Summary of Settlement of Consolidated Accounts for the Third Quarter of the Fiscal Year ending March 31, 2011 Japanese Standards (Consolidated)

Transcription

1 Japanese Standards (Consolidated) Isetan Mitsukoshi Holdings Ltd. February 10, 2011 Securities code: 3099 (Listed on the First Section of Tokyo Stock Exchange and Fukuoka Stock Exchange) (URL: Representative: Kunio Isihizuka, President and Representative Director Contact: Yasuhiro Suzuki, Executive Manager, Investor Relations Corporate Administration Div., Administration Headquarters, Isetan Mitsukoshi Holdings Ltd. TEL: (03) Scheduled date of filing of the quarterly financial report (Shihanki Houkokusho): February 14, 2011 Scheduled date of dividend payments:- Preparation of quarterly results supplementary materials: Yes Convening of quarterly results explanation meeting: No (Figures are rounded down to the nearest million yen) 1. Consolidated Business Results for the Second Quarter of Fiscal 2010 (From April 1, 2010, to December 31, 2010) (1) Results of consolidated operations (cumulative) (Percentage figures indicate changes from the previous year) Net Sales Operating Income Recurring Income Net Income (Loss) Millions of yen % Millions of yen % Millions of yen % Millions of yen % 3Q of FY ,933 (4.4) 13, , ,637-3Q of FY ,560 (11.2) 8,352 (58.2) 18,956 (39.0) (10,475) - Net Income (Loss) per Share (Basic) Yen Net Income per Share (Diluted) Yen 3Q of FY Q of FY2009 (26.87) - (2) Consolidated financial position Total Assets Net Assets Shareholder s Equity Ratio Net Assets per Share Millions of yen Millions of yen % Yen 3Q of FY2010 1,271, , , FY2009 1,238, , , (Reference) Shareholders equity: 3Q of FY2010: 415,559 million yen, FY2009: 413,861 million yen 2. Dividends Annual Dividends (Record date) First Quarter Second Quarter Third Quarter Year-end Total Yen Yen Yen Yen Yen FY FY FY2010 (Forecast) Note: Revision to the dividend forecast in the second quarter of fiscal 2010: No 3. Forecast of Consolidated Results for Fiscal 2010 (From April 1, 2010, to March 31, 2011) (Percentage figures indicate changes from the same period of the previous year) Net Sales Operating Income Recurring Income Net Income Net Income per Share Millions of yen % Millions of yen % Millions of yen % Millions of yen % Yen Full Year 1,240,000 (4.0) 9, , , Note: Revision to the forecast of consolidated results in the third quarter of fiscal 2010: Yes The Company has revised its results forecast announced on February 10, 2011 for the fiscal year ending March 31, For specific details, refer to Notice concerning Revision of Forecast of Consolidated Results for Fiscal 2010.

2 4. Others (For details, please refer to supporting data. Other information on Page 5.) (1) Changes in significant subsidiaries during the period: No (Note: changes regarding specified subsidiaries accompanying changes in the scope of consolidation) Isetan Mitsukoshi Holdings Ltd. (3099) (2) Application of simplified and special accounting methods: Yes (Note: Application of simplified accounting and special accounting methods in the preparation of quarterly financial statements (3) Changes in accounting principles, procedures and representation of methods 1) Changes in line with revision to accounting standards: Yes 2) Other changes: No (4) Number of shares issued and outstanding (common stock) 1) Number of shares issued and outstanding at Third quarter of the end of the period (including treasury stock) FY2010 2) Number of shares of treasury stock at the end Third quarter of of the period FY2010 3) Average number of shares during the period Third quarter of FY ,624,034 shares FY ,584,474 shares 102,054 shares FY ,621 shares 394,514,184 shares Third quarter of FY ,798,555 shares (* Presentation of status of implementation of the quarterly review process) This summary of quarterly financial results is not subject to the quarterly review procedures in accordance with the Financial Instruments and Exchange Act. At the time of disclosure of this summary of quarterly financial results, the procedures to review quarterly financial statements in accordance with the Financial Instruments and Exchange Act are still in progress. (* Disclaimer regarding Forward-looking Statements) This report contains forward-looking statements, which are based on the information currently available and certain assumptions the Company considers to be reasonable. Actual results, performance, achievements or financial position may be materially different from any future results, performance, achievements or financial position expressed or implied by these forward-looking statements. Risks, uncertainties and other factors that may affect actual results, performance, achievements or financial position include, but are not limited to, the trends of demand related to the Isetan Mitsukoshi Group s business, exchange rate fluctuations, public regulations, natural disasters and accidents. Note: This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and the Japanese original, the original shall prevail.

