actions that contravene the law, The Shiseido Code or
until the conclusion of the 108th Ordinary General
other regulations, and to identify distress in employees.
Meeting of Shareholders. However, steady implementa-
The Compliance Committee takes a cross-depart-
tion of the Three-Year Plan from the year ended March
mental approach to dealing with risks. The committee
2009 will increase Shiseido’s competitiveness and main-
identifies and evaluates risk in management strategy
tain sustainable growth in the global markets and assure or
operations and administrative operations, and promotes
increase its corporate value. Shiseido therefore passed a res-
necessary preventative measures and activities. It pre-
olution at its Board of Directors meeting held on April 30,
pares manuals for use in emergencies, and in the event of
2008 to discontinue the Plan and delete the governing
an emergency, it responds by organizing a countermea-
article from the Company’s articles of incorporation by
sure headquarters, project, team, or other grouping as dic-
resolution of the 108th Ordinary General Meeting of
tated by the seriousness of the situation.
Shareholders.
Shiseido’s Board of Directors has adopted and disclosed a basic policy for internal control systems.
In addition, in the year ended March 2009, the sub-
Shiseido will continue to strengthen its corporate governance system to enhance corporate and shareholder
value and the quality of management.
mission of reports on internal controls for financial
reporting was institutionalized. The Internal Auditing
Corporate Mission
We seek to identify new, richer sources of value
and use them to create a beautiful lifestyle.
With our
customers
Through the creation of products possessing true value and exceptional quality,
we strive to help our customers realize their dreams of beauty, well-being and
happiness.
Joining forces with partners who share our goals, we act in a spirit of sincere
With our
business partners cooperation and mutual assistance.
Mission
Company Rules and Regulations
Corporate practice, daily business activities
With our
shareholders
We strive to win the support and trust of our shareholders through transparent
management practices and sound business results achieved by high-quality growth,
enabling the retention of earnings for future investments and payment of dividends.
With our
employees
The diversity and creativity of our employees make them our most valuable
corporate asset. We strive to promote their professional development and we
evaluate them fairly. We recognize the importance of our employees’ personal
satisfaction and well-being, and seek to grow together with them.
With our
society
We respect and obey all laws in regions in which we do business. Safety and
preservation of the natural environment are among our highest priorities. In cooperation
with local communities and in harmony with international society, we employ our cultural
resources in creating a beautiful lifestyle.
Contributing to Society
employees with childcare responsibilities to accompany
Corporate Social Responsibility (CSR) Policy
Shiseido actively promotes both fundamental CSR
spouses transferred within Japan. Shiseido received the 3rd
required of a company and selective CSR unique to
(2008) Nikkei Parent-Friendliness Award in the year
Shiseido. At the center of our CSR activities is a focus on
ended March 2009 in recognition of its overall child-raising
meticulously addressing all customer beauty needs
support measures.
throughout life, as reflected in the corporate message of
Shiseido received the 2009 Integrity Award Grand
“This Moment. This Life. Beautifully.” Specifically,
Prize from the Integrity Award Council in March 2009.
Shiseido will further strengthen social activities through
The award recognized the Company’s ongoing internal
cosmetics, an approach that is unique to the Company;
control and corporate ethics activities.
enhance measures that address environmental prob-
In the area of human rights, we continue to pursue
lems, which are an important global issue; support
initiatives in the context of our own corporate activities
women, who make up over 70 percent of Company
while participating in education activities outside the
employees and 90 percent of its customers; and enhance
Company. In 2004, Shiseido joined the United Nations
the safety and reliability that are the basis of trusting
Global Compact. In December 2008, as part of our support,
relationships with customers.
we joined the CEO Statement, an initiative launched by the
Global Compact on the 60th anniversary of the Universal
Declaration of Human Rights. The statement declares to
Fundamental CSR
Fundamental CSR, the most basic responsibilities of a
the world, “We also reiterate our own commitment to
company, involves efforts for our customers, respect for
respect and support human rights within our sphere of
employee diversity, business partnerships, the protection of
influence. Human rights are universal and are an important
personal information, and work environment safety and
business concern all over the globe.”
hygiene. Shiseido addresses these issues as a Group.
In the year ended March 2009, we implemented support
Selective CSR Unique to Shiseido
measures for employees to balance work, childcare and
Shiseido actively pursues social contribution activi-
family life, including extending eligibility for reduced
ties through its core business of cosmetics that best
work hours for child rearing through the third grade of ele-
reflect the Company’s unique character and are most
mentary school and offering child nursing care leave in
expected from society. In the year ended March 2009,
half-day increments, in addition to a program allowing
Shiseido employees participated as volunteers at the first
■ CSR Activities Domain
Creating new markets
Proposing new social values
Social contribution activities
(philanthropy)
Unique Shiseido
CSR
Strict compliance with laws and regulations
Environmental conservation, information
disclosure, protection of personal information,
protection of human rights
Continued Corporate existence
Providing high-quality products and services
Valuing employees
Collaboration with business partners
Profit and dividends
Payment of taxes and creation of employment opportunities
Fundamental CSR
President Maeda delivers an address at the ceremony
where Shiseido received the Integrity Award Grand Prize.
national conference of XP (Xeroderma Pigmentosum)
cooperating with medical institutions to provide makeup
Association Japan, a group supported by the Shiseido
advice to people with serious skin concerns. In June 2006, we
Social Contribution Club-Camellia Fund. Employee activi-
opened a central facility in the Shiseido head office in
ties at the conference included giving a seminar on correct
Ginza, Tokyo, to provide free advice. Moreover, in April
usage of sunscreen cosmetics for XP, an incurable dis-
2009 we launched the SHISEIDO LIFE QUALITY BEAUTY
ease whose patients have a high probability of developing
CENTER for the first time overseas in Shanghai, China,
cancer when their skin is exposed to ultraviolet light.
and Taipei and Kaohsiung, Taiwan, and are working to
Through various social activities, Shiseido dissemi-
develop these activities globally.
nates the cultural capital it has cultivated since the
We also hold SHISEIDO LIFE QUALITY BEAUTY
Company’s foundation 137 years ago. We provide unique
SEMINARS at all branches in Japan. Through these
support for promising new talent and art, such as “shiseido
skincare, makeup and other beauty seminars, we assist
art egg” public exhibitions for up-and-coming artists held at
the elderly and physically challenged in working to
the Shiseido Gallery since the year ended March 2007.
achieve the beauty they desire. In the year ended March
For further information regarding Shiseido’s CSR
2009, approximately 36,000 people participated. In April
activities, please see the CSR website.
2009, we established a system to enable as many employ-
http://www.shiseido.co.jp/e/csr/
ees and former employees as possible to join in giving
these seminars.
SHISEIDO LIFE QUALITY BEAUTY PROGRAM
Since its foundation, Shiseido has sought to use the
results of its accumulated beauty-related research in both
We will continue to promote the SHISEIDO LIFE
QUALITY BEAUTY PROGRAM as a symbol of our social
contribution activities through cosmetics.
products and methods to help all customers achieve the
beauty they desire through a process of physical and emotional enrichment. In particular, we have actively worked
to support improvements in quality of life (QOL) by providing
our distinctive beauty methods and products through the
SHISEIDO LIFE QUALITY BEAUTY PROGRAM.
Since the 1990s, Shiseido has been developing foundation to cover birthmarks and other skin concerns, while
Many employees and former employees participate in the SHISEIDO LIFE QUALITY BEAUTY
PROGRAM.
Shiseido CSR Report 2009 on the Shiseido website
Environmental Initiatives
Basic Policy for Environmental Activities
Shiseido has faithfully shown consideration for the
Overview of the Shiseido Group’s Environmental Efforts
Corporate Ideals
environment since its foundation, with respect and
esteem for the natural habitat that is a cornerstone of the
Shiseido Eco Policy
Company’s identity, as embodied in the origin of its
name, a phrase in the Chinese classic I Ching meaning
Mission
“praise the virtues of the great Earth, which nurtures
new life and brings forth new values.”
In the year ended March 2009, Shiseido formulated
Aim for the realization of a society where
humanity and the earth’s environment can co-exist
Project
Name
the Shiseido Basic Environmental Policy for all companies in the Shiseido Group in order to fulfill its social
responsibility and to establish an unsurpassed, worldclass quality of business management as set in the
All employees
throughout
the world work
together
Unique Shiseido activities
＋
Basic environmental activities
Three-Year Plan. The plan clearly places environmental
initiatives at the core of management. Shiseido aims to
achieve a competitive advantage by addressing the environment in all its business activities.
Reduce CO2 emissions, conserve resources
Goals
Achieve a new lifestyle linking beauty
and eco activities in a way that is unique
to Shiseido
Environmental Management Framework
In 1992, Shiseido set the Shiseido Eco Policy as a management policy regarding the environment. To ensure that
Basic Environmental Activities and
Environmental Activities Unique to Shiseido
the Group’s domestic and international operations pro-
In its environmental plan, the Company classifies envi-
mote environmental activities in line with this policy, in
ronmental initiatives into basic environmental activities
1997 Shiseido established Global Eco Standards to serve
and unique Shiseido activities.
as activity guidelines. Responses to environmental chal-
Fundamental environmental activities strengthen envi-
lenges were classified into six categories: product develop-
ronmental consciousness in all work processes and encom-
ment; research and development; manufacturing and pro-
pass obvious duties of global citizens such as reducing CO2
curement; distribution; sales; and offices. Each category
emissions and conserving resources. Specifically, while
consists of (1) a basic policy, (2) specific design and action
aiming to achieve our promise to society to reduce CO2
standards, and (3) operating standards to implement those
emissions at domestic plants 15 percent by fiscal 2010
standards. In addition, in 2006 Shiseido formulated the
(compared with fiscal 1990 levels; per unit of production), we
Supplier Code of Conduct with the aim of combining
will respond appropriately to a variety of laws and regulations
efforts with business partners such as suppliers of ingredients
to reduce CO2 emissions and waste at all branches, including
and promotional materials, and contract manufacturers.
those overseas. In addition, we will gather data within
To further strengthen environmental management
Japan and overseas and reflect it in companywide environ-
based on these policies and rules, in April 2009 we estab-
mental targets to be set in the year ending March 2011,
lished the Environmental Control Office in the Social
while managing with a strong awareness of reducing envi-
Affairs and Consumer Relations Department to oversee
ronmental burden in each phase of business.
environmental activities throughout the Company. This
On the other hand, environmental activities unique to
department will be central in accelerating plan implementation
Shiseido are measures to propose new lifestyles in which
and collaborating in order to promote environmental activities.
human beauty and the environment coexist through our
main business as a cosmetics company. From the year
Global Compact, as an opportunity to express to the world its
ending March 2010, we launched the Shiseido Earth Care
strong dedication to the environment.
Project, an environmental initiative with a membership
comprising all Group employees.
In March 2009, Shiseido became the first company in the
cosmetics industry in Japan to be certified as an “Eco-First
We will engage in a wide range of initiatives through
Company” by Japan’s Ministry of the Environment. The
these environmental activities, including minimizing product
Eco-First Program was created by the Ministry of the
returns and reducing waste, in order to use resources
Environment in April 2008 to encourage leading compa-
effectively.
nies in each industry to further expand their environmental
protection activities by having them make a commitment
Shiseido’s Promise to Society
to the Minister for the Environment. In addition to reporting
In the year ended March 2009, Shiseido made a promise
the progress of initiatives to the Ministry of the
to society to carry out environmental activities as an envi-
Environment, we will officially announce the results
ronmentally progressive company.
through our website and other channels.
In November 2008, Shiseido endorsed “Caring for
Climate: The Business Leadership Platform,” a climate
change initiative being spearheaded by the United Nations
“Caring for Climate: The Business Leadership Platform” (Summary)
1. Take 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 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 enabling framework for the business sector to contribute effectively to
building a low carbon economy.
3. Work collaboratively with other enterprises nationally and sectorally, and along our valuechains, by setting standards and taking joint initiatives aimed at reducing climate risks, assisting with adaptation to climate change and enhancing climate-related opportunities.
Shiseido’s “Eco-First Commitment” (Summary)
1. Shiseido will actively pursue initiatives to prevent global warming.
2. Shiseido will actively pursue initiatives to realize a recycling-oriented society.
3. Shiseido will actively propose activities for realizing a society characterized by the beautiful
coexistence of people and the Earth both inside and outside the Company.
Board of Directors, Corporate Auditors and Corporate Officers
(As of June 24, 2009)
Directors
1970
2003
2003
2005
Joined Shiseido
General Manager of Corporate Planning Department
Director, Corporate Officer
Representative Director, President & CEO
Responsibilities:
Responsible for Public Relations, Consumer Information and
Corporate Culture
Responsible for Corporate Culture Reform, Environmental
Measures, Life Quality Beauty Program, and Committees
under Direct Control of the Board of Directors
Shinzo Maeda
Kimie Iwata
Representative Director,
President & CEO
Representative Director,
Vice President
Responsibilities:
Chief Financial Officer
Responsible for Finance, Investor Relations and
Information System Planning
Responsible for Internal Control
President & CEO, Shiseido Business Solutions Co., Ltd.
1971 Joined Shiseido
2003 General Manager of Corporate Restructuring
Department
2003 Corporate Officer
2005 Director
Yasuhiko Harada
2006 Corporate Executive Officer
Director, Corporate Senior 2008 Corporate Senior Executive Officer
Executive Officer
Committees:
Chair of CSR Committee and Compliance Committee
Responsibilities:
Responsible for Domestic Cosmetics Business Sales
President and Representative Director, Shiseido
Sales Co., Ltd.
President and Representative Director, FT Shiesido
Co., Ltd.
Toshimitsu Kobayashi
1999 General Manager of Nagoya Branch of
Shiseido Cosmetics Sales Co., Ltd.
2004 Director, Corporate Executive Officer
2006 Corporate Senior Executive Officer
Director, Corporate Senior
Executive Officer
Responsibilities:
Responsible for Research & Development, Production,
Technical Affairs and Logistics
Responsibilities:
Responsible for Global Business (International
Business, China Business and Professional
Business)
Chief Officer of International Business Division
2003 General Manager of International Business
Planning Department, International Operations
Headquarters
2003 Director, Corporate Officer
2009 Corporate Senior Executive Officer
Masaaki Komatsu
Carsten Fischer
Director, Corporate Senior
Executive Officer
Director, Corporate
Executive Officer
Responsibilities:
General Manager of Corporate Planning Department
1979 Joined Hans Schwarzkopf GmbH
2004 Corporate Officer, President, Professional
Care at the Procter & Gamble Company
2006 Corporate Advisor of Shiseido
2008 Director
Responsibilities:
Responsible for Business Strategy and Marketing
of Domestic Cosmetics Business
2007 General Manager of the Cosmetics Business
Planning Department
2009 Director
1975
2006
2007
2009
Hisayuki Suekawa*
Tatsuomi Takamori*
1997 President, ASKUL Corporation
2000 CEO, ASKUL Corporation
2006 External Director of Shiseido
Joined Shiseido
Chief Officer of China Business Division
Corporate Officer
Director
1997 Professor, School of Law, Waseda University
2003 Professor, Graduate School of Law, Waseda
University
2006 External Director of Shiseido
2006 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
Committees:
Chair of Remuneration Committee
Shoichiro Iwata
Tatsuo Uemura
External Director
External Director
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 Director, Corporate Officer
2008 Representative Director, Vice President
Committees:
Chair of Nomination Advisory Committee
Corporate Auditors
Kiyoharu Ikoma
Kazuko Ohya
Corporate Auditor
Corporate Auditor
2003 Chairman and Director, Shiseido International
Corporation
2006 Corporate Auditor
2000 General Manager of Consumer
Information Center
2007 Corporate Auditor
Akio Harada
Reiko Kuroda
External Corporate Auditor
2004 Attorney at Law
2005 External Corporate Auditor of Shiseido
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
Nobuo Otsuka
1988 President, Keiseikai Hospital
Corporate Officers
Corporate Executive Officer
Kiyoshi Kawasaki
Responsible for Advertising Creation and Beauty Solutions and Domestic Non-Shiseido Brand Business
Corporate Officers
Kozo Hanada
Tsunehiko Iwai
Chief Officer of Professional Business Operations Division
Responsible for Technical Planning and Technical Affairs
General Manager of Quality Management Department
Masaru Miyagawa*
Shoji Nishiyama
Chief Officer of China Business Division and Chief Area Managing Officer of China
Chairman, Shiseido China Co., Ltd.
Responsible for Cosmetics Products Research & Development and Software
Development
Shoji Takahashi
Mitsuo Takashige
Responsible for the Americas
Chairman & CEO, Shiseido Americas Corporation
Responsible for Personnel
General Manager of Personnel Department
Kazuo Tokubo
Takafumi Uchida
Responsible for Functional Food, Innovative Science Research & Development
and Patents
Responsible for General Affairs, Legal Affairs and Executive Affairs
General Manager of General Affairs Department
Ryuichi Yabuki
Toshio Yoneyama
Responsible for Sales Operations Planning of Domestic Cosmetics Business
General Manager of Sales Department, Specialty Stores Vice President and
Director, Shiseido Sales Co., Ltd.
Responsible for Healthcare Business and Frontier Sciences Business
Chief Officer of Healthcare Business Division
President and Representative Director, Shiseido Beauty Foods Co., Ltd.
Corporate officer retired as of March 31, 2009: Tamio Inaba
* New appointment
Main Subsidiaries and Af filiates
(As of March 31, 2009)
Company Name
Location
Paid-in Capital
Main Business1
Equity ownership percentage3
¥100 million
100.0
Chuo-ku, Tokyo
¥10 million
100.0
Shiseido International Inc.
Chuo-ku, Tokyo
¥30 million
100.0
FT Shiseido Co., Ltd.
Chuo-ku, Tokyo
¥100 million
Shiseido Professional Co., Ltd.
Chuo-ku, Tokyo
¥250 million
100.0
Shiseido Beauty Salon 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.
Shiseido Sales Co., Ltd.
Minato-ku, Tokyo
Shiseido FITIT Co., Ltd.
Shiseido America, Inc.
New York, U.S.A.
Zotos International, Inc.
Connecticut, U.S.A.
Shiseido International Europe S.A.
Paris, France
Shiseido International France S.A.S.
Paris, France
Shiseido Deutschland GmbH
Dusseldorf,
Germany
Shiseido Cosmetici (Italia) S.p.A.
Milan, Italy
Shiseido Europe S.A.S.
Paris, France
Beauté Prestige International S.A.
Paris, France
Laboratoires Declér S.A.
Paris, France
Shiseido China Co., Ltd.
Shanghai, China
Shanghai Zotos Citic Cosmetics Co., Ltd.
Shanghai, China
Shiseido Liyuan Cosmetics Co., Ltd.
Beijing, China
Shiseido Dah Chong Hong Cosmetics Ltd.
Hong Kong, China
Taiwan Shiseido Co., Ltd.
