Financial Results for the Fiscal Year Ended April 30, 2013 ～ Towards the Achievement of Medium Term Management Plan ～ June 2013 ITO EN, LTD. Index 1. Beverage Market in Japan 2. Results of Operations FYE April 2013 3. Annual Forecasts FYE April 2014 4. Management 5. Category Results (Non-Consolidated) 6. Category: RTD Japanese Tea "Oi Ocha" 7. Category: RTD Tea "Barley Tea," "Jasmine Tea," & etc. 8. Category: RTD Black Tea and Coffee 9. Category: Vegetable and Dairy Products Beverage 10. TULLY'S COFFEE Business 11. Chichiyasu and Vending Machine Business 12. Overseas Businesses 13. Medium and Long-Term Management Plan （Appendix） 1. Consumption Valuable Drinks per Capita 2. Market behind Green Tea 3. Developing Tea Farms Business 4. Sales Results by Packaging (Non-Consolidated) 5. Summary of Consolidated Balance Sheet & Other Data 6. ITO EN’s Business Structure 7. Other Topics 8. Key Management Indexes & Cash Flows (Consolidated) 1. Beverage Market in Japan グラフ② Average Monthly Temperatures and Market Trend Precipitation (Tokyo area) chart① chart② Processed 1995 2005 2015（Forecast） Monthly ave. temp foods ¥24,079.0 billion ¥23,010.5 billion ¥22,800.0 billion change from prev. yr. Precipitation (mm) 283 Alcoholic Alcoholic Alcoholic Bevarages Bevarages 4℃ 231 Beverages 16.5% 14.0% 215 3.3℃ 19.8% RTD 【Keys of Beverage Market】 RTD Others Others RTD Others Bevarages ・Increasing consumption per capita Bevarages The ratio of RTD 185 47.5% 3℃ 47.1% Beverages 48.8% 15.7% 16.5% composition would 155 154 ・Low birthrate & longevity and be UP 12.9% Confectione Confection Confectio health trend 130 ries Wheat Flour eries 10.4% neries ・Rising food safety and security 2℃ 1.6℃ Flour 9.7% Flour 11.0% products consciousness 1.1℃ 1.1℃ 70 9.8% 9.3% 11.0% 69 1℃ 30 45 (¥ billion) Total 25 4,000.0 -0.1℃ 0.8℃ 4,000 Tea was popular 0.7℃ Others/Functional 0℃ 0.7℃ Coffee was 3,715.6 May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr popular 3,637.5 3,700.0 3,612.7 3,631.5 3,616.0 3,607.8 3,603.1 Sports Drink 183.6 -1℃ -0.2℃ 3,540.3 3,527.7 170.0 -0.9℃ 176.2 183.9 165.5 152.3 156.7 Carbonated 218.4 222.0 159.3 250.0 Mineral Water -1.4℃ was popular 288.9 252.2 -2℃ -2.2℃ 282.0 265.9 292.3 260.0 Alternative demand 276.3 259.6 3,100.2 260.1 230.0 211.3 232.0 Fruit -3℃ 206.6 214.0 210.2 252.7 3,000 97.7 157.5 219.2 Source: Japan Meteorological Agency, May 2012 to Apr 2013 325.0 379.6 325.7 Safe & security Vegetable 2,707.5 376.4 359.6 324.2 312.2 325.0 447.4 305.6 health-conscious Pioneering of 175.0 Canned Green Tea 190.0 146.8 167.4 Monthly Sales Trends 159.2 184.5 156.2 144.4 150.1 145.6 chart③ Coffee (YOY %) Pioneering of Canned Oolong Tea 20.2% 950.0 2,000 952.4 952.0 20% ITO EN 1,883.9 955.1 948.2 956.6 969.1 966.2 948.0 922.3 14.2% 15% 8.7% 12.0% 7.8% 8.7% 8.3% 1,424.8 Carbonated 10% Avoidance of alcohol 6.0% 11.2% 6.0% 5.0% 4.7% 710.0 5% 8.0% 538.5 555.9 581.9 592.0 603.3 643.4 642.5 680.0 648.9 3.5% 2.4% 1,000 0% 3.0% 3.0% 3.0% 3.0% 2.0% (Tea total) 1.0% 