3 Table of Contents of Accompanying Materials 1. Qualitative Information on the Quarterly Results of Consolidated Operations...2 (1) Qualitative Information on the Results of Consolidated Operations...2 (2) Qualitative Information on the Changes in the Consolidated Financial Position...4 (3) Qualitative Information on Forecast of Consolidated Results Other Information...5 (1) Changes in significant subsidiaries...5 (2) Application of simplified accounting method and special accounting treatment...5 (3) Any changes in accounting policies and procedures and/or the method of presentation Consolidated Financial Statements...7 (1) Consolidated Balance Sheet...7 (2) Consolidated Statement of Income... 9 (3) Consolidated Statement of Cash Flows...10 (4) Notes on going concern assumption...12 (5) Segment information...12 (6) Notes on significant changes in the amount of shareholders equity (if any)

4 1. Qualitative Information on the Quarterly Results of Consolidated Operations (1) Qualitative Information on the Results of Consolidated Operations In the Japanese economy during the third quarter of fiscal 2010 (April 1, 2010, to December 31, 2010), recovery in production and exports was limited due to the appreciation of the yen and ongoing deflation. Despite the trend toward ceasing declines in employment and personal consumption, more time will be needed before the Japanese economy achieves a full-fledged recovery. In the department store sector, there were signs of a halting of the downturn, as sales in October 2010 rose year on year for the first time in 32 months since February Nevertheless, a preference for low prices and the tendency to economize by consumers have firmly taken hold. To raise profitability under these conditions, respective department stores are terminating the operation of stores and continuing to undertake structural reforms beginning with the conversion of business formats as well as the reform of business models. Amid this environment, the Isetan Mitsukoshi Group has carried out its rolling Three-Year Plan (fiscal fiscal 2012). Under the plan, the Isetan Mitsukoshi Group will strive to become my indispensable department store for each individual customer throughout his or her life by continually creating high-quality, new lifestyles and being of use to our customers in their many different roles in life. By doing so, we aim to become the world s foremost retail and services group with high profitability and sustained growth. We are advancing and intensively promoting three strategic measures (I: Reinforce contact with customers and review relationships with suppliers; II: Promote improvement of Group foundations and structural reforms; and III: Cultivate growth businesses), as we progress with the creation of a framework for reliably securing profits amid a situation in which growth in sales is difficult. Due to the previously mentioned initiatives, consolidated net sales for the third quarter of the fiscal 2010 amounted to 935,933 million, a decrease of 4.4% from the same period of the previous fiscal year; operating income amounted to 13,672 million, an increase of 63.7%; recurring income was 24,694 million, an increase of 30.3%; and net income of 12,637 million was recorded, an increase of 23,112 million compared with the same period of the previous fiscal year. Results by segment were as follows. 1) Department Store Business In the mainstay department store business, sales got back on a recovery track at the Mitsukoshi Nihonbashi main store and the Isetan main store. Moreover, the Mitsukoshi Ginza store with increased floor space reopened on September 11, 2010, and since then, many customers are visiting the store every day. Nonetheless, in regional areas in particular, there are no indications of any improvements in the economy and sales remain sluggish. Each respective company and store promoted cost reductions and recorded decreased revenues and increased profits. In April 2010, we spun off Mitsukoshi s regional stores into independent operating companies with the aim of establishing a structure capable of quickly implementing optimal community-focused business policies in each region. In the Niigata region, Niigata Isetan Mitsukoshi Ltd. began operations and now operates the Isetan Niigata store and the Mitsukoshi Niigata store. In Fukuoka, on October 1, 2010, Iwataya Mitsukoshi, Ltd. (hereinafter, Iwataya Mitsukoshi) took over operations of the Iwataya main store, Fukuoka Mitsukoshi store and Iwataya Kurume store. On a different front, in April 2010 we integrated information systems at Mitsukoshi and Mitsukoshi s regional stores with Isetan s information systems and launched a Group card. As a result, we have built a common operating foundation for the Isetan Mitsukoshi Group. By doing so, we aim to firmly establish merchandizing operations that utilize information systems and promote efficient operations as well as offer product lineups and services that exceed customer expectations and in turn maximize customer satisfaction. In April 2011, Isetan Mitsukoshi Ltd. and Sapporo Marui Mitsukoshi Co., Ltd. will begin operations and thus complete the restructuring of our department store business. Looking at our overseas department stores, by expanding our department store business in China and Southeast Asia, where growth is anticipated, Isetan Mitsukoshi intends to build an earnings foundation that can contribute to the overall Group. In China and Southeast Asian countries, economies recovered and we recorded increases in revenues and profits. As a result, segment sales amounted to 870,690 million, and operating income was 14,075 million. In November 2010, we opened the Serangoon Store as our sixth store in Singapore. Additionally, in China, we plan to open our second store in Tianjin in 2012, making this our fifth store in China. 2) Credit & Finance Business/Customer Organization Management Business - 2 -