Taipei, Taiwan
The Ginza Co., Ltd.
Domestic
cosmetics business
(Thousands of U.S. dollars)
100.0
$403,070
100.0
$28,000
（100.0）
100.0
$25,000
（100.0）
(Thousands of euro)
100.0
€247,473
100.0
(Thousands of euro)
€36,295
（100.0）
100.0
(Thousands of euro)
€5,200
（100.0）
100.0
(Thousands of euro)
€2,400
(Thousands of euro)
€9,000
100.0
（100.0）
Overseas
cosmetics business
100.0
（100.0）
100.0
(Thousands of euro)
€17,760
（100.0）
100.0
(Thousands of euro)
€19,374
（100.0）
(Thousands of yuan)
100.0
CNY565,093
92.6
(Thousands of yuan)
CNY418,271
（72.6）
65.0
(Thousands of yuan)
CNY94,300
（33.0）
(Thousands of HK dollars)
50.0
HKD123,000
(Thousands of NT dollars)
NTD1,154,588
51.0
Chuo-ku, Tokyo
¥100 million
98.2
Shiseido Parlour Co., Ltd.
Chuo-ku, Tokyo
¥100 million
Selan Anonymous Association2
Chiyoda-ku, Tokyo
Other: 61 subsidiaries
—
—
—
—
(Equity-method affiliates): 3 companies
—
—
—
—
Others
99.3
—
¥11,600 million
［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. Numbers in parentheses include indirect equity ownership, and numbers in brackets represent ownership by parties with a close relationship or
those in agreement with Shiseido.
Financial Section
Six-Year Summary of Selected Financial Data ·········· 40
Management’s Discussion and Analysis ··················· 41
Consolidated Financial Statements ··························· 54
Notes to the Consolidated Financial Statements ······ 59
Independent Auditors’ Report ··································· 75
Six-Year Summar y of Selected Financial Data
For the years ended March 31, 2004 to 2009
Thousands of dollars
(Note 1)
Millions of yen
2004
Operating Results:
Net sales ····························· ¥624,248
Cost of sales (Note 2) ············ 166,299
Selling, general and administrative
expenses (Note 2) ·················· 420,471
37,478
Operating income (Note 2) ·····
82,341
EBITDA (Note 3) ···················
27,541
Net income (loss) ··················
Financial Position (At year-end):
Total assets ························· ¥626,730
47,678
Short-term liabilities (Note 4) ·······
18,480
Long-term debt·····················
66,158
Interest-bearing debt ·············
Net assets ··························· 385,336
2005
2006
2007
2008
¥639,828
168,636
¥670,957
176,884
¥694,594
185,533
¥723,485
186,466
444,663
26,529
29,043
(8,856)
455,194
38,879
58,963
14,436
459,056
50,005
78,036
25,293
473,554
63,465
94,960
35,460
¥701,095
25,213
69,114
94,327
369,957
¥671,842
12,786
69,492
82,278
387,613
¥739,833
66,144
61,694
127,838
403,797
¥675,864
38,653
24,566
63,219
399,739
2009
2009
¥690,256 $7,024,791
171,752
1,747,934
468,590
49,914
70,149
19,373
4,768,878
507,979
713,912
197,161
¥606,569 $6,173,102
27,601
280,898
34,452
350,621
62,053
631,519
351,951
3,581,834
Per Share Data (In yen and U.S. dollars):
Net income (loss) (Note 5) ······
Net assets (Note 5) ················
Cash dividend·······················
Weighted average number of
shares outstanding during
the period (thousands) ··········
¥ 64.9
903.7
22.0
¥ (21.5)
866.5
24.0
¥ 34.4
906.1
30.0
¥ 60.9
940.8
32.0
¥ 86.1
946.2
34.0
¥ 48.0
839.9
50.0
414,723
414,219
412,855
412,572
407,696
403,240
Financial Ratios:
Operating profitability (%) (Note 2) ··
Return on assets (%) ·············
Operating ROA (%) (Notes 2 and 6)·····
Return on equity (%) ··············
Equity ratio (%) ·····················
Interest coverage ratio (times) (Note 7) ···
Debt-equity ratio (times) ·········
Payout ratio (Consolidated)(%) ·······
Total return ratio (%) (Note 8) ······
Number of employees at year-end ····
Net sales per employee ··········
6.0
4.3
6.0
7.6
59.8
18.2
0.18
33.9
51.2
24,839
¥25.1
4.1
(1.3)
4.3
(2.4)
51.2
22.1
0.26
—
—
24,184
¥26.5
5.8
2.1
5.9
3.9
55.7
8.6
0.22
87.2
105.1
25,781
¥26.0
7.2
3.6
7.4
6.6
52.5
30.6
0.32
52.6
52.6
27,460
¥25.3
8.8
5.0
9.4
9.2
56.6
39.1
0.16
39.5
108.8
28,793
¥25.1
7.2
3.0
8.2
5.4
55.6
23.6
0.18
104.1
127.2
28,810
¥24.0
$0.49
8.55
0.51
$244
Notes: 1. U.S. dollar amounts are converted from yen, for convenience only, at the rate of ¥98.26 = US$1 prevailing on March 31, 2009.
2. Cost of sales, selling, general and administrative expenses, operating income, operating profitability and operating ROA for years up to March
31, 2005 have been retrospectively restated to reflect changes in accounting policies for the year ended March 31, 2006.
3. EBITDA (Earnings before interest, tax, depreciation and amortization) = Income (loss) before income taxes + Interest expense + Depreciation and
amortization
4. Short-term liabilities = Short-term debt + Current portion of long-term debt
5. Net income (loss) 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.
6. Operating ROA = (Operating income + Interest and dividend income) ÷ Total assets (Yearly average)
7. Interest coverage ratio = Net cash provided by operating activities ÷ Interest paid*
*As stated in the statements of cash flows
8. Total return ratio = (Cash dividend + Share buybacks*) ÷ Net income
*Excluding odd-lot purchases
Management’s Discussion and Analysis
Operating Results
Accounting Standard for Lease Transactions,” (ASBJ Guidance
No.16, issued March 30, 2007). Therefore, Shiseido now
Overview
treats such leases as capital leases.
The financial and economic crisis that originated in the
United States spread during the fiscal year ended March 31,
In addition, effective the fiscal year ended March 31, 2009,
Shiseido
applied
“Practical
Solution
on
Unification
of
2009. The global economic downturn from fall 2008 affected the
Accounting Policies Applied to Foreign Subsidiaries for
Japanese economy, causing corporate results to deteriorate
Consolidated Financial Statements” (ASBJ Practical Issues
rapidly. Consumer spending weakened due to concerns about
Task Force No. 18, issued May 17, 2006), and adjusted its
employment instability and uncertainty about the direction of
financial statements accordingly.
the economy.
(Please refer to Notes to the Consolidated Financial Statements,“2.
Amid these conditions, Shiseido aimed to become a global
player representing Asia with its origins in Japan, and initiated a
Summary of Significant Accounting Policies,” for additional
details regarding the changes in accounting policies.)
new Three-Year Plan to improve the quality of activities across the
board. In the fiscal year ended March 31, 2009, the first year of the
Net Sales
new Three-Year Plan, Shiseido strengthened the global brand
Net sales decreased 4.6 percent on a yen basis to ¥690,256
, deployed its expertise to develop business in
million ($7,024,791 thousand), and decreased 1.6 percent on a
Asia, and concentrated on creating a brand loved by customers
local currency basis. Domestic sales decreased year on year,
throughout the world with a focus on nurturing core brands/lines in
reflecting a sudden cooling of consumer sentiment. By contrast,
the domestic market. In addition to promoting reform of its
overseas sales were solid, especially in China, but were
profit structure, Shiseido raised organizational capabilities, nurtured
eroded by the yen’s appreciation during the period. Sales
human resources and strengthened corporate governance in
both in Japan and overseas therefore decreased year on year.
working to establish an “unsurpassed, world-class quality of
business management.” Moreover, as a living corporation that is
Net Sales/Overseas Sales Ratio
part of society, Shiseido promoted CSR activities including
（%）
60
(Billions of yen)
800
social contributions and environmental protection.
However, even though Shiseido devoted all of its strengths to
these corporate activities, the fiscal year ended March 31,
600
45
400
30
200
15
2009 was unfavorable because of the impact of the global
downturn. The market environment was a negative force that
kept Shiseido from achieving the full result of reforms continuing
0
0
2005
from the previous three-year plan.
As a result, for the fiscal year ended March 31, 2009, net
sales decreased 4.6 percent compared with the previous fiscal
year to ¥690,256 million ($7,024,791 thousand), and operating
2006
2007
2008
2009
Net Sales
639.8 671.0 694.6 723.5 690.3
27.5 29.4 32.4 36.5 38.0
Domestic Sales
Overseas Sales
464.1 473.7 469.8 459.2 428.3
175.7 197.2 224.8 264.3 262.0
income decreased 21.4 percent to ¥49,914 million ($507,979
thousand). The operating margin was 7.2 percent. Shiseido
and impairment losses reported by overseas subsidiaries. As a
Cost of Sales and
Selling, General and Administrative Expenses
result, net income declined 45.4 percent to ¥19,373 million
[Cost of Sales]
recognized other expenses including restructuring expense
Cost of sales decreased 7.9 percent compared with the
($197,161 thousand).
previous fiscal year to ¥171,752 million ($1,747,934 thousand), and the ratio of cost of sales to net sales decreased 0.9
Changes in Accounting Policies
Effective the fiscal year ended March 31, 2009, Shiseido
percentage points to 24.9 percent. Factors in the improve-
applied “Accounting Standard for Measurement of Inventories”
ment included the result of ongoing efforts to reduce cost of
(ASBJ Statement No. 9, issued July 5, 2006).
sales, and also improvement in the domestic product mix.
Previously, Shiseido treated finance lease assets that did
Moreover, Shiseido scaled back or withdrew from services
not transfer ownership as operating leases. From the fiscal
businesses such as the lease business, which had a high cost of
year ended March 31, 2009, however, Shiseido applied
sales ratio. Other factors included the greater proportion to net
“Accounting
sales of sales in China, where cost of sales is relatively low.
Standard
for
Lease
Transactions”
(ASBJ
Statement No. 13, issued March 30, 2007) and “Guidance on
[Selling, General and Administrative Expenses]
new core business processing system. Overseas, however,
Selling, general and administrative (SG&A) expenses decreased 1.0
costs resulting from business expansion and other issues
percent compared with the previous fiscal year to ¥468,590 million
increased in China, which continues to be a growing market.
($4,768,878 thousand). The ratio of SG&A expenses to net
The ratio of other expenses to net sales rose as a result.
sales increased 2.5 percentage points to 67.9 percent despite
cost reductions in Japan because Shiseido invested aggres-
Operating Income
sively in marketing costs and other outlays overseas, particularly
Operating income decreased 21.4 percent compared with
in China. Analysis of the major components of SG&A expenses
the previous fiscal year to ¥49,914 million ($507,979 thou-
is included in the following sections.
sand). The operating margin decreased 1.6 percentage points to
Marketing Costs
7.2 percent.
Marketing costs consist of advertising and promotional
expenses. The ratio of marketing costs to net sales
Operating Income/Operating Profitability
(Billions of yen)
80
increased 0.8 percentage points to 23.7 percent. In Japan,
Shiseido
invested
to
distinguish
and
（%）
10
concentrate
brands/lines. Shiseido also worked to increase cost efficiency by concentrating marketing costs on certain
brands/lines, such as the new Revital Granas line and the
60
7.5
40
5
20
2.5
innovation of the Maquillage line. Overseas, however,
0
Shiseido invested aggressively to support the critical
Chinese market and designer fragrances. The ratio of marketing costs to net sales rose as a result.
0
2005
Operating Income
2006
2007
2008
2009
26.5 38.9 50.0 63.5 49.9
4.1 5.8 7.2 8.8 7.2
Personnel Expenses
The ratio of personnel expenses to net sales increased
1.0 percentage point compared with the previous fiscal year to
Other Income (Expenses)
22.3 percent. In Japan, a reduction in bonuses for employees
Net other expenses totaled ¥11,428 million ($116,304 thou-
offset an increase in pension expenses. Overseas, however,
sand), compared with net other income of ¥2,060 million for the
the Shiseido Group added employees in China, which con-
previous fiscal year.
tinues to be a growing market. Moreover, factors including
Net interest income, calculated as interest and dividend
increased compensation as a result of new Chinese
income less interest expense, totaled ¥1,009 million ($10,269
employment laws contributed to the year-on-year increase in
thousand), a decrease of 7.9 percent compared with net interest
personnel expenses. The ratio of personnel expenses to
income of ¥1,095 million for the previous fiscal year. In addition,
net sales rose as a result.
foreign exchange loss totaled ¥275 million ($2,799 thousand),
compared with foreign exchange loss of ¥1,649 million for the
Cost of Sales Ratio/
SG&A Expenses Ratio
previous fiscal year. A pronounced change in exchange rates near
(%)
30
（%）
70
the end of the previous fiscal year resulted in a substantial foreign
29
69
exchange loss on revaluation of foreign currency deposits
28
68
held in Japan and other assets.
27
67
26
66
25
65
24
64
previous fiscal year, partly reflecting lower earnings at Pierre
23
63
Fabre Japon, which sells the Avène brand of Laboratoires
2005
Cost of Sales Ratio (Left scale)
SG&A Expenses Ratio (Right scale)
2006
2007
2008
Equity in earnings of affiliates decreased 61.2 percent year
on year to ¥58 million ($590 thousand) from ¥149 million for the
2009
26.4 26.4 26.7 25.8 24.9
69.5 67.8 66.1 65.4 67.9
Pierre Fabre in Japan. In the fiscal year ended March 31, 2008, the
sale of shares in Shiseido Logistics Co., Ltd. and Shiseido
Lease Co., Ltd. resulted in gain on sale of shares in affiliates
totaling ¥3,097 million. In the fiscal year ended March 31, 2009, the
Other Expenses
The ratio of other expenses to net sales increased 0.7
percentage points to 21.8 percent. Other expenses
sale of shares in Shiseido Real Estate Development Co., Ltd.
resulted in gain on sale of shares in affiliates totaling ¥71 million
($723 thousand).
decreased year on year in Japan as lower logistics, leasing and
Impairment loss totaled ¥6,073 million ($61,805 thousand), an
other costs compensated for higher costs associated with a
increase of ¥4,922 million compared with impairment loss of
¥1,151 million for the previous fiscal year. This loss consisted pri-
Net Income (Loss)/Return on Equity
marily of impairment totaling ¥4,928 million ($50,153 thou-
(Billions of yen)
40
sand) recognized for DECLÉOR brand goodwill and trademark
（%）
12
30
9
20
6
10
3
thousand), an increase of ¥5,476 million from ¥598 million for the
0
0
previous fiscal year. This consisted primarily of expenses
(10)
rights as a result of declining profitability due to the worsening
environment in the European professional business.
Restructuring expenses totaled ¥6,074 million ($61,816
totaling ¥2,689 million ($27,366 thousand) related to the liquidation of Shiseido Beautech Co., Ltd. and expenses totaling
(3)
2005
2006
2007
2008
2009
(8.9) 14.4 25.3 35.5 19.4
(2.4) 3.9 6.6 9.2 5.4
Net Income (Loss)
Return on Equity
¥2,465 million ($25,087 thousand) related to the withdrawal of
THE GINZA from its boutique business.
Review by Business Segment
Income before Income Taxes
Results by business segment follow below.
Income before income taxes decreased 41.3 percent compared with the previous fiscal year to ¥38,486 million
($391,675 thousand).
Domestic Cosmetics
Sales in the domestic cosmetics business segment
decreased 6.1 percent compared with the previous fiscal year to
Income Taxes, Including Deferred Taxes
¥412,338 million ($4,196,397 thousand). During the fiscal
Income taxes, including deferred taxes, decreased 40.8 per-
year, consumer spending weakened suddenly as the econo-
cent compared with the previous fiscal year to ¥15,137 million
my deteriorated. This led to dramatic changes in the market,
($154,050 thousand) as a result of the decrease in income
including a heightened trend toward price rationalization. In
before income taxes. The effective tax rate was 39.3 percent,
response, Shiseido sought to raise the quality of all activities,
compared with 39.0 percent in the previous fiscal year.
such as promotional, sales and merchandising activities, in
order to win the support of customers, particularly in the low and
Minority Interests in
Net Income of Consolidated Subsidiaries
middle price ranges. However, the quality of sales activities
did not increase enough to sustain customer support, and
Minority interests in net income of consolidated sub-
segment sales declined.
sidiaries decreased 11.5 percent compared with the previous fis-
[Cosmetics Division]
cal year to ¥3,976 million ($40,464 thousand), due to factors such
as restructuring expenses at joint ventures in Asia.
Sales in the cosmetics division decreased 6.9 percent
compared with the previous fiscal year, with lower sales
year on year of counseling products, self-selection products
Net Income
Net income decreased 45.4 percent compared with the previous fiscal year to ¥19,373 million ($197,161 thousand). Net
income per share decreased to ¥48.0 ($0.49) from ¥86.1 for the
previous fiscal year.
and toiletries. During the year, we continued nurturing our
mega lines and focused on nurturing our relationship building
brands/lines.
Among our mega lines, we innovated the Maquillage
makeup line, and we added a new skincare range of Elixir Prior
Return on equity decreased 3.8 percentage points to 5.4
aimed at seniors. We also worked to strengthen cultivation of
percent from 9.2 percent for the previous fiscal year because of
existing brands/lines in ways such as updating promotional
lower net income.
campaigns for each of our lines.
For our relationship building brands/lines, despite growing
emphasis on low-priced products, we focused on the highpriced market, which has consistently performed well.
During the year, we launched Synergique, a top-end line
within the prestige Clé de Peau Beauté brand. We also
unveiled a brand-new line, called Revital Granas, targeting
“new luxury” women in their 30s or older.
[Professional Division]
Sales in the professional division, which manufactures and
markets products and services for hair and beauty salons,
decreased 2.3 percent compared with the previous fiscal year
due to the rapid deterioration of the economy.
In the beauty salon services sector, we opened a Salon & Spa
In the cosmetics specialty store channel, we continued to
increase the number of contracts for Shiseido Chain Stores.
Concurrently, we worked to expand sales at existing stores
in Ginza, and sales increased slightly year on year as we
through initiatives such as strengthening the China-only
worked to create new sales outlets. In hair and beauty salon
URARA brand of products sold exclusively in this channel.
product sales, we shifted to a new marketing style that
Moreover, we worked to enhance customer satisfaction
emphasizes the quality of our merchandising proposals, and
through the activities of a customer center in China, and pro-
strengthened the human resources of our sales department.
moted cultivation of human resources through means including
While sales in the beauty salon services sector increased,
the operation of a training center in China.
overall professional division sales were down year on year
Outside of China, in Asia, Europe and North America,
due to a substantial decrease in hair and beauty product sales.