0.0% (931.3) (918.2) -1.0% (923.4) (910.5) (870.1) (885.0) (872.5) (871.5) (890.0) Other Tea -5% 484.3 497.2 508.4 (796.4) 508.5 488.1 510.0 497.5 488.5 490.0 Consuming increase Market 579.3 in senior-citizen -10% -7.0% Green Tea -15% 447.0 421.0 415.0 402.0 382.0 375.0 375.0 383.0 400.0 217.1 0 85.2 May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr 1981 1985 1990 1995 2000 2005 2006 2007 2008 2009 2010 2011 2012 2013 2020 Forecast Forecast Source: ITO EN, May 2012 to Apr 2013 Source: ITO EN, Market: Calendar year - 1 - 2. Results of Operations FYE April 2013 ■Summary of Operations （Consolidated and Non-Consolidated） （\ million） ■Performances of Subsidiaries （\ million） Upper: Net Sales For the Year Ended For the Year Ended For the Year Ended For the Year Ended Bottom: Operating Apr. 30, 2012 Apr. 30, 2013 YOY % Apr. 30, 2012 Sales Apr. 30, 2013 Sales YOY % Income Change Composition Composition Change 5,476 6,487 18.5% ITO EN Net Sales 369,284 100.0% 403,957 100.0% 9.4% 394 471 19.5% (North America) 69,384$thousand 76,658$thousand 10.5% Gross Profit 177,071 47.9% 192,088 47.6% 8.5% INC. 5,078$thousand 5,705$thousand 12.3% Selling Commission 55,033 14.9% 64,000 15.8% 16.3% Tully's Coffee 18,048（19,383） 21,071 16.7% Japan Co., Ltd 2,008（2,126） 2,681 33.5% Advertising 12,156 3.3% 10,369 2.6% -14.7% 10,628 11,076 4.2% Chichiyasu Company 61 -199 － Transportation 8,911 2.4% 9,599 2.4% 7.7% 39,871 56,315 41.2% Domestic Subsidiaries Depreciation and 9,449 2.6% 12,246 3.0% 29.6% 1,468 1,487 1.3% Amortization 1,814 3,000 65.4% Selling, General and Other Subsidiaries 158,164 42.8% 171,837 42.5% 8.6% -65 190 － Administrative Expenses Consolidated Elimination of Internal -40,186 -45,805 － Operating Income 18,907 5.1% 20,250 5.0% 7.1% Transactions -1,209 -1,215 － ※Tully's Coffee Japan Co., Ltd. changed fiscal year end from Mar. 31 to Apr. 30 Ordinary Income 17,985 4.9% 19,914 4.9% 10.7% （ ） is 13 months in FYE Apr. 30, 2012 Extraordinary Expenses -795 － -430 － － and Income ■Breakdown of Gross Profit Change(Non-Consolidated) Net Income 9,249 2.5% 11,244 2.8% 21.6% For the Year (¥ billion) Ended Major extraordinary losses Impairment loss; 662 Impairment loss; 463 Apr. 30, 2013 Net Sales 332,297 100.0% 351,807 100.0% 5.9% Sales Changes 7.7 Changes in Product 46.7% 46.0% 4.4% -3.3 Gross Profit 155,192 161,990 Mix Fluctuations in 4.9% 4.8% 4.4% -1.3 Operating Income 16,131 16,834 Sales Prices Fluctuations in Raw Non-Consolidated 4.8% 4.9% 8.6% 3.6 Ordinary Income 15,784 17,138 Material Costs, etc. - 2 - 3. Annual Forecasts FYE April 2014 ■Summary of Operations （Consolidated and Non-Consolidated） （\ million） ■Forecasts of Subsidiaries （\ million） For the Year Upper: Net Sales For the Year Ended For the Year Ended For the Year Ending Bottom: Operating Ending Apr. 30, 2013 対前期比 Apr. 30, 2013 Sales Apr. 30, 2014 Est. Sales YOY % Income Apr. 30, 2014 Est. 