5 In the credit & finance business/customer organization management business, MI Card Co., Ltd. launched a new Mitsukoshi M Card in April 2010, while in October 2010 the respective stores of Iwataya Mitsukoshi, Sapporo Marui Imai, Ltd. and Hakodate Marui Imai, Ltd. started the use of a new Group card. As a result, we have established a structure capable of providing shared services at all stores. Although we recorded an increase in revenues due to higher fee income from card use at department stores and externally along with the increased issuance of the Group card, profits declined because of the incurrence of one-time expenses associated with the issue of these cards. On October 1, 2010, MI TOMONOKAI Co., Ltd. absorbed the operations of Iwataya Tomonokai, Co., Ltd., thereby completing the integration of Customer Organization Management operations throughout the entire Group and enabling the reciprocal use of Tomonokai shopping cards and shopping certificates. From February 1, 2011, we will begin recruiting participants for the The Six-month Installment Ki-Ra-Ku Course, which can also be easily used by younger-aged customers, thereby raising the convenience of and expanding Tomonokai card membership. As a result, segment sales amounted to 17,374 million, and an operating loss of 2,363 million was recorded. 3) Other Retail & Specialty Store Business In the other retail & specialty store business, Queen s Isetan Co., Ltd., which operates a supermarket business, worked to raise customer satisfaction by implementing sales polices and offering product lineups that respond to the demands of customers, as well as worked to enhance the efficiency of operations. As a result, segment sales amounted to 42,644 million. This segment posted an operating loss of 79 million. 4) Real Estate Business In the real estate business, in April 2010 we transferred Isetan Building Management Service Co., Ltd., a building maintenance service company, from Isetan to the Company and changed its name to Isetan Mitsukoshi Building Management Ltd. and worked to build sales support operations. As a result, segment sales were 24,128 million and operating income was 1,416 million. 5) Other Businesses In the other businesses segment, Group companies that engage in sales and marketing support made efforts to establish a highly productive operational infrastructure. These companies include Isetan Mitsukoshi Business Support Ltd., a logistics company, and Isetan Mitsukoshi Human Solutions Ltd., a personnel services company. As a result, segment sales were 65,897 million and operating income was 1,944 million