Shiseido continued strengthening cultivation of the global
[Healthcare Division]
brand
and expanded customer support through
Sales in the healthcare division continued to rise, increasing 3.1
ongoing marketing activities with a focus on anti-aging and
percent compared with the previous fiscal year. In the market for
skin-brightening products, which are areas of strength for the
beauty supplements, where strong growth is expected, we
Shiseido Group. In addition, under our “City Concept” we
concentrated resources on expanding sales of the Collagen
consider the world’s major markets as city-based rather than
line of beauty supplements for enhanced skin regeneration,
country-based units, and we concentrated allocation of
which drove sales growth for the healthcare division. In addition,
resources in target cities. We also made progress in establishing
we attracted attention with the launch of Shiseido Chomeiso, a
business bases in emerging markets, including the com-
supplement using a herb from Yonaguni Island (Peucedanum
mencement of full-scale operations at our Russian sales sub-
japonicum, Umbelliferae).
sidiary Shiseido (RUS), LLC.
Furthermore, in Europe and North America, where fra-
Operating income for domestic cosmetics decreased 23.5
($335,884 thousand), and the segment operating margin was 7.9
percent. The primary factor was a substantial drop in gross
profit due to the decrease in sales. Other factors included an
increase in the reserve for sales returns because of an
increase in retail inventories due to the worsening market environment, as well as an increase in pension expenses.
Overseas Cosmetics
Sales in the overseas cosmetics segment increased 7.3 percent
compared with the previous fiscal year on a local currency
basis, but decreased 1.1 percent on a yen basis to ¥260,916 million ($2,655,363 thousand). Despite economic contraction in
many regions, Shiseido maintained a high rate of sales growth in
China, and also increased sales in Europe and North America.
[Cosmetics Division]
Division sales increased 8.5 percent on a local currency basis
and 0.4 percent on a yen basis compared with the previous fiscal
year. In China, our key overseas market, the number of people
using cosmetics continued to grow. Shiseido continued to
grances occupy a key position in the cosmetics market,
Beauté Prestige International S.A. (BPI) added a new line, MA
DAME, to its Jean Paul GAULTIER line of designer fragrances, and worked to strengthen cultivation of the ISSEY
MIYAKE and NARCISO RODRIGUEZ lines and Shiseido Group
fragrance products.
Moreover, we gained new customers in our travel retail
business centered on duty-free shops in airports by increasing
the number of shops in hub airports that handle our products and
expanding the number of products specifically for duty-free
shops and in-flight sales.
[Professional Division]
Division sales decreased 0.3 percent on a local currency
basis and 10.2 percent on a yen basis compared with the previous fiscal year. Zotos International, Inc., which manufactures and sells products for salons globally with a focus on
North America, increased sales by working aggressively to
develop the market through means such as launching the
JOICO haircare line in Hong Kong. However, the worsening
market environment in Europe impacted the DECLÉOR and
CARITA esthetic beauty and spa treatment brands.
aggressively implement its channel-specific marketing strategy,
with a focus on dedicated brands for the Chinese market.
Operating income of the overseas cosmetics segment
In the department store channel, Shiseido innovated AUPRES, a
decreased 16.1 percent to ¥14,994 million ($152,595 thousand), and
China-only brand for the department store channel that has sup-
the operating margin was 5.7 percent. While Shiseido increased
ported growth in China since its launch, for the first time in 14
sales in highly profitable regions and businesses and managed
years. Moreover, initiatives such as sales promotion renewal
expenses efficiently, segment operating income decreased year on
and department store sales counter remodeling supported
year mainly because of the appreciation of the yen.
strong sales growth in this intensely competitive channel.
Others
Operating income in Japan decreased 42.0 percent com-
Sales in other businesses decreased 18.1 percent com-
pared with the previous fiscal year to ¥18,433 million
pared with the previous fiscal year to ¥17,002 million
($187,594 thousand). The operating margin was 4.0 percent. The
($173,031 thousand). The decrease was primarily the result of
primary factor was a substantial drop in gross profit due to the
the divestiture of the lease company Shiseido Lease Co., Ltd.
decrease in sales. Other factors included an increase in the
during the previous fiscal year and The Ginza Co., Ltd.’s with-
reserve for sales returns because of an increase in retail
drawal from its boutique business.
inventories due to the worsening market environment, as well as
[Frontier Sciences Division]
an increase in pension expenses.
The frontier sciences division handles items such as medical-use
drugs, cosmetics raw materials, chromatography, and cosmetic
Americas
dermatology treatments. Sales rose as sales in Japan and overseas
Sales in the Americas increased 1.8 percent compared with
continued to increase for bio-hyaluronic acid, a raw material
the previous fiscal year on a local currency basis. Sales
used in cosmetics and pharmaceuticals.
decreased 10.4 percent on a yen basis to ¥50,657 million
($515,540 thousand) due to appreciation of the yen versus the
Operating income from other businesses decreased 25.8
($15,073 thousand) and accounted for 5.2 percent of segment
sales. The divestiture of Shiseido Lease Co., Ltd. and the withdrawal from the boutique business were primary factors in the
decrease.
U.S. dollar.
In the cosmetics division, Shiseido secured earnings growth
through new product launches for global brand
skin
care and BPI fragrances amid a recessionary environment
in the United States. Sales in Canada and elsewhere were
also solid.
In the professional division, sales of Zotos International, Inc.
Net Sales by Business Segment
were firm.
(Billions of yen)
750
Operating income in the Americas decreased 18.0 percent
compared with the previous fiscal year to ¥3,276 million
500
($33,339 thousand), due to slowing sales growth and the
impact of the appreciation of the yen. The operating margin
250
was 5.6 percent.
0
2005
2006
2007
2008
2009
Domestic Cosmetics
Overseas Cosmetics
Others
445.3 453.4 447.6 439.0 412.4
174.5 196.3 224.3 263.7 260.9
20.0 21.3 22.7 20.8 17.0
Total
639.8 671.0 694.6 723.5 690.3
Europe
Sales in Europe increased 2.1 percent compared with the
previous fiscal year on a local currency basis. Sales decreased 3.6
percent on a yen basis to ¥100,034 million ($1,018,055 thousand)
due to appreciation of the yen versus the euro.
Operating Income by Business Segment
(Billions of yen)
Domestic Cosmetics
Overseas Cosmetics
Others
2005
2006
In the cosmetics division, worsening market conditions
2007
2008
2009
25.5 34.3 36.9 43.1 33.0
0.7 2.8 10.4 17.9 15.0
(0.1) 1.0 2.2 2.0 1.5
impacted subsidiaries in Italy and other countries. Sales of BPI
fragrances such as the newly launched MA DAME in the Jean
Paul GAULTIER line increased.
In the professional division, sales of the esthetic beauty and
Operating Profitability by Business Segment
（%）
2005
2006
2007
2008
2009
Domestic Cosmetics
Overseas Cosmetics
Others
5.7
0.4
(0.2)
7.5
1.4
2.4
8.1
4.6
4.9
9.7
6.7
5.0
7.9
5.7
5.2
Note: Operating profitability is calculated against sales for the segment,
including intersegment sales.
spa treatment brands DECLÉOR and CARITA were flat.
Operating income in Europe decreased 8.1 percent compared with the previous fiscal year to ¥8,258 million ($84,043
thousand), mainly because of slowing sales growth and the
appreciation of the yen. The operating margin was 7.8 percent.
Asia/Oceania
Review by Geographic Segment
Japan
Sales in Japan decreased 6.7 percent compared with the previous fiscal year to ¥429,963 million ($4,375,768 thousand) due to
Sales in Asia/Oceania increased 15.9 percent on a local currency
basis. Sales increased 7.0 percent on a yen basis to ¥109,602 million ($1,115,428 thousand) due to the overall appreciation of the
yen versus Asian currencies. Sales grew steadily in the cosmetics
division, centered on the key market of China.
a decline in sales of the core domestic cosmetics business.
In the cosmetics division, high growth continued in China,
securing sufficient capital for operating activities and maintaining
including Hong Kong. Sales were also solid in countries other
sufficient liquidity and a sound financial position. We fund working
than China, particularly Korea and Thailand. Sales growth was
capital, capital expenditures, and investments and loans needed for
also strong in the travel retail business.
sustainable growth by supplementing cash on hand and operating
Operating income in Asia/Oceania increased 5.7 percent
cash flow with bank borrowings and bond issues.
compared with the previous fiscal year to ¥16,779 million
As of March 31, 2009, Shiseido maintained a sufficient level of
($170,761 thousand), as higher gross profit resulting from
liquidity. The use of diverse funding methods provided a high
sales growth compensated for an increase in strategic mar-
level of financial flexibility. One of our targets for short-term liq-
keting expenditures and higher personnel expenses in China. The
uidity is to maintain cash on hand at a level of approximately 1.5
operating margin was 15.3 percent.
months of consolidated net sales. As of March 31, 2009, cash
and time deposits together with short-term investments in
Net Sales by Geographic Segment
(Billions of yen)
securities totaled ¥104,755 million ($1,066,100 thousand). It
2005
2006
2007
2008
2009
Japan
Americas
Europe
Asia/Oceania
467.0
43.1
79.8
49.9
475.7
46.0
85.6
63.7
471.2
51.7
88.4
83.3
460.7
56.6
103.8
102.4
430.0
50.7
100.0
109.6
Outside Japan
172.8 195.3 223.4 262.8 260.3
represented 1.8 months of consolidated net sales.
As of March 31, 2009, interest-bearing debt totaled ¥62,053
million ($631,519 thousand). This figure includes lease liabilities
in the fiscal year ended March 31, 2009. Shiseido has diversified
funding methods. These include an unused shelf registration in
Japan for ¥70.0 billion of straight bonds. Moreover, Shiseido Co.,
Operating Income by Geographic Segment
(Billions of yen)
2005
2006
Ltd. and two subsidiaries in the United States and Europe
2007
2008
2009
Japan
Americas
Europe
Asia/Oceania
12.5 24.0
(0.2) 0.9
5.0 5.4
6.5 7.7
27.3 31.8 18.4
2.8 4.0 3.3
6.3 9.0 8.3
11.2 15.9 16.8
Outside Japan
11.3 14.0
20.3 28.9 28.4
2005
2006
2.6 4.8
(0.3) 1.7
6.1 6.0
12.9 12.0
Japan
Americas
Europe
Asia/Oceania
6.2
Outside Japan
6.7
2007
the United States has also established an unused commercial
paper program totaling $90 million.
Shiseido recognizes that it needs to maintain a certain level of
2008
2009
5.5 6.5 4.0
4.7 6.1 5.6
6.8 8.3 7.8
13.4 15.5 15.3
8.6 10.4 10.3
Note: Operating profitability is calculated against sales for the segment,
including intersegment sales.
Overseas Sales
(by Destination)
commitments totaling $240 million. A financial subsidiary in
Credit Ratings
Operating Profitability by Geographic Segment
（%）
have established a syndicated loan program with unused
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.
Moody’s
(Billions of yen)
300
Long-term
Aa3 (Outlook: Stable)
Short-term P-1
200
S&P
A+ (Outlook: Stable)
A-1
(As of May 31, 2009)
100
On July 15, 2008, Moody’s upgraded Shiseido’s long-term
credit rating to Aa3 from A1. The rating action reflected
0
2005
Americas
Europe
Asia/Oceania
Total
2006
2007
2008
2009
Moody’s view that Shiseido’s earnings and cash flow should
44.3 47.5 54.0 59.3 54.9
74.9 80.4 79.3 92.8 88.5
56.5 69.3 91.5 112.1 118.6
improve and stabilize at a level higher than ever — supported by
175.7 197.2 224.8 264.3 262.0
an ongoing business strategy that focuses on strong cost initiatives, effective brand management, and steady expansion
of overseas operations. The rating action also incorporated
Shiseido’s solid financial fundamentals, based on prudent
Liquidity and Capital Resources
financial policy, which should support any strategic action
Financing and Liquidity Management
designed to expand growth as well as improve profitability.
Shiseido seeks to generate stable operating cash flow and
ensure a wide range of funding methods, with the aims of
Assets, Liabilities and Net Assets
($197,161 thousand). However, the appreciation of the yen
[Assets]
resulted in negative foreign currency translation adjustments
As of March 31, 2009, total assets decreased 10.3 percent
totaling ¥31,363 million ($319,184 thousand), and unrealized
compared with the previous fiscal year-end to ¥606,569 million
gains on available-for-sale securities, net of taxes decreased
($6,173,102 thousand).
¥4,921 million ($50,082 thousand) from a year earlier. Cash divi-
Current assets decreased 11.4 percent compared with the pre-
dend from retained earnings totaled ¥16,982 million ($172,827
vious fiscal year-end to ¥316,996 million ($3,226,094 thou-
thousand). Finally, the acquisition of treasury stock totaling
sand). Factors included a decrease in cash and time deposits and
¥6,546 million ($66,619 thousand) further reduced net assets.
reduction in the yen value of current assets denominated in
As a result, as of March 31, 2009 net assets per share
foreign currencies as a result of the yen’s appreciation versus
decreased ¥106.3 compared with the previous fiscal year-end to
major currencies as of the balance sheet date.
¥839.9 ($8.55). The equity ratio decreased 1.0 percentage
Investments and other assets decreased 5.6 percent com-
point to 55.6 percent from 56.6 percent a year earlier.
pared with the previous fiscal year-end to ¥115,934 million
($1,179,870 thousand), mainly due to lower market prices for
Total Assets/Operating ROA
（%）
10
(Billions of yen)
800
investments in securities.
Property, plant and equipment, net of accumulated deprecia-
600
7.5
400
5
200
2.5
tion, decreased 4.2 percent compared with the previous fiscal
year-end to ¥138,233 million ($1,406,808 thousand). This
decrease resulted despite the inclusion of lease assets as a
result of the adoption of a new accounting standard in Japan for
0
0
lease transactions, because of normal depreciation and reduction
in the yen value of property, plant and equipment denominated
in foreign currencies as a result of the yen’s appreciation as of
the balance sheet date.
Intangible assets decreased 30.5 percent compared with
2005
2006
2007
2008
2009
701.1 671.8 739.8 675.9 606.6
4.3 5.9 7.4 9.4 8.2
Total Assets
Operating ROA
Net Assets/
Interest-bearing Debt
the previous fiscal year-end to ¥35,406 million ($360,330
thousand). Factors included the retroactive amortization of
(Billions of yen)
400
300
goodwill at foreign subsidiaries as a result of the adoption a new
200
accounting standard in Japan and the recognition of impairment of goodwill and trademark rights associated with the
100
DECLÉOR brand.
0
2005
[Liabilities]
Total liabilities as of March 31, 2009 decreased 7.8 percent
Net Assets
Interest-bearing Debt
2006
2007
2008
2009
370.0 387.6 403.8 399.7 352.0
94.3 82.3 127.8 63.2 62.1
($2,591,268 thousand). Interest-bearing debt decreased 1.8
percent compared with the previous fiscal year-end to ¥62,053
Equity Ratio/
Debt-Equity Ratio
million ($631,519 thousand). It includes short- and long-term
（%）
100
(Times)
1.00
75
0.75
50
0.50
25
0.25
debt and, beginning with the fiscal year ended March 31,
2009, lease liabilities. The redemption of ¥6,849 million in
medium-term notes issued by a U.S. subsidiary more than offset
the inclusion of lease liabilities on the balance sheets. The current
0
portion of long-term debt includes ¥20.0 billion in 1.12% unsecured yen bonds due in March 2010.
0
2005
Equity Ratio (Left scale)
Debt-Equity Ratio (Right scale)
2006
2007
2008
2009
51.2 55.7 52.5 56.6 55.6
0.26 0.22 0.32 0.16 0.18
[Net Assets]
Total net assets as of March 31, 2009 decreased 12.0 percent
($3,581,834 thousand). Net income totaled ¥19,373 million
Cash Flows
Cash Flows from Financing Activities
Cash and cash equivalents (net cash) as of March 31, 2009
Net cash used in financing activities totaled ¥32,283 million
totaled ¥91,858 million ($934,846 thousand), a decrease of
($328,547 thousand). Primary uses of cash included ¥16,972 mil-
¥28,536 million compared with the previous fiscal year-end.
lion ($172,726 thousand) for cash dividend paid and the use of
¥6,546 million ($66,619 thousand) for the acquisition of treasury
Cash Flow Summary
(Billions of yen)
stock.
2007
2008
2009
Cash flows from operating activities
69.4
75.3
42.8
Cash flows from investing activities
(18.5)
(5.8)
(28.2)
global customers’ beauty and health, Shiseido conducts R&D
1.8
(95.9)
(32.3)
activities in five locations worldwide, with two research centers in
145.3
120.4
91.9
Cash flows from financing activities
Cash and cash equivalents at end of year
Research and Development
To develop superior products and offer services that support
Yokohama, Kanagawa Prefecture, Japan, the Beauty Solution
Development Center in Shinagawa Ward, Tokyo, Japan, and
research facilities in the Americas (the United States), Europe
(France), and Asia (China and Thailand). During the fiscal year
Cash Flows from Operating Activities
Net cash provided by operating activities totaled ¥42,768
ended March 31, 2009, awards such as the Grand Prize in the Oral
million ($435,253 thousand). Income before income taxes of
Presentation category at the 2008 Congress in Barcelona of the
¥38,486 million ($391,675 thousand) and depreciation of
International Federation of the Societies of Cosmetic Chemists
¥28,289 million ($287,900 thousand) contributed to cash provided
(IFSCC), the world’s most authoritative congress for cosmetics
by operations. Uses of cash included income taxes paid of
science and technology, demonstrated the regard the international
¥17,542 million ($178,527 thousand) and increase in inventories
community holds for Shiseido technology.
In the fiscal year under review, R&D expenses for the
of ¥10,340 million ($105,231 thousand).
Shiseido Group totaled ¥15,243 million ($155,129 thousand),
Cash Flows from Operating Activities/Acquisition of Fixed Assets
(Property, Plant and Equipment + Intangible Assets + Long-term Prepaid Expenses)
(Billions of yen)
80
and represented 2.2 percent of net sales. R&D objectives, primary
initiatives, results and expenses by business segment were as follows. R&D expenses include basic research costs and other
expenses totaling ¥5,207 million ($52,992 thousand) that cannot
60
be allocated to specific businesses.
40
Domestic Cosmetics
20
With the goal of contributing to beautiful skin and beautiful
lifestyles, Shiseido conducts research in basic dermatology
0
2005
2006
2007
2008
2009
Cash Flows from Operating Activities 52.4 21.8 69.4 75.3 42.8
Acquisition of Fixed Assets
30.0 27.5 28.6 27.7 28.2
and interface science. The broad range of Shiseido’s R&D
activities includes developing cosmetic ingredients, developing and evaluating products, and developing beauty methods.