増減率 Composition Composition Change 6,487 7,734 19.2% ITO EN Net Sales 403,957 100.0% 440,000 100.0% 8.9% 471 703 49.3% (North America) 76,658$thousand 81,500$thousand 6.3% Gross Profit 192,088 47.6% 209,562 47.6% 9.1% INC. 5,705$thousand 7,400$thousand 29.7% Selling Commission 64,000 15.8% 69,450 15.8% 8.5% Tully's Coffee 21,071 22,700 7.7% Japan Co., Ltd 2,681 2,900 8.2% Advertising 10,369 2.6% 12,524 2.8% 20.8% 11,076 12,500 12.9% Chichiyasu Company -199 150 － Transportation 9,599 2.4% 10,540 2.4% 9.8% 56,315 72,982 29.6% Domestic Subsidiaries Depreciation and 12,246 3.0% 12,601 2.9% 2.9% 1,487 1,844 24.0% Amortization 3,000 4,418 47.2% Selling, General and Other Subsidiaries 171,837 42.5% 186,562 42.4% 8.6% 190 242 28.0% Administrative Expenses Consolidated Elimination of Internal -45,805 -49,214 － Operating Income 20,250 5.0% 23,000 5.2% 13.6% Transactions -1,215 -1,189 － Ordinary Income 19,914 4.9% 21,500 4.9% 8.0% Extraordinary Expenses ■Breakdown of Gross Profit Change -430 － -500 － － and Income (Non-Consolidated) (¥ billion) Net Income 11,244 2.8% 12,300 2.8% 9.4% For the Year For the Year Ended Ending Major extraordinary losses Impairment loss; 463 Apr. 30, 2013 Apr. 30, 2014 Est. Net Sales 351,807 100.0% 368,880 100.0% 4.9% Sales Changes 7.7 7.6 Changes in Product 46.0% 46.0% 4.8% -3.3 0.7 Gross Profit 161,990 169,704 Mix Fluctuations in 4.8% 5.0% 9.0% -1.3 0.0 Operating Income 16,834 18,350 Sales Prices Fluctuations in Raw Non-Consolidated 4.9% 4.8% 4.2% 3.6 -0.6 Ordinary Income 17,138 17,850 Material Costs, etc. - 3 - 4. Management Management Strategies Difference in Consolidated Operating Income chart① ¥400 billion for consolidated net sales: Achieved a year ahead of schedule ¥23 billion for consolidated operating income:Target for this FYE - ¥5.7 billion + ¥0.2 billion + ¥7.8 billion 【Enhance Domestic Sales & Distribution】 - ¥0.5 billion + ¥0.9 billion *Acquire new customers *Expand distribution and strengthen ties with existing ↑ ↑ ↑ ↑ ↑ customers ITO EN ITO EN Effects of Increase in Increase in ¥23.0 billion (Non-consolidated) (Non-consolidated) increase in operating income amortization of ¥20.2 billion Increase in goodwill & FYE 2014/4 *Strengthen field-marketing strategies Increase in gross consumption of Tully's, profit Selling, General & Chichiyasu, increase/decrease *Strengthen vending machine-marketing strategies Administrative tax FYE 2013/4 & NEOS in operating income *Strengthen area-marketing strategies Expenses of other subsidiaries ＝＝＝＝＝＝＝＝＝ ＝＝＝＝＝＝＝＝＝ *Complete cost reduction *Improve productivity and cost competitiveness Consolidated Cash Flow and improve profitability on subsidiaries *Generate synergetic effects among the group CF from operating activities chart② CF from investing activities (¥ million) 26,100 Free CF 24,042 25,000 19,714 21,462 【Strengthen Branding】 17,191 *Strengthen distribution of Oi Ocha series 15,000 22,100 17,581 *Further brand-building of TEAS' TEA & TULLY'S COFFEE 13,394 14,769 5,000 10,621 *Brand-building of Ichinichibun-no-Yasai (a day's worth -5,000 of vegetables), Kenko Mineraru Mugicha (healthy mineral -2,133 -4,000 -6,569 barley tea), & etc.