6 (2) Qualitative Information on the Changes in the Consolidated Financial Position Total assets at the end of the third quarter amounted to 1,271,727 million, an increase of 33,721 million from the end of the previous fiscal year. This was attributable mainly to such reasons as an increase in notes and accounts receivable trade due to seasonal factors as well as to a rise in tangible fixed assets along with the reopening of the Mitsukoshi Ginza store with increased floor space. Total liabilities amounted to 844,667 million, an increase of 31,782 million from the end of the previous fiscal year. This was attributable mainly to such reasons as an increase in notes and accounts payable due to seasonal factors. Net assets amounted to 427,060 million, an increase of 1,939 million from the end of the previous fiscal year. This was attributable mainly to such factors as an increase in retained earnings. Cash Flows Cash and cash equivalents at the end of the third quarter were 33,600 million, a decrease of 2,011 million from the end of the same period of the previous fiscal year. 1) Cash flows from operating activities Net cash provided by operating activities amounted to 56,631 million, a 35,693 million increase in cash inflow from the end of the same period of the previous fiscal year. This was due mainly to an increase in income before income taxes and minority interest. 2) Cash flows from investing activities Net cash used in investing activities amounted to 30,508 million, an 7,678 million increase in cash from the end of the same period of the previous fiscal year. This was due mainly to a increase of 7,079 million in payments for purchase of tangible fixed assets accompanying the reopening of the Mitsukoshi Ginza store with increased floor space. 3) Cash flows from financing activities Net cash used in financing activities amounted to 29,388 million, a decrease of 32,043 million from the same period of the previous fiscal year. Despite proceeds from issuance of corporate bonds, this decline was mainly due to the repayment of long-term debt and a decrease in short-term borrowings. (3) Qualitative Information on Forecast of Consolidated Results For the entire fiscal year, in consideration of third quarter business results and taking into account progress in reducing expenses, we are raising our previous forecast for operating income, recurring income and net income

7 2. Other Information (1) Changes in significant subsidiaries Not applicable (2) Application of simplified accounting method and special accounting treatment 1. Valuation method of inventories For the computation of inventories at December 31, 2010 year on year, we omitted the physical inventory check and adopted a reasonable computation method based on the result of the consolidated subsidiaries physical inventory check conducted at the end of the second quarter of current fiscal year. 2. Method of calculation of depreciation of fixed assets Depreciation expenses for assets that are depreciated using the declining balance method are calculated by dividing the annual depreciation expenses on a pro-rata basis. 3. Computing of tax expenses Tax expenses are computed by the following procedures: first, the effective tax rate after applying tax effect accounting to income before income taxes and minority interests for the fiscal year is reasonably estimated, and then, the quarterly net income before income taxes and minority interests is multiplied by the estimated effective tax rate. Income taxes deferred is included in income taxes. (3) Any changes in accounting policies and procedures and/or the method of presentation (Changes of Accounting Procedures and Presentation) 1. Application of Accounting Standards for Asset Retirement Obligations From the first quarter of the current fiscal year, the Company has adopted the Accounting Standards for Asset Retirement Obligations (ASBJ Statement No. 18, issued on March 31, 2008) and Guidance on Accounting Standards for Asset Retirement Obligations (ASBJ Guidance No. 21, issued on March 31, 2008). As a result of this change, operating income and recurring income decreased 175 million respectively, and quarterly net income before income taxes declined 5,698 million for the third quarter of the current fiscal year. 2. Application of Accounting Standard for Equity Method of Accounting for Investments and Practical Solution on Unification of Accounting Policies Applied to Associates Accounted for Using the Equity Method From the first quarter of the current fiscal year, the Company adopted the Accounting Standard for Equity Method of Accounting for Investments (ASBJ Statement No. 16, released on March 10, 2008) and the Practical Solution on Unification of Accounting Policies Applied to Associates Accounted for Using the Equity Method (PITF No. 24, March 10, 2008) and has made necessary adjustments. There was no material impact from this change on the quarterly consolidated financial statements

8 3. Application of Accounting Standard for Business Combinations From the first quarter of the current fiscal year, the Company adopted Accounting Standard for Business Combinations (ASBJ Statement No. 21, December 26, 2008), Accounting Standard for Consolidated Financial Statements (ASBJ Statement No. 22, December 26, 2008), Revised Accounting Standard for Business Divestitures (ASBJ Statement No. 7, December 26, 2008), Revised Accounting Standard for Equity Method of Accounting for Investments (ASBJ Statement No. 16, released December 26, 2008), and Revised Guidance on Accounting Standard for Business Combinations and Accounting Standard for Business Divestitures (ASBJ Guidance No. 10, December 26, 2008). (Change in Presentation Method) In the third quarter of the current fiscal year, the Company listed net income (loss) before minority interests in the consolidated statement of income along with the application of Cabinet Office Ordinance Partially Revising Regulation on Terminology, Forms and Preparation of Financial Statements (Cabinet Office Ordinance No. 5, March 24, 2009) based on the Accounting Standard for Consolidated Financial Statements (ASBJ Statement No. 22, December 26, 2008). (Additional Information) Principle Method of Treatment of Deferred Assets Bonds issue costs In line with recording bond issue costs incurred associated with issuing new corporate bonds during the second quarter of the consolidated accounting period under review, bonds issue costs as of this period are amortized using the straight-line method over the period in which the bonds are outstanding in accordance with the PITF (Practical Issues Task Force) No.19 Tentative Solution on Accounting for Deferred Assets issued on August 11, 2006 by the Accounting Standards Board of Japan (ASBJ)