For the skin care line Revital Granas, Shiseido conducted
Cash Flows from Investing Activities
detailed studies on more than 600 varieties of ingredients
Net cash used in investing activities totaled ¥28,158 million
derived from plants over eight years to develop such new
($286,566 thousand). Acquisition of fixed assets, calculated as the
Shiseido original ingredients as winged bean seed extract.
sum of acquisition of property, plant and equipment, intangible
Shiseido then compounded selected ingredients using cut-
assets excluding goodwill, and long-term prepaid expenses,
ting-edge technology to develop a new anti-aging skin care
totaled ¥28,223 million ($287,228 thousand), which was about the
product that makes skin firm and beautiful.
same level as depreciation. Shiseido mainly used capital expen-
On the other hand, after many years of research into skin
ditures for the restoration and renewal of existing facilities in
blemishes, Shiseido discovered that a large amount of
Japan and overseas, and to construct facilities such as a new fac-
melanin takes away the regenerative power of skin, and the
tory in Vietnam. Net cash used in investing activities increased
melanin that accumulates on the back of skin that becomes
compared to the previous fiscal year in part because of the
blemished has unique functions. Shiseido put this discovery
absence of proceeds from sales of property, plant and equip-
to use developing HAKU Melanofocus EX, which encourages
ment generated through the sale of logistics and product center
smooth melanin emission to support the regenerative power of
facilities in the fiscal year ended March 31, 2008.
skin for smooth, blemish-free skin that is clear and white.
In addition, Shiseido has developed a totally new spherical
R&D Expenses/Ratio of R&D Expenses to Net Sales
(Billions of yen)
20
pearlizing agent with a highly light-diffusing effect that diminishes
（%）
4
the appearance of lip wrinkles, and is using it in lipstick in the
Maquillage makeup line.
Furthermore, Shiseido conducted joint research with a fiber
15
3
10
2
5
1
manufacturer to develop a new compound using a sustained
motion fiber that employs instant adhesion technology, and
applied it to develop UNO Power Motion, a hair styling agent that
0
combines a light finish with powerful, long-lasting styling.
In the health care business, Shiseido discovered an amura
0
2005
2006
2007
2008
2009
R&D Expenses
16.8 16.5 16.1 14.6 15.2
Ratio of R&D Expenses to Net Sales 2.6 2.5 2.3 2.0 2.2
fruit extract that maintains elastic collagen, and is using it in the
Collagen brand of beauty supplements that help bring out beauty.
R&D expenses for the fiscal year ended March 31, 2009 in the
thousand).
Outlook for the Fiscal Year Ending
March 31, 2010
Overseas Cosmetics
remain challenging, both domestically and overseas, because of
domestic cosmetics segment totaled ¥7,817 million ($79,554
Market conditions surrounding the Shiseido Group will
Aiming for “high quality, high image and high service” in
the ongoing global recession. Nonetheless, the Group will
overseas cosmetics brands, Shiseido develops products that
work in concert to implement its Three-Year Plan for the period
fully capitalize on high-quality, high-performance ingredients.
from the fiscal year ended March 31, 2009 through the fiscal year
During the fiscal year ended March 31, 2009, Shiseido
developed SHISEIDO Perfect Rouge that delivers true, clear
ending March 31, 2011 aimed at building a foundation for sustained medium- and long-term growth.
color. Shiseido employed coating technology to eliminate the dif-
In the fiscal year ending March 31, 2010, Shiseido expects
ference in the color makeup appears to have and the color it has
market conditions in Japan and overseas to remain as difficult as
when applied and combined it with Micromatic Color Pigment,
they were in the year under review. Anticipating recovery
which keeps color from becoming dull over time. The com-
from the fiscal year ending March 31, 2011, Shiseido will
pound uses Trans Red pigment, which functions to create
focus on strengthening its basic foundation so that it can
clear, beautiful red by transforming the emission of light from col-
return to growth as quickly as possible. Rather than change
ors other than red to red.
the vision, strategies, and implementation agenda of the
R&D expenses for the fiscal year ended March 31, 2009 in the
Three-Year Plan, Shiseido will work to raise its market com-
overseas cosmetics segment totaled ¥2,017 million ($20,527
petitiveness and profitability under its stepped-up distinction
thousand).
and concentration strategy.
Shiseido expects net sales to fall below the level of the fiscal year
Others
ended March 31, 2009 due to contraction in the domestic market
The frontier sciences division conducts R&D in areas including
and the effect of the yen’s appreciation on overseas sales. In
medical-use drugs, cosmetics raw materials, chromatography,
contrast, Shiseido expects operating income to remain at about the
and cosmetic dermatology treatments.
same level as the fiscal year ended March 31, 2009 because
During the fiscal year ended March 31, 2009, Shiseido devel-
efforts to enhance cost efficiency and reduce sales costs and
oped a new surface preparation agent that has phosphoryl-
business expenses should compensate for a further increase in
choline
Moreover,
pension-related costs. Shiseido also forecasts that net income
Shiseido integrated this finishing agent with powder surface
with
extremely
hydrophilic
behavior.
will increase in the fiscal year ending March 31, 2010 because of
preparation technology used in cosmetics technology to develop
decreases in other expenses and income taxes.
a new column packing material for the columns used in high-speed
For the year ending March 31, 2010, Shiseido forecasts that
liquid chromatography for analyzing ingredients in areas including
consolidated net sales will decrease 5.8 percent year on year to
cosmetics, pharmaceuticals, foods and clinical testing. As a
¥650 billion, operating income will increase 0.2 percent to ¥50
result, it can detect hydrophilic substances that conventional
billion, and net income will increase 60.0 percent to ¥31 billion.
column packing materials had difficulty measuring, which raises
The outlook by business segment follows below.
analytical accuracy while shortening analysis time.
R&D expenses for the fiscal year ended March 31, 2009 in
other businesses totaled ¥202 million ($2,056 thousand).
Domestic Cosmetics
In the fiscal year ending March 31, 2010, Shiseido is targeting
a year-on-year sales increase in the healthcare division.
However, Shiseido expects sales in the cosmetics division to
For other businesses, Shiseido forecasts decreases in both
decline because of continued challenging market conditions,
sales and operating income, due mainly to the withdrawal of The
and sales in the professional division to remain relatively
Ginza Co., Ltd. from the boutique business at the end of
unchanged.
March 2009.
In the cosmetics division, Shiseido will concentrate on the two
pillars of mega lines and relationship building brands/lines
Overseas Sales
with meticulous efforts to match brands/lines being nurtured and
Shiseido expects China to drive continued sales growth in
sales channels while honing the focus on core fields. At the
Asia-Oceania. Due to economic contraction, however, sales in
same time, Shiseido will reinforce its fundamental sales capa-
Europe and North America will be sluggish. Shiseido expects
bilities and upgrade its product information and sales-counter
total overseas sales to increase 5 percent year on year on a local
activities. In the professional division, Shiseido expects ongoing
currency basis, but to decrease on a yen basis due to the
sales reforms to maintain sales at the same level as in the fiscal
yen’s appreciation.
year ended March 31, 2009. In the healthcare division,
Shiseido will work to further increase sales through various
initiatives, including a focused effort to nurture Collagen.
Shiseido expects lower sales in the cosmetics division to
result in a decrease in overall sales in the Domestic
Cosmetics business segment. Although the decrease in sales
will reduce the operating margin, Shiseido will manage
expenses efficiently and rigorously reassess business expenses
under its stepped-up distinction and concentration strategy.
Shiseido therefore expects segment operating income to
The above outlook is based on the assumption that domestic
real GDP will contract approximately 4 to 5 percent in the fiscal
year. Based on Ministry of Economy, Trade and Industry statistics for cosmetics shipments, Shiseido estimates that
demand for cosmetics products will decrease by 2 to 3 percent.
Our forecasts are based on exchange rates of ¥90 per U.S.
dollar, ¥120 per euro and ¥13.5 per Chinese yuan.
Income Distribution Policy
The total shareholder return policy of Shiseido Co., Ltd. aims to
increase year on year.
maximize returns to shareholders through direct means, in
addition to generating medium- and long-term share price
Overseas Cosmetics
Shiseido expects growth in China despite the global recession,
and will therefore reinforce its makeup lines for department
stores while expanding its network of cosmetic specialty
stores and adopting measures to boost sales at existing
stores. Outside of China, Shiseido will seek to maintain
growth by innovating the global brand
, advancing its
“City Concept” strategy, and cultivating new markets. Due to the
impact of economic recession, Shiseido expects the rate of
overall growth in overseas sales to slow down, but forecasts that
overseas sales will increase year on year on a local currency basis
due to the initiatives discussed above. However, the sharp
appreciation of the yen forecast for the fiscal year ending
March 31, 2010 will cause overseas sales to decrease year on
year on a yen basis. Shiseido expects operating income from the
Overseas Cosmetics business segment to decrease on a
yen basis because of continued future-oriented expenditures in
tandem with slower sales growth and the negative impact of the
yen’s significant appreciation.
gains. To this end, in allocating internal capital resources, we prioritize (a) strategic investments linked to renewed growth, and (b)
stable dividends and flexible implementation of share buybacks. We have established a total return ratio, which represents
the amount of profits returned to shareholders — the sum of dividends paid and share buybacks — as a proportion of consolidated
net income. We hope to achieve a 60 percent total return ratio in
the medium term. Going forward, Shiseido will emphasize dividends while flexibly buying back and retiring shares.
For the fiscal year ended March 31, 2009, Shiseido Co., Ltd.
increased the cash dividend per share by ¥16 to ¥50 ($0.51), consisting of an interim cash dividend of ¥25 ($0.25) per share and a
year-end cash dividend of ¥25 ($0.25) per share. In addition,
based on a resolution of the Board of Directors on October 30,
2008, Shiseido bought back 2,211 thousand shares at a cost of
¥4,488 million ($45,675 thousand), which raised the total
return ratio to 127.2 percent from 108.8 percent for the previous
fiscal year. For the fiscal year ending March 31, 2010, Shiseido
plans to pay an interim and year-end dividend of ¥25 per share
Others
Going forward, Shiseido will continue working to expand its
presence in the frontier sciences division, which includes
medical-use drugs, cosmetics raw materials, chromatography,
and cosmetic dermatology treatment.
each, which will maintain the annual cash dividend at ¥50 per
share.
Business and Other Risks
The various risks that could potentially affect the business performance and financial position of Shiseido are summarized
below. We feel that these risks could have a major impact on
investors’ decisions. Items that deal with future events are
mergers and acquisitions and expanding market share by exe-
based on our judgment as of June 24, 2009, the date of issue for
cuting marketing activities to raise consumer awareness of
this annual report. Please note that the potential risks are not lim-
their brands. Consequently, inability to respond to this com-
ited to those listed below.
petitive environment as effectively as global competitors
could negatively affect Shiseido’s business performance and
1. Decrease in Value of the
Corporate Brand
The
corporate brand is shared by all Group com-
financial position.
5. Overseas Business Activities
panies in Shiseido’s domestic and overseas business activi-
Shiseido conducts business in 70 countries and regions
ties. We will continue working to enhance the value of this
overseas, and overseas sales account for a growing percentage
brand, but a decline in the brand’s value from an unforeseen
of consolidated net sales each year, totaling 38.0 percent in
event could negatively affect Shiseido’s business perform-
the fiscal year under review. In the course of conducting over-
ance and financial position.
seas business, Shiseido’s business performance and financial
position could negatively be affected by various factors.
2. Customer Services
These include the occurrence of sudden and unpredictable
Shiseido places high priority on its relationships with cus-
economic, political and social crises; terrorism, war and civil
tomers. Chapter 1 of The Shiseido Code (Corporate Ethics
war; economic and civil upheaval resulting from the spread of
and Behavior Standards) clearly states that we shall act in a
contagious diseases such as new strains of influenza; and
manner that earns the satisfaction and trust of customers,
severe or abnormal weather.
and we will continue working to ensure that all employees are
aware of these standards. However, an unforeseen event
6. Market Risk
could cause loss of such satisfaction and trust, leading to a
[Raw material prices]
decline in the value of Shiseido Group brands. Shiseido’s
International market conditions affect the price of raw materials
business performance and financial position could negatively be
used in Shiseido products. Factors affecting market conditions
affected as a result.
include geopolitical risk, the impact on supply and demand from
increasing demand in developing countries and speculative capi-
3. Strategic Investment Activities
tal flows, weather abnormalities and changes in exchange
When making decisions about investments in strategic mar-
rates. Shiseido constantly works to limit the impact of rising
kets, such as China and Russia, and strategic investments in
raw material prices by reducing cost of sales and other means.
mergers and acquisitions, new businesses and new markets,
However, changes in market conditions and prices that exceed
Shiseido endeavors to collect sufficient information and
projections could negatively affect Shiseido’s business per-
undertake due diligence prior to making rational judgments.
formance and financial position.
Due to various unforeseeable factors that may cause the
[Exchange rates]
operating environment to deteriorate, however, we may not
Export, import and other transactions denominated in foreign
achieve the results originally anticipated. This could negatively
currencies expose Shiseido to foreign exchange rate risk.
affect Shiseido’s business performance and financial position.
Although we hedge foreign exchange rate risk through means
such as limiting export and import transactions by establishing pro-
4. The Competitive Environment of the
Cosmetics Industry
duction bases to serve local markets, we are unable to completely eliminate risk. Moreover, the financial statements of
Shiseido operates in the cosmetics industry, in which com-
consolidated subsidiaries and equity affiliates domiciled over-
petition is intensifying on a global scale. Zero sum competi-
seas are denominated in local currencies that are translated into
tion for share among Japanese cosmetic companies in the
yen upon inclusion in the consolidated financial statements.
mature domestic market is intensifying because of factors
This has the potential to exert a negative impact on operating per-
including the expanding influence of global U.S. and European
formance if the yen appreciates versus foreign currencies when
corporations in the prestige market, and the entry of new
revenues exceed expenses. Moreover, the Shiseido Group’s
competitors from other industries. In addition, in overseas
investments in overseas subsidiaries and equity affiliates are
markets such as China, which Shiseido has positioned as a
subject to foreign currency translation adjustments that reduce
pillar of its growth strategy, and Russia, the competitive envi-
shareholders’ equity if the yen strengthens. Foreign exchange fluc-
ronment is becoming increasingly challenging as well-capitalized
tuations that exceed assumptions could negatively affect
U.S. and European corporations are aggressively conducting
Shiseido’s business performance and financial position.
11. Information Security Risk
[Stock prices]
As of March 31, 2009, Shiseido held shares and is therefore
Shiseido takes various measures aimed at protecting its
exposed to the risk of changes in share price, which can
information assets, which include customers’ personal infor-
increase or decrease unrealized gains or losses and expose
mation and industrial secrets. For example, in April 2005, the
Shiseido to the risk of impairment losses. In addition, a portion
Personal Information Protection Law was fully enacted in
of the pension plan assets of Shiseido’s retirement benefit
Japan. In anticipation of this, Shiseido Co., Ltd. in March 2004
plan is invested in shares with a market price. Lower share
obtained Privacy Mark certification, a Japanese Industrial
prices could therefore reduce pension plan assets and negatively
Standard that recognizes the appropriateness of a company’s
affect operating performance by increasing retirement benefit
systems for protecting personal information. However,
expenses. Unforeseen situations such as this could negatively
unforeseeable events, such as leakage of information due to
unauthorized access, could negatively affect Shiseido’s business
performance and financial position.
7. Responding Appropriately to Market Needs
Shiseido’s ability to develop and cultivate products and
12. Natural Disasters and Accidents
brands/lines and to conduct marketing activities that respond
Shiseido has developed a business continuation plan covering
appropriately to market needs exerts a significant impact on its sales
issues critical to the continued operation of production bases, dis-
and earnings. To respond to market needs, we continuously
tribution bases, information systems and the head office to
develop appealing new products and brands/lines; reinforce and cul-
minimize loss due to interruption of production, distribution or
tivate new and existing products and brands/lines through marketing
sales resulting from the occurrence of a natural disaster or
activities; and withdraw existing products and brands/lines that
accident, such as a major earthquake. However, a natural disaster
no longer meet market needs. However, by nature these activities
or accident that exceeds the assumptions of this plan and dis-
entail uncertainties that may prevent Shiseido from achieving its
rupts production, distribution or sales could negatively affect
intended results, which could negatively affect Shiseido’s business
performance and financial position.
Fundamental Policy on Control
of the Company
8. Specific Business Partners
Significant changes are taking place in retail and wholesale distribution channels in Shiseido’s core domestic cosmetics busi-
At its Board of Directors meeting held on April 27, 2006,
ness. Failure to respond effectively to these changes could
the Company established a basic policy regarding control
negatively
over the Company (the “Basic Policy”) and a plan for counter-
affect
Shiseido’s
business
performance
and
financial position.
measures against large-scale acquisitions of its shares
(known as an advance warning rights plan; hereinafter, the
9. Regulatory Risk
“Plan”).
Shiseido is subject to a range of domestic and overseas legal
The 106th Ordinary General Meeting of Shareholders
provisions in the course of conducting its business. These
held on June 29, 2006 resolved to implement the Plan, with
include pharmaceuticals laws, as well as quality-related stan-
Article 15, Resolution 3 of the Articles of Incorporation serving
dards, environmental standards, accounting standards, and tax reg-
as the basis for introducing the Plan, and Resolution 7 stipu-
ulations. We aspire to be completely ethical based on legal
lating its contents.
compliance and corporate social responsibility. However, future
However, the Plan was scheduled to end at the close of
regulatory changes or the establishment of unanticipated new reg-
the 108th Ordinary General Meeting of Shareholders held
ulations may limit Shiseido’s activities, which could negatively
on June 25, 2008. Therefore, on April 30, 2008 the Board of
Directors resolved to revoke the Basic Policy and discontinue
the Plan from the close of the 108th Ordinary General
10. Material Litigation
Meeting of Shareholders because steady implementation of
In the fiscal year ended March 31, 2009, Shiseido was not
the Three-Year Plan from the fiscal year ended March 31,
involved in material litigation other than the litigation discussed
2009 would increase competitiveness in global markets and
in Notes to the Consolidated Financial Statements, “9.
sustained growth potential, maximize corporate value and
Contingent Liabilities.” In the future, unfavorable judgments
secure and increase profits shared with shareholders.
resulting from material litigation could negatively affect
Consequently, in accordance with Resolution 2, the 108th
Ordinary General Meeting of Shareholders resolved to eliminate
the Article of Incorporation that served as the basis for introducing the Plan.
