Interim Performance



1. Consolidated Net Sales

(Millions of yen)

First Half
of Fiscal
1999

Percent
of
Net Sales

First Half
of Fiscal
1998

Percent
of
Net Sales

Increase/Decrease over
First Half of Fiscal 1998

Amount

% change

Cosmetics
Toiletries
Others

227,423
48,778
31,094

74.0%
15.9%
10.1%

227,397
51,864
31,208

73.2%
16.7%
10.1%

25
-3,085
-113

0.0%
-5.9%
-0.4%

Net Sales

307,296

100.0%

310,470

100.0%

-3,173

-1.0%


Domestic Sales

256,160

83.4%

268,799

86.6%

-12,638

-4.7%

Overseas Sales

51,136

16.6%

41,671

13.4%

9,465

+22.7%


First Half
of Fiscal
1999

Percent
of
Net Sales

First Half
of Fiscal
1998

Percent
of
Net Sales

Increase/Decrease over
First Half of Fiscal 1998

Amount

% change

Income from
Operations

17,494

5.7%

22,564

7.3%

-5,070

-22.5%

Ordinary Income

19,085

6.2%

24,318

7.8%

-5,233

-21.5%

Net Income

2,573

0.8%

9,408

3.0%

-6,835

-72.6%

Consolidated
Income/
Nonconsolidated
Income

0.3 times

1.1 times


Note: From the interim period under review, figures are based on revised regulations covering consolidated financial statements. Figures for the previous interim period have also been arranged to reflect the revision. As a result of the revision, income from operations and ordinary income for the previous interim period have increased 2,385 million yen and 2,369 million yen, respectively, compared with figures previously announced.

Consolidated domestic net sales for the first half of fiscal 1999 were down 4.7% from the first half of fiscal 1998. The decline was the result of depressed personal consumption, as well as an increase in shipments in the previous interim term following a demand peak prior to the April 1997 consumption tax hike. By contrast, overseas sales jumped 22.7%. As a result, total net sales were down 1% from the previous year.

Although we undertook cost-efficient advertising and promotion activities and reduced overall costs, income from operations fell 22.5% in real terms, due to increased depreciation expenses resulting from aggressive growth-oriented investments, which we implemented as planned, as well as the effects of declines in revenues of our domestic sales subsidiaries.

Interim net income dropped 72.6%, due primarily to a 9.9 billion yen extraordinary loss on the devaluation of securities, caused by falling stock market prices, especially of bank shares.

Nonconsolidated Net Sales

(Millions of yen)

First Half
of Fiscal
1999

Percent
of
Net Sales

First Half
of Fiscal
1998

Percent
of
Net Sales

Increase/Decrease over
First Half of Fiscal 1998

Amount

% change

Cosmetics
Toiletries
Others

141,355
44,430
10,251

72.1%
22.7%
5.2%

145,902
46,858
13,175

70.8%
22.8%
6.4%

-4,547
-2,428
-2,924

-3.1%
-5.2%
-22.2%

Net Sales

196,036

100.0%

205,937

100.0%

-9,900

-4.8%


First Half
of Fiscal
1999

Percent
of
Net Sales

First Half
of Fiscal
1998

Percent
of
Net Sales

Increase/Decrease over
First Half of Fiscal 1998

Amount

% change

Income from
Operations

14,250

7.3%

13,570

6.6%

680

+5.0%

Ordinary Income

19,346

9.9%

16,906

8.2%

2,440

+14.4%

Net Income

7,510

3.8%

8,506

4.1%

-995

-11.7%


2. Financial Position (consolidated)

(Millions of yen)

Cash and Cash Equivalents at Beginning of Term

119,401

Interim Net Income
Depreciation
Stock Devaluation Loss

2,573
12,324
9,902

Subtotal

24,799

Investments in Fixed Assets

16,611

Retirement of Treasury Stock
Cash Dividends

3,787
2,963

Subtotal

6,751

Other, Net

67

Cash and Cash Equivalents at End of Term

120,905


Investments in Fixed Assets

(Millions of yen)

Capital Investment

11,710

Intangible Fixed Assets

2,107

Long-Term Prepaid Expenses, etc.

2,792


In the interim period under review, the Company made capital investments to strengthen its production system, aimed at reinforcing its foundation for future growth. Investments in fixed assets were made primarily in our cosmetics and salon businesses. In cosmetics, we added a new facility to the Kakegawa factory, upgraded and expanded the Maizuru factory, and reinforced our North American production operations. In our salon business, we acquired the goodwill of a domestic salon operator.

During the term, the Company bought back and retired treasury stock, reflecting its commitment to shareholder return.


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