9 3. Consolidated Financial Statements (1) Consolidated Balance Sheet (Millions of yen) Condensed consolidated balance 3Q of Fiscal 2010 (As of December 31, 2010) sheet at the end of the previous fiscal year (As of March 31, 2010) ASSETS Current assets Cash and bank deposits 33,889 37,682 Notes and accounts receivable trade 118,566 97,314 Marketable securities Merchandise and finished goods 63,098 56,412 Work in process Raw materials and supplies 1,133 1,161 Other current assets 47,720 34,975 Less: Allowance for doubtful accounts (3,126) (2,941) Total current assets 262, ,252 Property and equipment Tangible fixed assets Buildings and structures, net 196, ,609 Land 538, ,609 Other tangible fixed assets, net 22,729 33,692 Total tangible fixed assets 757, ,910 Intangible fixed assets Goodwill 1,430 1,762 Other intangible fixed assets 47,349 46,342 Total intangible fixed assets 48,780 48,104 Investments and other assets Investment securities 89,839 94,798 Other assets 114, ,995 Less: Allowance for doubtful accounts (2,020) (2,055) Total investments and other assets 202, ,738 Total property and equipment 1,009,484 1,012,753 Deferred assets Bond issue costs Total deferred assets Total assets 1,271,727 1,238,

10 (Millions of yen) Condensed consolidated balance 3Q of Fiscal 2010 (As of December 31, 2010) sheet at the end of the previous fiscal year (As of March 31, 2010) LIABILITIES Current liabilities Notes and accounts payable 146,301 94,940 Short-term borrowings 15,846 85,683 Income taxes payable 7,047 5,529 Reserve for loss from redemption of gift vouchers 17,673 20,710 Allowance 7,454 11,767 Other current liabilities 246, ,395 Total current liabilities 440, ,026 Long-term liabilities Bonds payable 24,000 - Long-term debt 91,000 71,600 Deferred tax liabilities 193, ,106 Reserve for accrued employees retirement benefits 45,432 46,672 Allowance Negative goodwill 29,777 39,703 Other long-term liabilities 19,881 21,714 Total long-term liabilities 403, ,858 Total liabilities 844, ,885 NET ASSETS Shareholders equity Common stock 50,043 50,024 Capital surplus 325, ,984 Retained earnings 57,690 49,473 Less: Treasury stock (93) (81) Total shareholders equity 432, ,399 Valuation and translation adjustments Net unrealized gains (losses) on other securities (3,309) 125 Deferred gains (losses) on hedges 5 16 Foreign currency translation adjustments (13,779) (10,680) Total valuation and translation adjustments (17,083) (10,538) Stock acquisition rights Minority interests 10,635 10,317 Total net assets 427, ,120 Total liabilities and net assets 1,271,727 1,238,