Investments in Securities
Shiseido recognizes impairment for securities reported as
available-for-sale securities for which fair value or market price has
fallen substantially below acquisition cost. Securities deemed
recoverable are excluded. Securities with a fair value that is
Significant Accounting Estimates
more than 50 percent below acquisition cost as of the balance
Shiseido prepares its consolidated financial statements in
sheet date are deemed unrecoverable. The recoverability of
accordance with accounting principles generally accepted in
securities with a fair value from 30 to 50 percent below acquisi-
Japan. In preparing these financial statements, we select and
tion cost is evaluated according to the performance and financial
apply accounting policies and necessarily make estimates that
condition of the issuing entity. Impairment is recognized for
affect the presentation of reported amounts for assets, liabilities,
securities for which fair value is not available if current net
revenue and expenses. We consider information including his-
asset value per share according to the financial condition of the
torical data in making rational estimates. However, due to the
issuing entity is more than 50 percent below net asset value per
unpredictable nature of these estimates, actual results
share at the time of acquisition. Securities deemed recover-
may vary.
able are excluded. We consider the estimates of recoverability to
Shiseido considers the following significant accounting policies
be appropriate. However, in the future the market price of
to exert a large effect on key decisions regarding the esti-
securities deemed recoverable may decrease and the perform-
mates used in the consolidated financial statements.
ance and financial condition of the issuing entity may deteriorate.
This could require us to recognize impairment losses.
Property, Plant and Equipment
Shiseido reviews fixed assets, primarily property, plant and
Deferred Tax Assets
equipment, for impairment whenever circumstances indicate that
Shiseido has established an allowance for deferred tax
their carrying value may not be recoverable. Business-use
assets deemed unrecoverable using appropriate deferred tax
assets are pooled by business division to estimate future cash
asset accounting. Historical data and future projections are
flow, and the net sales value of idle assets is estimated for
used to evaluate the recoverability of deferred tax assets to
each separate property. Based on these estimates, assets are
sufficiently determine taxable status. We consider these to be
devalued from book value to recoverable value. We consider
appropriate. However, unpredictable factors could cause
information including estimates of future cash flow and recov-
changes in underlying assumptions that could reduce or eliminate
erable value in making rational estimates. However, unpre-
deferred tax assets. This could require us to provide additional
dictable factors could cause changes in the underlying
allowances for deferred tax assets.
assumptions of these estimates. This could change our estimates, decrease future cash flow and recoverable value, and
require us to recognize impairment losses.
Retirement Benefits and Obligations
Shiseido’s domestic retirement benefit plans consist primarily
of corporate pension plans and termination allowance plans.
Goodwill and Other Intangible Assets
Employee benefits and obligations are calculated based on
Shiseido reviews goodwill and other intangible assets for
assumptions including discount rate, employee turnover rate,
impairment. Shiseido employs the opinions of external experts and
mortality rate and projected rate of return on pension plan
other data in estimating fair value and examining impairment.
assets. These assumptions are revised annually. Discount
The discounted cash flow method primarily used to estimate fair
rate and expected return on plan assets are two critical
value relies extensively on estimates and assumptions regarding
assumptions in determining benefits and obligations. The dis-
future cash flow and discount rate. These estimates and
count rate is determined with reference to the market rate for
assumptions may significantly affect measurement and recognition
long-term fixed-rate bonds that carry little or no risk. Expected
of the amount of impairment. We consider the estimates of fair
return on pension plan assets is determined based on an
value used for measuring impairment to be rational. However,
expected weighted-average return for the various types of
unforeseen changes to the underlying assumptions of these
assets held within the plan. We consider these assumptions to
estimates could occur. This could reduce fair value and require us
be appropriate. However, actual results may vary and changes in
to recognize impairment losses.
the underlying assumptions could occur. This could affect
pension costs and obligations.
Consolidated Financial Statements
CONSOLIDATED BALANCE SHEETS
March 31, 2008 and 2009
Thousands of
U.S. dollars (Note 1)
Millions of yen
2008
2009
2009
ASSETS
Current Assets:
¥ 67,413
65,075
¥ 57,411
47,344
$ 584,276
481,824
111,072
44
111,116
102,018
2
102,020
1,038,246
20
1,038,266
Less: allowance for doubtful accounts ··························
(1,495)
109,621
(1,035)
100,985
(10,534)
1,027,732
Inventories (Note 5) ······················································
Deferred tax assets (Note 8) ··········································
Other current assets (Note 13) ·······································
68,486
29,455
17,657
68,330
26,229
16,697
695,400
266,935
169,927
Total current assets ···············································
357,707
316,996
3,226,094
38,377
32,628
332,058
1,404
35,159
10,419
10,944
26,558
1,302
34,360
11,313
12,092
24,239
13,251
349,685
115,133
123,061
246,682
122,861
115,934
1,179,870
Buildings and structures (Note 6) ····································
Machinery and equipment ·············································
Lease assets ·······························································
168,343
135,975
—
304,318
161,018
128,891
10,840
300,749
1,638,693
1,311,734
110,320
3,060,747
Less: accumulated depreciation ······································
(201,624)
102,694
(201,837)
98,912
(2,054,112)
1,006,635
Land ··········································································
Construction in progress ···············································
40,290
1,374
38,185
1,136
388,612
11,561
Total property, plant and equipment ··························
144,358
138,233
1,406,808
Intangible Assets (Note 16):
Goodwill ·····································································
Lease assets ·······························································
Other intangible assets ·················································
22,194
—
28,744
12,198
208
23,000
124,140
2,117
234,073
Total intangible assets················································
50,938
35,406
360,330
Total Assets ········································································
¥ 675,864
¥ 606,569
$ 6,173,102
Cash and time deposits (Notes 3 and 6) ···························
Short-term investments in securities (Notes 3 and 4) ·········
Notes and accounts receivable:
Trade ······································································
Unconsolidated subsidiaries and affiliates ·····················
Investments and Other Assets (Note 16):
Investments in securities (Notes 4 and 6) ·························
Investments in and advances to
unconsolidated subsidiaries and affiliates ···················
Prepaid pension expenses (Note 7) ·································
Long-term prepaid expenses ··········································
Deferred tax assets (Note 8) ··········································
Other investments (Note 6) ···········································
Total investments and other assets ··························
Property, Plant and Equipment, at Cost (Note 16):
The accompanying notes are an integral part of the financial statements.
Thousands of
Millions of yen
2008
LIABILITIES AND NET ASSETS
Current Liabilities:
Short-term debt (Note 6) ···············································
Current portion of long-term debt (Note 6) ························
Notes and accounts payable:
Trade ······································································
Unconsolidated subsidiaries and affiliates ·····················
¥
4,704
33,949
2009
¥
4,528
23,073
2009
$
46,082
234,816
57,294
1,040
58,334
51,862
851
52,713
527,804
8,660
536,464
Other payables (Note 13) ···············································
Accrued income taxes ··················································
Reserve for sales returns···············································
Accrued bonuses for employees·····································
Accrued bonuses for directors ········································
Provision for liabilities and charges ··································
Deferred tax liabilities (Note 8)········································
Other current liabilities ··················································
Total current liabilities ·············································
56,108
9,030
7,945
12,417
110
888
4
22,500
205,989
47,006
5,307
11,062
9,563
120
634
9
20,083
174,098
478,384
54,010
112,579
97,323
1,221
6,452
92
204,386
1,771,809
Long-Term Liabilities:
Long-term debt (Note 6) ················································
Accrued retirement benefits (Note 7)·······························
Allowance for losses on guarantees ································
Deferred tax liabilities (Note 8)········································
Other long-term liabilities···············································
Total long-term liabilities ·········································
Total Liabilities ····················································
24,566
38,302
350
3,797
3,121
70,136
276,125
34,452
39,271
350
3,822
2,625
80,520
254,618
350,621
399,664
3,562
38,897
26,715
819,459
2,591,268
64,507
64,507
656,493
70,258
248,921
(11,197)
70,258
245,545
(16,840)
715,021
2,498,932
(171,382)
372,489
363,470
3,699,064
5,274
(57)
4,764
9,981
154
17,115
399,739
¥675,864
353
—
(26,599)
(26,246)
256
14,471
351,951
¥606,569
3,592
—
(270,700)
(267,108)
2,605
147,273
3,581,834
$6,173,102
CONTINGENT LIABILITIES (Note 9)
NET ASSETS (Note 10)
Shareholders’ Equity:
Common stock ·························································
Authorized: 1,200,000,000 shares as of March 31, 2008 and 2009
Issued: 410,000,000 shares as of March 31, 2008 and 2009
Capital surplus ··························································
Retained earnings ·····················································
Less: treasury stock, at cost ·······································
Treasury stock: 5,794,022 shares as of March 31, 2008 and
8,489,386 shares as of March 31, 2009
Total shareholders’ equity ··············································
Valuation, Translation Adjustments and Others:
Unrealized gains (losses) on available-for-sale securities,
net of taxes (Note 4) ················································
Deferred losses on hedges, net of taxes ·······················
Foreign currency translation adjustments ······················
Total valuation, translation adjustments and others ············
Stock Acquisition Rights (Note 11) ·······························
Minority Interests in Consolidated Subsidiaries ·············
Total Net Assets ···················································
Total Liabilities and Net Assets ··········································
CONSOLIDATED STATEMENTS OF INCOME
Thousands of
Millions of yen
2007
2008
2009
2009
Net Sales (Note 18) ·················································
¥694,594
¥723,485
¥690,256
$7,024,791
Cost of Sales ······················································
Gross profit ···················································
185,533
509,061
186,466
537,019
171,752
518,504
1,747,934
5,276,857
Selling, General and Administrative Expenses (Note 12) ·····
Operating Income (Note 18) ····························
459,056
50,005
473,554
63,465
468,590
49,914
4,768,878
507,979
2,169
(1,881)
86
58
143
(20)
2,977
(1,882)
(1,649)
149
422
3,097
2,821
(1,812)
(275)
58
24
71
28,710
(18,441)
(2,799)
590
244
723
(28)
(96)
(206)
(2,096)
734
(4,598)
(1,102)
—
(154)
(1,151)
(598)
(1,083)
(884)
(6,073)
(6,074)
—
(8,997)
(61,805)
(61,816)
—
—
2,200
(2,239)
47,766
—
2,028
2,060
65,525
(216)
1,138
(11,428)
38,486
(2,198)
11,581
(116,304)
391,675
Income before minority interests··························
13,660
5,515
19,175
28,591
16,507
9,063
25,570
39,955
12,028
3,109
15,137
23,349
122,410
31,640
154,050
237,625
Minority Interests in Net Income of
Consolidated Subsidiaries ·························
(3,298)
(4,495)
(3,976)
(40,464)
Net income ············································
¥ 25,293
¥ 35,460
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 4) ···
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 16 and 18) ·························
Restructuring expenses (Note 17) ························
Additional retirement benefits (Note 7) ···················
Loss on adjustment for changes of accounting
standard for lease transactions ····························
Other, net ························································
Income before income taxes ···························
Income Taxes (Note 8)
Current ····························································
Deferred ··························································
¥ 19,373
Yen
Per Share
Net income — basic ·············································
— fully diluted ·································
Cash dividend ···················································
¥60.9
60.7
32.0
¥86.1
85.7
34.0
¥48.0
48.0
50.0
Weighted Average Number of Shares (thousands) ·····
412,572
407,696
403,240
$ 197,161
$0.49
0.49
0.51
CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS
Thousands
Number
of shares
of common
stock
Balance as of March 31, 2006 ········
Net income for the year ended March 31, 2007 ···
Cash dividend from retained earnings as
appropriation of earnings ··················
Directors’ bonuses as appropriation of earnings···
Interim cash dividend from retained earnings ····
Other decreases in retained earnings ··
Acquisition of treasury stock ·········
Disposal of treasury stock ·············
Change in scope of consolidation ····
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·····
Other decreases in retained earnings ··
Retirement of treasury stock ···········
Change in scope of consolidation ········
available-for-sale securities, net of taxes ···
Issuance of stock acquisition rights ···
Effect of changes in accounting policies
applied to foreign subsidiaries ···········
Change in scope of consolidation ········
Millions of yen
Common
stock
Capital
surplus
Deferred
losses on
hedges, net
of taxes
Foreign currency
translation
adjustments
Stock
acquisition
rights
Minority
interests in
consolidated
subsidiaries
424,562
—
¥64,507
—
¥70,258
—
¥244,768
25,293
¥(17,159)
—
¥18,279
—
—
—
¥ (6,754)
—
—
—
¥13,714
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
36
—
(6,186)
(133)
(6,601)
(174)
—
—
(1,557)
—
—
—
—
(697)
960
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(4,535)
—
—
—
—
—
—
—
—
—
—
(233)
—
—
—
—
—
—
424,562
—
—
—
—
—
(14,562)
—
—
—
—
64,507
—
—
—
—
—
—
—
—
—
—
70,294
—
—
—
—
90
(126)
—
—
—
—
255,410
35,460
(13,464)
(491)
—
—
(27,880)
(114)
—
—
—
(16,896)
—
—
—
(25,078)
2,771
28,006
—
—
—
—
13,744
—
—
—
—
—
—
—
—
—
—
(233)
—
—
—
—
—
—
—
8,315
—
—
1,561
—
—
—
—
—
—
—
—
52
—
52
—
—
—
—
—
—
—
—
—
1,644
15,358
—
—
—
—
—
—
—
—
—
—
—
—
(8,470)
—
—
—
—
—
—
—
—
—
—
176
—
—
—
—
—
—
410,000
—
—
—
64,507
—
—
—
70,258
—
—
—
248,921
—
—
—
(11,197)
—
—
—
5,274
—
—
—
(57)
3,203
—
—
4,764
—
102
—
154
—
—
1,757
17,115
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(5,386)
19,373
(16,982)
—
(430)
49
—
—
—
(6,546)
903
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(4,921)
—
—
—
—
—
—
—
—
—
—
57
—
—
—
—
—
—
410,000
—
—
—
¥64,507
—
—
—
¥70,258
—
—
—
¥245,545
—
—
—
¥(16,840)
—
—
—
¥ 353
—
—
—
—
(31,363)
—
—
¥(26,599)
—
102
—
¥256
—
—
(2,644)
¥14,471
Thousands
Number
of shares
of common
stock
Effect of changes in accounting policies
applied to foreign subsidiaries ···········
Change in scope of consolidation ·······
Unrealized gains
Treasury stock, (losses) on availableat cost
for-sale securities,
net of taxes
Retained
earnings
Thousands of U.S. dollars (Note 1)
Common
stock
Capital
surplus
Retained
earnings
Unrealized gains
Treasury stock, (losses) on availableat cost
for-sale securities,
net of taxes
$715,021 $2,533,289 $(113,953)
410,000
$656,493
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(54,814)
197,161
(172,827)
—
(4,376)
499
—
—
—
(66,619)
9,190
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(50,082)
—
—
—
—
—
—
—
—
—
410,000
—
—
—
$656,493
—
—
—
—
—
—
—
—
—
$715,021 $2,498,932 $(171,382)
—
—
—
$ 3,592
$53,674
Deferred
Foreign currency
losses on
translation
hedges, net
adjustments
of taxes
$(580) $ 48,484
Stock
acquisition
rights
Minority
interests in
consolidated
subsidiaries
$1,567
$174,181
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
580
—
—
—
— (319,184)
—
—
—
—
— $(270,700)
—
1,038
—
$2,605
—
—
(26,908)
$147,273
CONSOLIDATED STATEMENTS OF CASH FLOWS
Thousands of
Millions of yen
2007
Cash Flows from Operating Activities:
Income before income taxes ······················································
Depreciation ················································································
Amortization of goodwill ·····························································
Impairment loss ··········································································
Additional retirement benefits·····················································
Restructuring expenses ······························································
Loss on adjustment for changes of accounting standard
for lease transactions ································································
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····················
Payments of accumulated benefits to defined contribution pension plan ···
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 ··································
Net proceeds from acquisition of shares in subsidiaries
resulting in change in consolidation scope ·····························
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 ·····················································
Acquisition of treasury stock·······················································
Disposal of treasury stock···························································
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 ·················
Cash and Cash Equivalents at End of Year (Note 3) ··················
2008
2009
2009
¥ 38,486
28,289
1,562
6,073
—
6,074
¥ 47,766
27,876
741
4,598
—
1,102
¥ 65,525
27,068
785
1,151
1,083
598
—
(501)
3,734
—
122
(31)
2,506
(2,018)
(2,169)
1,881
(58)
(143)
20
28
(734)
1,542
216
(3,756)
(2,362)
3,147
83,507
2,151
(2,269)
(13,958)
69,431
—
245
(779)
947
(12)
(559)
284
(2,940)
(2,977)
1,882
(149)
(422)
(3,097)
96
154
(7,589)
3,954
6,179
(1,841)
1,736
91,322
2,897
(1,925)
(16,986)
75,308
216
(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
2,198
(2,341)
22,135
(25,097)
102
(193)
20,252
5,628
(28,710)
18,441
(590)
(244)
(723)
2,096
8,997
(51,425)
(105,231)
(47,812)
—
(33,126)
603,450
28,730
(18,400)
(178,527)
435,253
(4,519)
1,668
(1,354)
370
(1,725)
9,842
(20,558)
4,161
(2,878)
(5,122)
(7,093)
1,515
(1,525)
896
(3,349)
9,741
(17,449)
18,711
(5,399)
(4,899)
(31,738)
27,668
(935)
1,639
(3,816)
3,927
(16,133)
757
(5,671)
(6,419)
(323,000)
281,580
(9,515)
16,680
(38,836)
39,965
(164,187)
7,704
(57,714)
(65,327)
—
92
132
1,500
(18,483)
2,411
545
(5,803)
343
2,220
(28,158)
3,491
22,593
(286,566)
854
25,927
(10,977)
(697)
995
(12,794)
(1,672)
201
1,837
1,930
54,715
89,015
260
2,657
(61,219)
(25,078)
2,862
(13,462)
(1,982)
79
(95,883)
1,536
(24,842)
145,260
670
28,669
(36,623)
(6,546)
473
(16,972)
(2,065)
111
(32,283)
(10,753)
(28,426)
120,394
6,818
291,767
(372,715)
(66,619)
4,814
(172,726)
(21,016)
1,130
(328,547)
(109,434)
(289,294)
1,225,260
1,530
¥145,260
(24)
¥120,394
(110)
¥ 91,858
(1,120)
$ 934,846
—
$ 391,675
287,900
15,897
61,805
—
61,816
—
Notes to the Consolidated Financial Statements
1. BASIS OF PRESENTING CONSOLIDATED FINANCIAL STATEMENTS
Accounting Principles and Presentation
The financial statements of Shiseido Company, Limited (the “Company”) and its domestic consolidated subsidiaries have been prepared in accordance with the provisions set forth in the Financial Instruments and Exchange Law
and Corporate Law and in conformity with accounting principles generally accepted in Japan. The financial statements
of the Company’s overseas subsidiaries have been prepared in conformity with generally accepted accounting principles
prevailing in the respective countries of domicile in the years ended March 31, 2007 and 2008. Effective from the current fiscal year, the financial statements of the overseas subsidiaries have been prepared in conformity with
International Financial Reporting Standards or US GAAP for the Company’s consolidation process, except for certain
items which are required to be adjusted in the consolidation process as explained in Note 2(29). The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in Japan,
which are different from International Financial Reporting Standards in certain respects as to the application and disclosure requirements.