11 (2) Consolidated Statement of Income Third Quarter of Fiscal 2009 and 2010 (Millions of yen) 3Q of Fiscal 2009 (From April 1, 2009, to December 31, 2009) 3Q of Fiscal 2010 (From April 1, 2010, to December 31, 2010) Net sales 978, ,933 Cost of sales 705, ,837 Gross profit 273, ,096 Selling, general and administrative expenses 264, ,423 Operating income 8,352 13,672 Non-operating income Interest income Dividend income Amortization of negative goodwill 9,966 9,925 Equity in earning of affiliates 1,673 2,306 Other non-operating income 3,339 2,524 Total non-operating income 16,216 15,929 Non-operating expenses Interest expenses 1,658 1,333 Loss on retirement of property and equipment Other non-operating expenses 3,353 2,822 Total non-operating expenses 5,613 4,907 Recurring income 18,956 24,694 Extraordinary gain Gain on sales of property and equipment Gain on sales of investment securities Gain on liquidation of affiliates - 54 Total extraordinary gain 1, Extraordinary loss Loss on sales of property and equipment Loss on disposal of property and equipment Loss on sales of investment securities - 7 Loss on valuation of investment securities 1, Loss on liquidation of affiliates Loss on structural reforms 38,758 - Amount from application of accounting standard for asset retirement obligations - 5,522 Other extraordinary loss Total extraordinary loss 42,413 6,310 Income (loss) before income taxes and minority interests (22,440) 19,058 Income taxes (12,438) 5,776 Net income before minority interests - 13,281 Minority interests in earnings of consolidated subsidiaries Net income (loss) (10,475) 12,

12 (3) Consolidated Statement of Cash Flows (Millions of yen) 3Q of Fiscal 2009 (From April 1, 2009, to December 31, 2009) 3Q of Fiscal 2010 (From April 1, 2010, to December 31, 2010) Cash flows from operating activities Income (loss) before income taxes and minority interest (22,440) 19,058 Depreciation and amortization 17,006 16,918 Amortization of negative goodwill (9,966) (9,925) Increase (decrease) in allowance for bonuses (2,061) (4,595) Increase (decrease) in allowance for doubtful accounts Increase (decrease) in reserve for accrued employees retirement benefits (14,791) (874) Interest and dividend income (1,236) (1,172) Interest expenses 1,658 1,333 Equity in loss (earnings) of affiliated companies (1,673) (2,306) Loss (gain) on disposal of property and equipment Loss (gain) on sales of investment securities (896) (611) Loss (gain) on valuation of investment securities 1, Loss on liquidation of affiliates Loss on structural reforms 38,758 - Amount from application of accounting standard for asset retirement obligations - 5,522 Decrease (increase) in receivables (14,941) (27,272) Decrease (increase) in inventories (1,938) (6,799) Increase (decrease) in payables 34,505 51,575 Increase (decrease) in accrued expenses 1,086 3,381 Increase (decrease) in accrued liabilities 14,974 17,815 Other, net (6,838) (1,854) Sub-total 34,300 61,874 Interest and dividend income received 3,628 2,540 Interest expense paid (1,461) (910) Income taxes paid (3,033) (4,767) Special retirement allowances paid (12,495) (2,105) Net cash provided by operating activities 20,937 56,631 Cash flows from investing activities Increase in fixed deposits (246) (132) Payments for purchase of tangible fixed assets (16,636) (23,715) Proceeds from sales of tangible fixed assets Payments for purchase of intangible fixed assets (1,534) (3,788) Payments for purchase of investment securities (219) (4,444) Proceeds from sales of investment securities 1,543 1,351 Payments for transfer of business (13,125) - Proceeds from collection of lease and guarantee deposits 2,754 3,743 Other, net 4,235 (3,996) Net cash used in investing activities (22,830) (30,508)

13 (Millions of yen) 3Q of Fiscal 2009 (From April 1, 2009, to December 31, 2009) 3Q of Fiscal 2010 (From April 1, 2010, to December 31, 2010) Cash flows from financing activities Increase (decrease) in short-term borrowings 41,127 (43,437) Proceeds from borrowings of long-term debt 30,000 23,000 Repayment of long-term debt (72,560) (30,000) Proceeds from issuance of corporate bonds - 23,887 Increase (decrease) in commercial paper 10,000 2,000 Dividends paid (5,383) (3,920) Other, net (529) (918) Net cash provided by (used in) financing activities 2,654 (29,388) Effect of exchange rate changes on cash and cash equivalents 98 (499) Net increase (decrease) in cash and cash equivalents 861 (3,766) Cash and cash equivalents at beginning of period 34,749 37,366 Cash and cash equivalents at end of period 35,611 33,