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, 2007
and 2008 to conform to the presentation for the year ended March 31, 2009.
Amounts in U.S. dollars are included solely for the convenience of the reader. The rate of ¥98.26= US$1 prevailing
on March 31, 2009 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 91 subsidiaries (companies over which the Company exercises control over operations) as of March
31, 2009 (100 and 96 as of March 31, 2007 and 2008, respectively). The accompanying consolidated financial statements
as of March 31, 2009 include the accounts of the Company and its 86 (92 and 91 as of March 31, 2007 and 2008, respectively) significant subsidiaries (the “Companies”).
The Company has 20 affiliates (companies that are not subsidiaries but over which the Company exercises significant influence) as of March 31, 2009 (28 and 22 as of March 31, 2007 and 2008, respectively). Investments in 3 affiliates (5 and 3 as of March 31, 2007 and 2008, respectively) are accounted for by the equity method as of March 31,
2009.
Shiseido Vietnam Inc. and Shiseido Business Solutions Co., Ltd. were established in the current fiscal year and thus
are included in the scope of consolidation in the current fiscal year.
Beauté Prestige International Co., Ltd. was liquidated in the current fiscal year and thus was excluded from the scope
of consolidation in the current fiscal year.
SAHA Asia Pacific Co., Ltd. was excluded from the scope of consolidation in the current fiscal year because it ceased
operations and its effect on the consolidated financial statements was immaterial.
Shiseido Real Estate Development Co., Ltd. was excluded from the scope of consolidation in the current fiscal year
because its shares were sold during the current fiscal year.
Shiseido Cosmetics (America) Ltd., NARS Cosmetics, Inc., and ZIC Corporation were acquired by and transferred their business to Shiseido International Corporation (currently Shiseido Americas Corporation), a consolidated subsidiary, in the current fiscal year. Accordingly, those three companies were excluded from the scope of consolidation
in the current fiscal year because the effect on the consolidated financial statements became immaterial.
Shiseido France S.A. was excluded from the scope of consolidation in the current fiscal year because it was merged
with Shiseido Europe S.A.S. during the fiscal year.
The major consolidated subsidiaries are listed in “Main Subsidiaries and Affiliates” section on page 38.
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 5 unconsolidated subsidiaries and 17 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 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 current fiscal year, the Company has 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. Accordingly, from the
current fiscal year such inventories are mainly 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).
The effect of this change on operating income, income before income taxes and net income in the current fiscal year
was immaterial.
(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
approximately 20-30% reduction from useful lives for tax purpose.
Effective from the year ended March 31, 2008, the Company and its domestic consolidated subsidiaries changed their
depreciation method for tangible fixed assets acquired on or after April 1, 2007 in accordance with the revision of Japanese
Corporate Tax Law (Partial Revision of Income Tax Law, Law No. 6 of March 30, 2007; Partial Revision of Income Tax
Law Enforcement Ordinance, Cabinet Order No. 83 of March 30, 2007). The effect of this change on operating
income, income before income taxes and net income for the year ended March 31, 2008 was immaterial.
Pursuant to an amendment to the Japanese Corporate Tax Law, effective from the year ended March 31, 2008, the
Company and its domestic consolidated subsidiaries depreciate the difference between the original residual value of
5% of acquisition cost of assets acquired before April 1, 2007 and the new residual value of 1 yen (memorandum value)
by the straight-line method over 5 years commencing from the fiscal year following the year in which the asset becomes
fully depreciated to the original residual value. Depreciated amounts are included in depreciation expenses. As a result
of this change, operating income and income before income taxes each declined ¥687 million, and net income
declined ¥405 million for the year ended March 31, 2008.
(4) Intangible Assets (Excluding Lease Assets)
Intangible assets are mainly amortized using the straight-line method over the following estimated useful lives:
Trademark rights: 10 years, mainly
Software: 5 years, mainly
(5) Lease Assets
Effective from the current fiscal year, 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 lease assets that do not
transfer ownership as operating leases. Effective from the current fiscal year, however, the Company and its
domestic consolidated subsidiaries have applied “Accounting Standard for Lease Transactions”(ASBJ, Statement No.
13, March 30, 2007; revised from 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 current fiscal year, 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 ($2,900 thousand),
income before income taxes increased ¥180 million ($1,832 thousand), and net income decreased ¥106 million
($1,079 thousand) in the current fiscal year. The effects of this change in specific segments are described in
Segment Information section (Note 18).
(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 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 values 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 moving average method. If fair value is not available, securities are carried at cost, which is determined mainly by the moving average 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 and others 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 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.
Prior to the year ended March 31, 2007, the Companies provided a reserve for sales returns based on historical return
ratios. As a result of accumulation of past data and improvements in analytical precision, effective for the year
ended March 31, 2007, the Company and its domestic consolidated subsidiaries adopted a new methodology that considers the market distribution status and product resale status to more accurately estimate sales returns.
Accordingly, as a result of this change, operating income and income before income taxes decreased ¥3,636 million and net income decreased ¥2,145 million for the year ended March 31, 2007.
(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.
Previously, the Company included accrued bonuses for employees in other current liabilities. Due to the introduction
of a performance-based bonus system, the accrued amount represents an estimate, and, therefore, the Company recategorized this item as a separate line item; “Accrued Bonuses for Employees” from the year ended March 31, 2007.
(14) Accrued Bonuses for Directors
The Companies provide accrued bonuses for board directors (except for external directors) based on the estimated
amounts to be paid in respect of the fiscal year.
Effective from the year ended March 31, 2007, the Company and its domestic consolidated subsidiaries applied
“Accounting Standard for Directors’ Bonuses” (ASBJ, Statement No. 4, issued November 29, 2005). As a result, for
the year ended March 31, 2007, selling, general and administrative expenses increased ¥122 million and operating
income, income before income taxes, and net income decreased by the same amount.
(15) Provision for Liabilities and Charges
To provide for losses due to legal risks, product guarantee risks, currency 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) 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 by the straight-line method 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.
Until the previous fiscal year, accrued retirement benefits for corporate officers were included in Accrued
Retirement Benefits. However, in accordance with the public announcement of the “Auditing Treatment Relating to
Reserve Defined under the Special Tax Measurement Law, Reserve Defined under the Special Law, and Reserve for
Director and Corporate Auditor Retirement Benefits” (Japanese Institute of Certified Public Accountants, Auditing and
Assurance Practice Committee, Report No. 42, revised April 13, 2007) and because they are definitely payable within one year, accrued benefits for corporate officers are included in “Other payables” effective for the year ended March
31, 2008.
(17) Accrued Retirement Benefits for Directors and Corporate Auditors
In the year ended March 31, 2004, the Board of Directors of the Company resolved to abolish the unfunded retirement
benefit plans for directors, corporate auditors and corporate officers, effective on the date of the Ordinary General
Meeting of Shareholders for the year ended March 31, 2004. The Company provided the amount equivalent to the
unfunded lump-sum payments for their service up to March 31, 2004 based on the accrued retirement benefits for directors and corporate auditors determined by the Board of Directors.
Previously, the Company included the amount in “Accrued Retirement Benefits for Directors and Corporate
Auditors”. However, in accordance with the public announcement of the “Auditing Treatment Relating to Reserve
Defined under the Special Tax Measurement Law, Reserve Defined under the Special Law, and Reserve for
Director and Corporate Auditor Retirement Benefits” (Japanese Institute of Certified Public Accountants, Auditing and
Assurance Practice Committee, Report No. 42, revised April 13, 2007), these benefits are included in “Other long-term
liabilities” effective for the year ended March 31, 2008.
(18) Allowance for Losses on Guarantees
The Company provides an allowance for estimated probable losses on guarantees based on the financial status of the
guaranteed parties.
(19) 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.
(20) Derivatives and Hedging Activities
The Companies use foreign currency exchange agreements and interest rate swap agreements to reduce market risks
and maintain stable profits. The Companies limit their use of foreign currency related derivative transactions to the
amounts of foreign currency denominated receivables and payables, and do not use derivatives for speculative trading.
The Companies’ basic policies regarding derivatives are determined by the Board of Directors, and contracts are entered
into and controlled by the Financial Department. Transactions involving derivative contracts are exposed to market risks.
The counter parties are limited to highly rated banking institutions and the Companies consider there are no material
credit risks associated with them.
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).
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 swaps that meet the requirements
for special accounting.
(21) Foreign Currency Financial Statements
Foreign currency financial statement amounts of overseas consolidated subsidiaries and affiliates 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.
(22) 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.
(23) Accounting Standard for Presentation of Net Assets in the Consolidated Balance Sheet
Effective from the year ended March 31, 2007, the Company applied “Accounting Standard for Presentation of Net
Assets in the Balance Sheet” (ASBJ, Statement No. 5, issued December 9, 2005) and “Implementation Guidance on
Accounting Standard for Presentation of Net Assets in the Balance Sheet” (ASBJ, Guidance No. 8, issued
December 9, 2005).
(24) Accounting Standards for Business Combinations and Divestitures
Effective from the year ended March 31, 2007, the Company and its domestic consolidated subsidiaries applied
“Accounting Standard for Business Combinations” (Business Accounting Council, issued October 31, 2003) and
“Accounting Standard for Business Divestitures” (ASBJ, Statement No. 7, issued December 27, 2005) and
“Guidance on Accounting Standard for Business Combinations and Accounting Standard for Business Divestitures”
(ASBJ, Guidance No. 10, final revision on December 22, 2006).
(25) Accounting Standards for Stock Options
Effective from the year ended March 31, 2007, the Company applied “Accounting Standard for Share-Based
Payment” (ASBJ, Statement No. 8, issued December 27, 2005) and “Implementation Guidance on Accounting
Standard for Share-Based Payment” (ASBJ, Guidance No. 11, final revision on May 31, 2006). As a result, for the year
ended March 31, 2007, selling, general and administrative expenses increased ¥52 million, operating income and income
before income taxes decreased by the same amount and net income decreased by ¥45 million.
(26) Revision to Accounting Standard for Treasury Stock and Reduction of Legal Reserves
Effective from the year ended March 31, 2007, the Company applied the revised “Accounting Standard for
Treasury Stock and Reduction of Legal Reserves” (ASBJ, Statement No. 1, final revision on August 11, 2006) and
“Implementation Guidance on Accounting Standard for Treasury Stock and Reduction of Legal Reserves” (ASBJ,
Guidance No. 2, final revision on August 11, 2006). The change had no impact on the consolidated statements of income
for the year ended March 31, 2007.
(27) Application of Control Criteria and Influence Criteria to Investment Associations
Effective from the year ended March 31, 2007, the Company applied “Practical Solution on Application of Control Criteria
and Influence Criteria to Investment Associations” (ASBJ, Practical Issues Task Force No. 20, issued September 8, 2006).
As a result, for the year ended March 31, 2007, operating income increased ¥1,376 million, while income before income
taxes decreased ¥507 million, and net income decreased ¥337 million.
(28) Changes in Classification
In the previous fiscal year, negotiable certificates of deposit issued by domestic corporations were included in
“Cash and Time Deposits.” Effective from the year ended March 31, 2008, however, this item is included in
“Short-Term Investments in Securities”. This change is in accordance with “Practical Guidelines for Accounting for
Financial Instruments” (Accounting Committee Report No. 14, issued by the Japanese Institute of Certified Public
Accountants, July 4, 2007), and amended “Q&A on Accounting for Financial Instruments” issued by the Japanese
Institute of Certified Public Accountants (JICPA, November 6, 2007).
(29) Practical Solution on Unification of Accounting Policies Applied to Foreign Subsidiaries for
Effective from the current fiscal year, 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 current fiscal year, operating income decreased ¥1,095 million ($11,144 thousand), income before income taxes
decreased ¥950 million ($9,668 thousand), and net income increased ¥456 million ($4,641 thousand). The effects of this
change in specific segments are described in Segment Information section (Note 18).
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, 2007, 2008 and 2009 is as follows:
Thousands of
Millions of yen
Cash and time deposits·································
Short-term investments in securities··············
Total ·······················································
Time deposits with maturities exceeding 3 months ···
Equity securities and debt securities with
maturities exceeding 3 months ························
Cash and cash equivalents ····························
2007
2008
¥ 65,453
85,544
¥150,997
(4,121)
¥ 67,413
65,075
¥132,488
(9,679)
¥ 57,411
47,344
¥104,755
(11,536)
2009
$ 584,276
481,824
$1,066,100
(117,403)
2009
(1,616)
¥145,260
(2,415)
¥120,394
(1,361)
¥ 91,858
(13,851)
$ 934,846
The assets and liabilities on the date of sale of Mieux Products Co., Ltd., which was sold during the year ended March
31, 2007, 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 ·····························································································
Non–current assets ······················································································
Current liabilities ··························································································
Non–current liabilities ··························································································
Minority interests in consolidated subsidiaries ······················································
Loss on sale of shares of Mieux Products Co., Ltd. ···········································
Proceeds from sale of shares of Mieux Products Co., Ltd. ··································
Cash and cash equivalents of Mieux Products Co., Ltd. ······································
Net cash proceeds from sale of shares of Mieux Products Co., Ltd. ·····················
¥1,707
904
(790)
(236)
(555)
(20)
¥1,010
(878)
¥ 132
The assets and liabilities on the date of sale of Shiseido Logistics Co., Ltd., which was sold during the year ended
March 31, 2008, 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 ·····························································································
Non-current assets ·······················································································
Non-current liabilities ··························································································
Remaining investment balance after sale of shares ···············································
Decrease in retained earnings resulting from exclusion of consolidated subsidiaries ·····
Profit on sale of shares of Shiseido Logistics Co., Ltd. ·······································
Proceeds from sale of shares of Shiseido Logistics Co., Ltd. ·······························
Cash and cash equivalents of Shiseido Logistics Co., Ltd. ···································
Net cash proceeds from sale of shares of Shiseido Logistics Co., Ltd. ··················
¥ 4,411
522
(3,754)
(653)
0
(53)
2,379
¥ 2,852
(1,923)
¥ 929
The assets and liabilities on the date of sale of Shiseido Lease Co., Ltd., which was sold during the year ended
March 31, 2008, 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 ·····························································································
Non-current liabilities ···························································································
Unrealized profit and other ··················································································
Decrease in retained earnings resulting from exclusion of consolidated subsidiaries ······
Profit on sale of shares of Shiseido Lease Co., Ltd. ···········································
Proceeds from sale of shares of Shiseido Lease Co., Ltd. ···································
Cash and cash equivalents of Shiseido Lease Co., Ltd.·······································
Net cash proceeds from sale of shares of Shiseido Lease Co., Ltd. ······················
¥ 3,449
6,367
(4,660)
(4,236)
38
(18)
(61)
723
¥ 1,602
(120)
¥ 1,482
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 ·····························································································
Non-current liabilities ···························································································
Increase in retained earnings resulting from exclusion of consolidated subsidiaries ····
Profit on sale of shares of Shiseido Real Estate Development Co., Ltd. ·················
Proceeds from sale of shares of Shiseido Real Estate Development Co., Ltd. ········
Cash and cash equivalents of Shiseido Real Estate Development Co., Ltd. ············
Net cash proceeds from sale of shares of Shiseido Real Estate Development Co., Ltd. ·····
¥ 3,638
559
(3,396)
(350)
(49)
4
71
¥ 477
(134)
¥ 343
Thousands of
$ 37,024
5,689
(34,561)
(3,562)
(499)
41
723
$ 4,855
(1,364)
$ 3,491
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 current
fiscal year are ¥9,281 million ($94,453 thousand) and ¥9,497 million ($96,652 thousand) for lease assets and lease obligations, respectively.
4. SECURITIES
The acquisition cost, carrying amount, and gross unrealized gains and losses for securities with fair value by security type
at March 31, 2008 and 2009 are as follows:
Available-for-sale securities:
Millions of yen
2008
Cost
Equity securities ··········································
Corporate bonds ··········································
Other ··························································
····································································
¥ 9,505
4,500
1,615
¥15,620
Carrying amount
Gross unrealized gains
¥18,976
4,024
1,627
¥24,627
¥9,603
6
13
¥9,622
Gross unrealized losses
¥133
390
92
¥615
Millions of yen
2009
Cost
Corporate bonds ··········································
Other ··························································
····································································
¥12,235
4,990
1,550
¥18,775
Carrying amount
¥13,516
4,456
1,392
¥19,364
¥3,531
3
—
¥3,534
¥2,250
537
158
¥2,945
2009
Cost
Corporate bonds··············································
Other ·······························································
····································································
$124,517
50,784
15,774
$191,075
Carrying amount
$137,554
45,349
14,166
$197,069
$35,935
31
—
$35,966
$22,898
5,466
1,608
$29,972
The carrying amount of securities without fair value by security type as of March 31, 2008 and 2009 is summarized as
follows:
Available-for-sale securities:
Carrying amount
Thousands of
Millions of yen
2008
Unlisted equity securities·························································
Unlisted bonds ········································································
Other ·····················································································
......................................................................................................
¥11,142
2,456
65,227
¥78,825
2009
¥11,124
970
48,514
¥60,608
2009
$113,210
9,872
493,731
$616,813
Proceeds from sales, and gross realized gains and losses from the sale of available-for-sale securities in the years ended
March 31, 2007, 2008 and 2009 are as follows:
Carrying amount
Thousands of
Millions of yen
2007
Proceeds from sales ·······························
Gross realized gains ································
Gross realized losses ·······························
¥10,212
310
167
2008
2009
¥13,682
2,109
1,687
¥1,980
36
12
2009
$20,151
366
122
The carrying value of debt securities by contractual maturity for securities classified as available-for-sale as of March
31, 2009 is as follows:
Millions of yen
Due in 1 year or less·····················································································
Due after 1 year through 5 years ····································································
Due after 5 years through 10 years ·································································
Due after 10 years ······························································································
¥ 6,587
1,602
118
5,000
¥13,307
Thousands of
$ 67,036
16,304
1,201
50,885
$135,426
5. INVENTORIES
Inventories held by the Companies as of March 31, 2008 and 2009 are as follows:
Thousands of
Millions of yen
2008
Merchandise and products·······················································
Work in process ······································································
Raw materials and supplies ·················································
2009
¥41,365
4,304
22,817
¥68,486
¥40,172
4,187
23,971
¥68,330
2009
$408,834
42,611
243,955
$695,400
6. SHORT-TERM AND LONG-TERM DEBT
Short-term and long-term debt as of March 31, 2008 and 2009 are as follows:
Thousands of
Millions of yen
2008
Bank borrowings (weighted average interest rate 6.12%) ···········
Commercial paper (Borrowings due within one year,
weighted average interest rate 1.00%) ········································
Short-term debt ············································································
Long-term borrowings from banks and other financial institutions
(Borrowings due within one year, weighted average interest rate 1.37%)·····
(Borrowings due after one year, weighted average interest rate 1.75%)·······
1.12% unsecured yen bonds due in March 2010·························
Medium-term notes due 2008*····················································
Lease obligations
(Borrowings due within one year, weighted average interest rate 3.37%)·····
(Borrowings due after one year, weighted average interest rate 3.71%)·······
........................................................................................
Less: portion due within one year ················································
Long-term debt·············································································
2009
2009
¥ 4,704
¥ 3,709
$ 37,747
—
¥ 4,704
819
¥ 4,528
8,335
$ 46,082
27,100
4,566
20,000
6,849
800
31,111
20,000
—
8,142
316,619
203,542
—
—
—
¥ 58,515
(33,949)
¥ 24,566
2,273
3,341
¥ 57,525
(23,073)
¥ 34,452
23,132
34,002
$ 585,437
(234,816)
$ 350,621
* This note has been issued by Shiseido International Corporation (currently Shiseido Americas Corporation). The interest rates during the
year ended March 31, 2008 ranged from 4.01% to 4.05%.
The aggregate annual maturities of long-term debt as of March 31, 2009 are as follows:
For the Years Ending March 31
Millions of yen
2010 ········································································································
2011 ········································································································
2012 ········································································································
2013 ········································································································
2014 ········································································································
2015 and thereafter ······························································································
¥23,073
2,367
3,584
3,092
25,198
211
¥57,525
Thousands of
$234,816
24,089
36,475
31,468
256,442
2,147
$585,437
Assets pledged as collateral as of March 31, 2009 are as follows:
Millions of yen
2009
Buildings and structures····························································································
Other investments ······························································································
Investments in securities·····················································································
Cash and time deposits ·······················································································
······················································································································
¥21,563
15,200
1,512
1,021
¥39,296
Thousands of
2009
$219,448
154,692
15,388
10,391
$399,919
The above assets are pledged as collateral for derivative transactions (interest rate swaps) and the following collateralized
liabilities as of March 31, 2009:
Millions of yen
2009
Current portion of long-term debt ·············································································
Long-term debt ·········································································································
¥ 800
25,650
¥26,450
Thousands of
2009
$ 8,142
261,042
$269,184
7. ACCRUED RETIREMENT BENEFITS
The Company and its domestic consolidated subsidiaries have contributory funded pension plans and unfunded termination allowance plans, which are defined benefit plans. In some cases, additional voluntary retirement benefits are paid
when an employee retires, which are accounted for as retirement benefit expenses when incurred.
Certain overseas consolidated subsidiaries also 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 expense and accrued retirement benefits recognized in the accompanying balance
sheets as of March 31, 2008 and 2009 is as follows:
Thousands of
Millions of yen
Projected benefit obligations·······················································
Fair value of plan assets······························································
Funded status of the pension benefit plans································
Unamortized net obligation at transition* ···································
Unrecognized net actuarial loss ··················································
Unrecognized prior service cost ··················································
Additional minimum liability* ······················································
Net retirement benefit obligation ················································
Prepaid pension expense ····························································
Accrued retirement benefits ·······················································
2008
2009
2009
¥(195,564)
173,532
(22,032)
932
27,973
(7,136)
(1,351)
¥ (1,614)
35,159
¥ (36,773)
¥(200,767)
144,086
(56,681)
—
56,885
(5,115)
—
¥ (4,911)
34,360
¥ (39,271)
$(2,043,222)
1,466,375
(576,847)
—
578,923
(52,055)
—
$ (49,979)
349,685
$ (399,664)
The net periodic pension benefit costs for the years ended March 31, 2007, 2008 and 2009 are as follows:
Thousands of
Millions of yen
Service cost ····················································
Interest cost····················································
Expected return on plan assets·······················
Amortization of net obligation at transition*····
Amortization of net actuarial loss ····················
Amortization of prior service cost ···················
Net periodic pension benefit cost ···················
2007
2008
¥ 7,876
4,546
(7,328)
113
3,069
(2,125)
¥ 6,151
¥ 7,862
4,646
(7,614)
113
2,843
(2,021)
¥ 5,829
2009
¥ 8,712
4,965
(7,011)
—
5,500
(2,125)
¥10,041
2009
$ 88,663
50,529
(71,352)
—
55,974
(21,626)
$102,188
* The amounts for the years ended March 31, 2007 and 2008 pertain to a Taiwanese subsidiary, according to the Taiwanese retirement
allowance accounting system. The net obligation at transition is amortized by the straight-line method over a 17-year period.
The discount rate used to determine the actuarial present value of projected benefit obligations as of March 31, 2008
and 2009 is mainly 2.5%. The expected rate of return on plan assets of those plans as of March 31, 2008 and 2009 is
mainly 4.0%. Allocation of pension benefits to each year of service of the employees is based on the “benefits/years-ofservice” approach, whereby the same amount of benefits is allocated to each year. Certain foreign consolidated subsidiaries
have adopted the corridor approach for the amortization of actuarial gains and losses.
In addition, certain other overseas consolidated subsidiaries recorded accrued retirement benefits according to the
accounting standards of their respective countries up to the year ended March 31, 2008. The total amount of these accrued
retirement benefit at March 31, 2008 was ¥1,529 million.
8. 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, 2007, 2008 and
2009.
Since the difference between the statutory tax rate and the effective tax rate for the fiscal years ended March 31,
2007, 2008 and 2009 is less than 5%, a reconciliation of these two rates is not presented.
Deferred tax assets and liabilities (both current and non-current) as of March 31, 2008 and 2009 are as follows:
Thousands of
Millions of yen
2008
Deferred tax assets:
Inventory ··················································································
Depreciation ·············································································
Tax losses carried forward························································
Accrued expenses····································································
Accrued bonuses for employees··············································
Unrealized intercompany profit in inventory and
property, plant and equipment ···············································
Write-down of investments in securities and other investments ····
Reserve for sales returns ·························································
Accrued retirement benefits·····················································
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 ·····················································
Undistributed earnings of foreign subsidiaries··························
Unrealized gains (losses) on available-for-sale securities ··········
Other ························································································
Total deferred tax liabilities ·······················································
Net deferred tax assets ····························································
2009
2009
¥ 6,572
8,244
5,651
5,401
4,868
¥ 9,190
8,283
5,564
4,554
3,858
$ 93,527
84,297
56,625
46,347
39,263
9,020
7,909
757
409
777
4,190
53,798
(8,839)
¥44,959
3,530
2,374
2,025
1,743
222
4,099
45,442
(6,078)
¥39,364
35,925
24,160
20,609
17,739
2,259
41,716
462,467
(61,856)
$400,611
¥ 1,869
1,063
1,256
3,674
499
¥ 8,361
¥36,598
¥ 2,099
1,028
506
234
1,007
¥ 4,874
¥34,490
$ 21,362
10,462
5,150
2,381
10,248
$ 49,603
$351,008
9. CONTINGENT LIABILITIES
1. As of March 31, 2008 and 2009, the Company was contingently liable as a guarantor for SDL Co., Ltd.’s own
guarantees for the lease liabilities of third-party customers, amounting to ¥153 million and ¥56 million ($570 thousand),
respectively.
2. On March 15, 2006, the French Competition Council reprimanded consolidated subsidiaries Shiseido France S.A. (currently Shiseido Europe S.A.S.) and Beauté Prestige International S.A. for impeding fair competition and ordered payment of a 1,150 thousand Euro fine.
Shiseido France S.A. and Beauté Prestige International S.A. appealed this decision and brought the case
before the French Supreme Court, which remanded the case for retrial before a court of appeals. Shiseido France and
Beauté Prestige International are now litigating the case in the court of appeals in Paris.
3. On July 4, 2008, the German Cartel Office reprimanded consolidated subsidiary Shiseido Deutschland GmbH for
impeding fair competition and ordered payment of a 728 thousand Euro fine.
However, Shiseido Deutschland GmbH does not concur with the ruling and has filed an objection with the
German Cartel Office.
10. 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 Corporate Law (“the Law”), 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 Law, 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 Law, 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 Law. Under the Law, 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.
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, 2009 include amounts representing year-end cash dividend of ¥10,038 million
($102,158 thousand), ¥25.0 ($0.25) per share, which was approved at the shareholders’ meeting held on June 24, 2009.
11. STOCK OPTION PLAN
Summarized information on the stock options granted as of March 31, 2009 is as follows:
➀ 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
239,000 shares
¥1,669
July 1, 2004 - June 26, 2012
Total
578,000 shares
239,000 shares
➁ Stock option plan approved by the shareholders on June 27, 2003
July 31, 2003
Exercise price
Exercisable period
878,000 shares
141,000 shares
¥1,287
July 1, 2005 - June 26, 2013
Total
878,000 shares
141,000 shares
➂ Stock option plan approved by the shareholders on June 29, 2004
July 26, 2004
Exercise price
Exercisable period
Total
1,004,000 shares
1,004,000 shares
667,000 shares
667,000 shares
¥1,427
July 1, 2006 - June 28, 2014
➃ Stock option plan approved by the shareholders on June 29, 2005
July 28, 2005
Number of shares for
options outstanding
Exercise price
Exercisable period
October 27, 2005
11,000 shares
—
options outstanding
Exercise price
¥1,865
Exercisable period
November 1, 2005 - October 31, 2008
408,000 shares
July 28, 2005
261,000 shares
108,000 shares
¥1
July 1, 2008 - June 30, 2011
258,000 shares
¥1,481
July 1, 2007 - June 28, 2015
November 7, 2005
March 8, 2006
1,851,000 shares
621,000 shares
¥1,896
July 1, 2007 - June 30, 2010
63,000 shares
—
¥2,012
April 1, 2006 - March 31, 2009
Total
2,594,000 shares
987,000 shares
➄ Stock option plan approved by the shareholders on June 29, 2006 and resolved by the Board of Directors on July 31, 2006.
August 23, 2006
Exercise price
Exercisable period
August 23, 2006
12,000 shares
options outstanding
9,000 shares
Exercise price
¥1
Exercisable period
July 1, 2008 - June 30, 2011
9,000 shares
2,000 shares
¥1
July 1, 2008 - June 30, 2011
August 23, 2006
67,000 shares
67,000 shares
¥2,300
August 1, 2008 - July 30, 2016
August 23, 2006
74,000 shares
74,000 shares
¥2,300
August 1, 2008 - July 30, 2016
Total
162,000 shares
152,000 shares
➅ Stock option plan approved by the shareholders on June 26, 2007 and resolved by the Board of Directors on July 31, 2007.
August 23, 2007
Exercise price
Exercisable period
2,000 shares
—
¥1
July 1, 2008 - June 30, 2011
August 23, 2007
Number of shares for options granted 15,000 shares
10,000 shares
options outstanding
Exercise price
¥1
Exercisable period
July 1, 2008 - June 30, 2011
August 23, 2007
81,000 shares
81,000 shares
¥2,615
August 1, 2009 - July 30, 2017
August 23, 2007
78,000 shares
78,000 shares
¥2,615
August 1, 2009 - July 30, 2017
Total
176,000 shares
169,000 shares
➆ Stock option plan approved by the shareholders on June 25, 2008 and resolved by the Board of Directors on July 31, 2008.
August 21, 2008
options outstanding
Exercise price
Exercisable period
46,000 shares
46,000 shares
¥1
August 1, 2011 - July 30, 2018
August 21, 2008
40,000 shares
40,000 shares
¥1
August 1, 2011 - July 30, 2018
Total
86,000 shares
86,000 shares
12. 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
¥16,133 million, ¥14,566 million and ¥15,243 million ($155,129 thousand) for the years ended March 31, 2007, 2008 and
2009, respectively. There are no research and development expenses included in total manufacturing expenses for the
years ended March 31, 2007, 2008 and 2009.
13. TRANSACTIONS WITH RELATED PARTIES
The Company contributed ¥1 million to the Shiseido Social Welfare Foundation (“the Foundation”) in the years
ended March 31, 2007 and 2008. The Foundation performs social support specializing in child welfare. Shinzo
Maeda, President and CEO (Representative Director) of the Company, is the Chairman of the Foundation. The
Company approved the amount of contribution at a Board of Directors meeting.
Shoichiro Iwata, an External Director of the Company, is the Representative Director of ASKUL Corporation. The
Company purchases stationery and other products from ASKUL Corporation and the amount of transactions was ¥94
million for the year ended March 31, 2008 and the ending balance was ¥42 million in other payables as of March 31, 2008.
Effective from the current fiscal year, 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 ($142 thousand) to Rémy 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 ($71 thousand) as prepaid expenses in other current assets as of March 31, 2009. The advisory services fee conforms to customary practices.
14. 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.
Information on finance lease contracts other than those deemed to transfer the ownership of the leased assets as a
lessee and a lessor for the years ended March 31, 2007 and 2008 was as follows:
Millions of yen
2007
2008
➀ 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·································
¥ 2,788
4,161
¥ 6,949
¥ 3,335
4,050
¥ 7,385
Balance of allowance for impairment
loss on leased assets······························
Reversed lease impairment loss ··················
Lease rental expenses for the year ··············
Assumed depreciation·································
Impairment loss ·········································
¥
15
¥ 103
¥ 3,688
¥ 3,681
¥
7
¥
14
¥
9
¥ 3,229
¥ 3,220
¥
8
Leased machinery and equipment:
Assumed purchase cost ························
¥15,155
¥ 22,012
Assumed accumulated depreciation ········
Assumed impairment loss·······················
Assumed net book value ·······················
(8,206)
(15)
¥ 6,934
(14,627)
(14)
¥ 7,371
Assumed purchase cost and the scheduled maturities of future lease rental payment include the capitalized interest
thereon, as the proportion of future lease rental payments to total property, plant and equipment is immaterial.
Assumed depreciation is based on the straight-line method over the lease term of the leased assets, assuming no
residual value.
Millions of yen
➁ As lessor:
The scheduled maturities of future
lease rental payments on such lease contracts
are as follows:
2007
2008
¥ 1,324
2,046
¥ 3,370
—
—
—
Lease rental income for the year ·················
Depreciation················································
Assumed interest income····························
¥ 1,999
¥ 1,740
¥ 203
¥1,596
¥1,380
¥ 165
Leased machinery and equipment:
Purchase cost ········································
Accumulated depreciation ·····················
Net book value········································
¥ 8,784
(5,584)
¥ 3,200
—
—
—
Assumed interest income is calculated based on the interest method.
Lease obligations under operating leases at March 31, 2007, 2008 and 2009 are as follows:
Thousands of
Millions of yen
2007
2008
2009
2009
¥1,629
4,454
¥6,083
¥2,260
6,514
¥8,774
¥2,655
5,944
¥8,599
$27,020
60,493
$87,513
¥ 210
381
¥ 591
—
—
—
—
—
—
—
—
—
➀ As lessee:
lease rental payments on
such lease contracts are as follows:
➁ As lessor:
lease rental payments on
such lease contracts are as follows:
15. DERIVATIVE FINANCIAL INSTRUMENTS
The contract amount, estimated fair value and unrealized gain (loss) of the derivative contracts as of March 31, 2008
and 2009 are as follows:
Millions of yen
2008
Contract amount
Settled over
one year
Total
Interest swap contracts:
To receive variable/to pay fixed····················
¥2,283
Estimated
fair value
¥2,283
¥(107)
Unrealized
gain (loss)
¥(107)
Millions of yen
2009
Contract amount
Settled over
one year
Estimated
fair value
¥1,396
161
—
—
¥1,472
158
1,820
—
¥1,820
—
Total
Foreign exchange contracts: Put US$···············
Foreign exchange contracts: Call US$ ·············
Interest swap contracts:
(168)
—
Unrealized
gain (loss)
¥ (76)
(3)
(168)
¥(247)
2009
Contract amount
Foreign exchange contracts: Put US$···············
Foreign exchange contracts: Call US$ ··············
Total
Settled over
one year
Estimated
fair value
Unrealized
gain (loss)
$14,207
1,639
18,522
—
—
—
$18,522
—
$14,980
1,608
(1,710)
—
$ (773)
(31)
(1,710)
$(2,514)
Derivatives that meet the criteria for hedges are excluded from the above table.
16. 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 due to be sold
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 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 value, which are
mainly based on real estate appraisal values.
Impairment loss on overseas assets is mainly recognized due to decreasing profitability of long-lived assets of
European and American subsidiaries.
Impairment losses for the years ended March 31, 2007, 2008 and 2009 are as follows:
Thousands of U.S.
dollars (Note 1)
Millions of yen
Domestic
Business-use assets:
Land ························································
Buildings and structures, etc.··················
Idle assets:
Land ························································
Overseas
Goodwill ··················································
Trademark rights ·····································
2007
2008
¥1,389
699
¥ 939
161
1,159
143
407
801
—
¥4,598
2009
2009
168
605
$ 1,710
6,157
—
—
291
58
2,961
590
51
—
—
¥1,151
23
1,653
3,275
¥6,073
234
16,823
33,330
$61,805
¥
17. 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
($27,366 thousand) of Shiseido Beautech Co., Ltd. and withdrawing expenses of ¥2,465 million ($25,087 thousand) of
THE GINZA boutique business.
18. SEGMENT INFORMATION
(1) Business Segment Information1
The Companies operate principally in the following three business segments.
The business segments are classified based on the internal organization of the Companies.
The main contents of each business segment are as follows:
Domestic Cosmetics:
Overseas Cosmetics:
Others:
Cosmetics division
(Production and sale of cosmetics, cosmetic
accessories and toiletries)
Professional division (Production and sale of beauty salon products, etc.)
Healthcare division
(Production and sale of health & beauty foods and
over-the-counter drugs)
Cosmetics division
(Production and sale of cosmetics, cosmetic
accessories and toiletries)
Professional division (Production and sale of beauty salon products, etc.)
Frontier Sciences division (Production and sale of cosmetic ingredients, medical-use
pharmaceuticals, and beauty therapy cosmetics)
Others
(Sale of clothing and accessories, operation of
restaurants and other)
The business segment information of the Companies for the years ended March 31, 2007, 2008 and 2009 is as follows:
Millions of yen
2007
Net sales
Sales to outside customers ··············
Intersegment sales or transfers ········
Total ················································
Operating expenses2 ·······················
Operating income3,4 ·························
Total assets5,6 ··································
Depreciation7 ···································
Impairment loss7 ·····························
Capital expenditure7·························
Domestic
Cosmetics
Overseas
Cosmetics
Others
¥447,557
6,232
¥453,789
416,919
¥ 36,870
¥275,739
¥ 14,362
¥ 2,115
¥ 12,150
¥224,320
1,347
¥225,667
215,222
¥ 10,445
¥238,773
¥ 7,617
¥ 1,255
¥ 8,739
¥22,717
23,113
¥45,830
43,585
¥ 2,245
¥80,275
¥ 6,519
¥ 1,228
¥ 5,463
Subtotal
¥694,594
30,692
¥725,286
675,726
¥ 49,560
¥594,787
¥ 28,498
¥ 4,598
¥ 26,352
Elimination/
corporate
—
¥ (30,692)
¥ (30,692)
(31,137)
¥
445
¥145,046
¥
(23)
—
¥
14
Consolidation
¥694,594
—
¥694,594
644,589
¥ 50,005
¥739,833
¥ 28,475
¥ 4,598
¥ 26,366
Millions of yen
2008
Net sales
Total ················································
Total assets5,6 ··································
Depreciation7 ···································
Impairment loss7 ·····························
Domestic
Cosmetics
Overseas
Cosmetics
Others
¥439,021
6,471
¥445,492
402,362
¥ 43,130
¥257,963
¥ 14,133
¥ 1,080
¥ 14,756
¥263,703
1,771
¥265,474
247,600
¥ 17,874
¥257,508
¥ 8,944
¥
51
¥ 12,261
¥20,761
19,487
¥40,248
38,253
¥ 1,995
¥61,123
¥ 4,630
¥
20
¥ 2,649
Subtotal
¥723,485
27,729
¥751,214
688,215
¥ 62,999
¥576,594
¥ 27,707
¥ 1,151
¥ 29,666
Elimination/
corporate
—
¥ (27,729)
¥ (27,729)
(28,195)
¥
466
¥ 99,270
¥
3
—
¥
72
Consolidation
¥723,485
—
¥723,485
660,020
¥ 63,465
¥675,864
¥ 27,710
¥ 1,151
¥ 29,738
Millions of yen
2009
Net sales
Total ················································
Total assets5,6 ··································
Depreciation7 ···································
Impairment loss7 ·····························
Domestic
Cosmetics
Overseas
Cosmetics
Others
¥412,338
5,601
¥417,939
384,935
¥ 33,004
¥251,744
¥ 17,390
¥
750
¥ 15,546
¥260,916
1,734
¥262,650
247,656
¥ 14,994
¥224,091
¥ 9,241
¥ 5,071
¥ 13,223
¥17,002
11,552
¥28,554
27,073
¥ 1,481
¥53,358
¥ 1,621
¥ 252
¥ 621
Subtotal
¥690,256
18,887
¥709,143
659,664
¥ 49,479
¥529,193
¥ 28,252
¥ 6,073
¥ 29,390
Elimination/
corporate
—
¥(18,887)
¥(18,887)
(19,322)
¥
435
¥ 77,376
¥
37
—
¥
72
Consolidation
¥690,256
—
¥690,256
640,342
¥ 49,914
¥606,569
¥ 28,289
¥ 6,073
¥ 29,462
2009
Net sales
Total ················································
Total assets5,6 ··································
Depreciation7 ···································
Impairment loss7 ·····························
Domestic
Cosmetics
Overseas
Cosmetics
Others
Subtotal
Elimination/
corporate
Consolidation
$4,196,397
57,002
$4,253,399
3,917,515
$ 335,884
$2,562,019
$ 176,980
$
7,633
$ 158,213
$2,655,363
17,647
$2,673,010
2,520,415
$ 152,595
$2,280,592
$ 94,046
$ 51,608
$ 134,571
$173,031
117,566
$290,597
275,524
$ 15,073
$543,029
$ 16,497
$ 2,564
$ 6,320
$7,024,791
192,215
$7,217,006
6,713,454
$ 503,552
$5,385,640
$ 287,523
$ 61,805
$ 299,104
—
$(192,215)
$(192,215)
(196,642)
$ 4,427
$ 787,462
$
377
—
$
733
$7,024,791
—
$7,024,791
6,516,812
$ 507,979
$6,173,102
$ 287,900
$ 61,805
$ 299,837
Notes: 1. Effective for the year ended March 31, 2007, the Company has reclassified business segment reporting from “cosmetics,
““toiletries”and “others” to “domestic cosmetics,” “overseas cosmetics” and “others.”
• “Cosmetics” includes toiletries, beauty salon products, health & beauty foods, and over-the-counter drugs, which had previously
been included in “toiletries” and “others” segments.
• “Cosmetics” with its wider product domain is divided into domestically-operated “domestic cosmetics” and overseas-operated
“overseas cosmetics.”
• “Others” include medical-use drugs, clothing, accessories, and other businesses that are not included in the scope of
“domestic cosmetics” and “overseas cosmetics.”
Through these changes, segments are reclassified to reflect the integration of cosmetics with its peripheral businesses and other
internal organizational changes, and to clarify overseas cosmetics business results.
2. Effective for the year ended March 31, 2007, the Company has reassessed the segment allocation of its operating expenses.
Certain administrative expenses and basic research and development expenses, etc., which had previously been included under the
Elimination/corporate line as unallocatable operating expenses, are now allocated to each segment. The Company also redefined certain intersegment transactions. By allocating all administrative expenses to each business segment, these changes aim to provide a more
appropriate presentation and disclosure of business segment results, in line with the reclassification in business segment reporting.
3. 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, operating income in the
Overseas Cosmetics business segment decreased ¥1,095 million ($11,144 thousand) for the year ended March 31, 2009.
4. 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, operating income
in the Domestic Cosmetics business segment increased ¥207 million ($2,107 thousand), operating income in the Overseas
Cosmetics business segment increased ¥65 million ($661 thousand), and operating income in the Others business segment
increased ¥13 million ($132 thousand) for the year ended March 31, 2009.
5. 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 years ended March 31, 2007 and 2008 have been restated to reflect this change in allocation of deferred tax assets adopted from the year ended March 31, 2009.
6. Corporate assets included in the Elimination/corporate line item as of March 31, 2007, 2008 and 2009 were ¥148,859 million,
¥101,942 million and ¥79,411 million ($808,172 thousand), consisting mainly of financial assets of the Company (cash and time
deposits, short-term investments in securities, and investments in securities) and assets related to administrative operations.
7. Depreciation, impairment loss and capital expenditure include amounts relating to long-term prepaid expenses.
(2) Geographic Segment Information
Segmentation between countries and regions is based on geographic proximity.
Major countries and regions besides Japan are as follows:
Americas: United States, Canada, Brazil
Europe: France, Italy, Germany, Spain
Asia/Oceania: China (including Hong Kong), Taiwan, South Korea, Southeast Asia, Australia
The geographic segment information of the Companies for the years ended March 31, 2007, 2008 and 2009 is as follows:
Millions of yen
2007
Japan
Net sales
Sales to outside customers··········
Intersegment sales or transfers ···
Total ················································
Total assets4,5 ··································
¥471,205
22,116
¥493,321
465,986
¥ 27,335
¥377,052
Americas
Europe
¥51,730
8,139
¥59,869
57,060
¥ 2,809
¥60,300
¥88,364
4,335
¥92,699
86,388
¥ 6,311
¥97,797
Asia/Oceania
¥83,295
112
¥83,407
72,195
¥11,212
¥74,597
Subtotal
¥694,594
34,702
¥729,296
681,629
¥ 47,667
¥609,746
Elimination/
corporate
—
¥ (34,702)
¥ (34,702)
(37,040)
¥ 2,338
¥130,087
Consolidation
¥694,594
—
¥694,594
644,589
¥ 50,005
¥739,833
Millions of yen
2008
Japan
Net sales
Total ················································
Total assets4,5 ··································
¥460,714
25,898
¥486,612
454,827
¥ 31,785
¥343,461
Americas
¥56,559
9,007
¥65,566
61,572
¥ 3,994
¥57,347
Europe
Asia/Oceania
Subtotal
¥103,775
5,092
¥108,867
99,881
¥ 8,986
¥107,343
¥102,437
154
¥102,591
86,711
¥ 15,880
¥ 86,996
¥723,485
40,151
¥763,636
702,991
¥ 60,645
¥595,147
Elimination/
corporate
—
¥ (40,151)
¥ (40,151)
(42,971)
¥ 2,820
¥ 80,717
Consolidation
¥723,485
—
¥723,485
660,020
¥ 63,465
¥675,864
Millions of yen
2009
Japan
Net sales
Total ················································
Total assets4,5 ··································
¥429,963
25,326
¥455,289
436,856
¥ 18,433
¥337,164
Americas
¥50,657
8,297
¥58,954
55,678
¥ 3,276
¥44,388
Europe
Asia/Oceania
Subtotal
¥100,034
6,150
¥106,184
97,926
¥ 8,258
¥ 80,642
¥109,602
182
¥109,784
93,005
¥ 16,779
¥ 80,648
¥690,256
39,955
¥730,211
683,465
¥ 46,746
¥542,842
Elimination/
corporate
—
¥(39,955)
¥(39,955)
(43,123)
¥ 3,168
¥ 63,727
Consolidation
¥690,256
—
¥690,256
640,342
¥ 49,914
¥606,569
2009
Net sales
Total ················································
Total assets4,5 ··································
Japan
Americas
Europe
Asia/Oceania
$4,375,768
257,745
$4,633,513
4,445,919
$ 187,594
$3,431,346
$515,540
84,439
$599,979
566,640
$ 33,339
$451,740
$1,018,055
62,589
$1,080,644
996,601
$ 84,043
$ 820,700
$1,115,428
1,852
$1,117,280
946,519
$ 170,761
$ 820,761
Subtotal
Elimination/
corporate
Consolidation
$7,024,791
— $7,024,791
406,625 $(406,625)
—
$7,431,416 $(406,625) $7,024,791
6,955,679
(438,867) 6,516,812
$ 475,737 $ 32,242 $ 507,979
$5,524,547 $ 648,555 $6,173,102
Notes: 1. Effective for the year ended March 31, 2007, the Company has reassessed the segment allocation of its operating expenses.
Certain administrative expenses and basic research and development expenses, etc., which had previously been included under the
Elimination line as unallocatable operating expenses, are now allocated to each segment. The Company also redefined certain intersegment transactions. By allocating all administrative expenses to each geographic segment, these changes aim to provide a more appropriate presentation and disclosure of geographic segment results, in line with the reclassification in geographic segment reporting.
2. 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, operating income in the
Americas decreased ¥734 million ($7,470 thousand) and operating income in Asia/Oceania decreased ¥361 million ($3,674
thousand) for the year ended March 31, 2009.
3. 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, operating income
in Japan increased ¥285 million ($2,900 thousand) for the year ended March 31, 2009.
4. Previously, deferred tax assets were included as corporate assets. Effective from the year ended March 31, 2009, however, such
assets are classified by geographic segment, in order to better clarify assets that should be controlled by the relevant geographic
segment. Geographic segment information for years ended March 31, 2007 and 2008 have been restated to reflect this
change in allocation of deferred tax assets adopted from the year ended March 31, 2009.
5. Corporate assets included in the Elimination/corporate line as of March 31, 2007, 2008 and 2009 were ¥148,859 million,
¥101,942 million and ¥79,411 million ($808,172 thousand), consisting mainly of financial assets of the Company (cash and time
deposits, short-term investments in securities, and investments in securities), and assets related to administrative operations.
(3) Overseas Sales*
Overseas sales of the Companies (which represent the exports made by the Company and its domestic consolidated
subsidiaries and sales (other than exports to Japan) of its overseas consolidated subsidiaries) for the years ended March
31, 2007, 2008 and 2009, are as follows:
Thousands of
Millions of yen
Overseas sales:
Americas ·······················································
Europe ···························································
Asia/Oceania ············································
......................................................
Percentage of such sales against
consolidated net sales ·······························
2007
2008
2009
2009
¥ 53,969
79,326
91,503
¥224,798
¥ 59,333
92,785
112,146
¥264,264
¥ 54,859
88,550
118,595
¥262,004
$ 558,304
901,181
1,206,951
$2,666,436
32.4%
36.5%
38.0%
38.0%
*** Classification of overseas sales is determined by geographical location.
19. SUBSEQUENT EVENT
(Acquisition of Treasury Stock)
At its meeting held on April 30, 2009, the Board of Directors passed a resolution to purchase the Company’s treasury stock
under Article 156 of the Corporation Law of Japan, as applied pursuant to Article 165-3 of the same law, and implemented,
as detailed below.
(1) Reason for acquisition
To facilitate flexible capital strategies and bolster shareholder returns in response to changing business conditions
(2) Details of acquisition
(1) Class of shares acquired: Common stock
(2) Total number of shares acquired: 4,000 thousand shares
(3) Aggregate acquisition price of shares: ¥6,752 million ($68,716 thousand)
(4) Acquisition date: May 12, 2009
(5) Method of acquisition: Purchase order placed through Off-Auction Own Share Repurchase Trading of the
Tokyo Stock Exchange Trading of the Tokyo Stock Exchange Trading Network System (ToSTNeT-3)
Independent Auditors’ Repor t
To the Shareholders and Board of Directors of
Shiseido Company, Limited:
We have audited the accompanying consolidated balance sheets of Shiseido Company, Limited and consolidated subsidiaries as of March 31, 2009 and 2008, and the related consolidated statements of income, changes in net assets and
cash flows for each of the three years in the period ended March 31, 2009, 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, 2009 and 2008, and the consolidated results of their operations and their cash flows for each of the three years in the period ended March 31, 2009,
in conformity with accounting principles generally accepted in Japan.
Without qualifying our opinion, we draw attention to the following:
(1)
As discussed in Note 2(27) to the consolidated financial statements, effective for the year ended March 31,
2007, Shiseido Company, Limited applied Practical Solution on Application of Control Criteria and Influence
Criteria to Investment Associations.
(2)
As discussed in Note 18(1) to the consolidated financial statements, Shiseido Company, Limited changed the
classification of business segments in the year ended March 31, 2007.
The U.S. dollar amounts in the accompanying consolidated financial statements with respect to the year ended
March 31, 2009 are presented solely for convenience of the reader. Our audit also included the translation of yen
amounts into U.S. dollars 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, 2009
Investor Information
Number of Shareholders
37,426
Common Shares Issued and Outstanding
410,000,000 (including 8,489,386 in treasury stock)
Principal Shareholders
Shareholders
Mizuho Bank, Ltd.
Japan Trustee Services Bank, Ltd. (Trust Account)
State Street Bank and Trust Company 505223
The Master Trust Bank of Japan, Ltd. (Trust Account)
Japan Trustee Services Bank, Ltd. (Trust Account 4G)
The Bank of New York Mellon as Depositary Bank for DR Holders*
Asahi Mutual Life Insurance Company
Mizuho Corporate Bank, Ltd.
NIPPONKOA Insurance Company, Ltd.
Nippon Life Insurance Company
Number of
shares held
(thousands)
Percentage
of
shareholding
21,226
19,309
18,258
16,480
16,234
14,199
12,079
11,382
11,277
9,747
5.17
4.70
4.45
4.01
3.95
3.46
2.94
2.77
2.75
2.37
Composition of Shareholders
(by number of shares)
Other Japanese
Companies 5.16%
Treasury Stock
2.07%
Securities
Companies
Foreign
Investors
1.69%
27.66%
Financial
Institutions Individuals
44.64%
18.76%
In addition to the above, Shiseido Company, Limited holds 8,489 thousand shares of treasury stock.
* The Bank of New York Mellon as Depositary Bank for Depositary Receipt Holders (formerly named Hero & Co.) 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
(¥)
3,500
Share Price
Trading Volume
Composition of Shareholders (%)
(Nikkei Stock Average)
Nikkei Stock Average (Closing Price)
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
04/06
04/07
04/08
(By number of shareholders)
Foreign Investors
Individuals
Financial Institutions
Securities Companies
Other Japanese Companies
Treasury Stock
0
0
(By number of shares)
Foreign Investors
Individuals
Financial Institutions
Securities Companies
Other Japanese Companies
Treasury Stock
18,000
03/09
2008
28.08
17.08
46.23
2.00
5.17
1.41
2009
27.66
18.76
44.64
1.69
5.16
2.07
2008
1.41
96.32
0.48
0.11
1.65
0.00
2009
1.40
96.30
0.48
0.17
1.62
0.00
Note: Shiseido acquired 2,211,000 of its own shares at an
aggregate acquisition price of ¥4,488,330,000 in
November 2008.
Stock Price Indicators
Price/Earnings Ratio (PER)
Price/Book Value Ratio (PBR)
( Times)
80
Dividend Yield
(Times)
3.0
63.7
(%)
4.0
2.8
60
39.3
40
2.4
2.5
30.6
3.5
2.5
3.5
3.0
29.9
2.0
20
1.7
1.6
0
2.5
2.0
1.5
(20)
1.7
1.5
1.4
1.3
03/06
03/07
1.3
1.0
1.0
(40)
0.5
(60)
(80)
(65.8)
03/05
0.5
0.0
03/06
03/07
03/08
03/09
Note: Price/Earnings Ratio =
Closing stock price at fiscal year-end/Net income per share
0.0
03/05
03/06
03/07
03/08
03/09
Note: Price/Book Value Ratio =
Closing stock price at fiscal year-end/Net assets per share
03/05
03/08
03/09
Note: Dividend Yield = Cash dividends per share/
Closing stock price at fiscal year-end
Corporate Information
Head Office
Stock Listings
Shiseido Company, Limited
5-5, Ginza 7-chome, Chuo-ku
Tokyo 104-0061, Japan
Tel: +81-3-3572-5111
Common Stock: Tokyo Stock Exchange (Code: 4911)
American Depositary Receipts: U.S. Over-the-Counter
Accounting Auditors
KPMG AZSA & Co.
Foundation
September 17, 1872
Share Registrar
Incorporation
The Chuo Mitsui Trust and Banking Company, Ltd.
33-1, Shiba 3-chome, Minato-ku, Tokyo 105-8574, Japan
June 24, 1927
American Depositary Receipts
Capital
¥64,506,725,140
Number of Employees
3,500 (28,810 for the Shiseido Group)
Fiscal Year-End
March 31
Shareholders’ Meeting
CUSIP:
824841407
Ratio (ADR:ORD): 1:1
Exchange:
OTC (Over-the-Counter)
Symbol:
SSDOY
Depositary:
The Bank of New York Mellon
101 Barclay Street, New York, NY
10286, U.S.A.
Tel: +1 (212) 815-3874
U.S. toll free: (888) 269-2377
http://www.adrbnymellon.com
The Ordinary General Meeting of Shareholders
is normally held in June in Tokyo.
For further information, please contact
Investor Relations, Financial Department
Shiseido Company, Limited
6-2, Higashi-shimbashi 1-chome Minato-ku,
Tokyo 105-8310, Japan
F a x : +81-3-6218-5544
E-mail: [email protected]
Website
English Edition: http://www.shiseido.co.jp/e/
Japanese Edition: http://www.shiseido.co.jp/
This mark certifies use of the Certificate of Green Electricity
through Solar Power provided by Tuvalu-Forest Corporation.
2009
2009
Building
Building
Building
Momentun
Momentun
Momentun
as
asaaGlobal
Global
as a Global
Player
PlayerPlayer
Representing
Representing
Representing
Asia
Asiawith
with
Asiaits
its
with
Origins
Origins
its Origins
ininJapan
Japan
in Japan
２
２
０
０
０
０
９年３月期
９年３月期
２００９年３月期
2009
00
09
9
20
2

Annual Report 2009 [PDF:2.7MB]

Transcription

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