14 for the First Half of the Fiscal Year ending March 31, 2011 (4) Notes on going concern assumption Third Quarter of Fiscal 2010 (From April 1, 2010, to December 31, 2010) Not applicable (5) Segment information Business segment information Third Quarter of Fiscal 2009 (From April 1, 2009, to December 31, 2009) Sales Department store business Credit & finance business Other retail & specialty store business Customer organization management business Other businesses Total (Millions of yen) Elimination or corporate Consolidated total (1) Sales to outside customers 907,388 6,927 38, , , ,560 (2) Intersegment sales or transfer 357 3,917 7,161 3,295 70,181 84,913 (84,913) - Total 907,746 10,845 45,279 3,497 96,104 1,063,474 (84,913) 978,560 Operating income (loss) 9,110 (116) (71) (1,861) 1,235 8, ,352 Notes: 1. Business segments are based on the segments defined for internal management purposes. 2. Details of each business segment are as follows: 1) Department store business: Sales of apparel, accessories, household and sundry goods, and foods 2) Credit & finance business: Credit cards, money lending, brokerage of non-life insurance, and businesses concerning solicitation for life insurance 3) Other retail & specialty store business: Sales of ladies wear, foods, dry goods (clothing and textiles), and household goods 4) Customer organization management business: Operation of customer organization management business 5) Other businesses: Management of real estate, services of manufacturing, exporting, importing, wholesaling, distribution, temporary personnel, and data processing 3.1) Regarding the methods of depreciation of tangible fixed assets for the department store business segment, effective from the first quarter of fiscal 2009, the Company uniformly depreciates building fixtures and structures using the straight-line method and the declining-balance method, respectively. As a result of this change, compared with the previous accounting treatment, operating income increased 1,717 million. 2) The customer organization management business, which was included in other businesses until the third quarter of the previous fiscal year, is presented as a separate segment customer organization management business from the end of the previous fiscal year onward because the operating loss attributable to the customer organization management business exceeded 10% of the total operating loss of the other businesses segment. For the third quarter of the previous year, the customer organization management business, which is included in other businesses, posted sales of 3,743 million (sales of 287 million to outside customers) and recorded an operating loss of 2,137 million. Geographical segment information Third Quarter of Fiscal 2009 (From April 1, 2009, to December 31, 2009) Geographical segment information is not provided since Japan accounted for over 90% of total sales of all segments. Overseas sales Third Quarter of Fiscal 2009 (From April 1, 2009, to December 31, 2009) Information on overseas sales is not provided since overseas sales accounted for less than 10% of consolidated net sales for the third quarter of fiscal

15 for the First Half of the Fiscal Year ending March 31, 2011 Segment information (Additional Information) Effective from the first quarter of the current fiscal year, the Company adopted the Accounting Standard for Disclosures about Segments of an Enterprise and Related Information (ASBJ Statement No. 17, March 27, 2009) and Guidance on Accounting Standard for Disclosures about Segments of an Enterprise and Related Information (ASBJ Guidance No. 20, March 21, 2008). 1. Overview of Reporting Segments The Company s reporting segments are those for which financial information separate from that of other units comprising the Group can be obtained. These reporting segments are the subject of regular reviews by the board of directors for determining the allocation of management resources and assessment of business results. The Group is composed of business segments centering on the department stores segment. The Group reports its segments as the department store business, credit & finance business/customer organization management business, other retail & specialty store business and other businesses based on the considerations of their services and economic characteristics. The department store business sells apparel, accessories, household and sundry goods, and foods. The credit & finance business/customer organization management business is involved in credit cards, cash loans, brokerage of non-life insurance and businesses concerning solicitation for life insurance and the operation of the customer organization management business. The other retail & specialty store business sells ladies wear, foods, dry goods (clothing and textiles) and household goods. The other businesses segment engages in real estate leasing, building interior decorating and building maintenance. 2. Information Concerning Segment Sales, Income and Losses Third Quarter of consolidated accounting period (April 1, 2010, to December 31, 2010) Sales Department store business Credit & finance business/ Customer organization management business Reporting segments Other retail & specialty store business Real estate business Subtotal Other businesses (Note 1) Total (Millions of yen) Amount listed on quarterly Adjusted Consolidated amounts Statement of (Note 2) Income (Note 3) (1) Sales to outside customers 870,492 7,517 35,171 10, ,333 12, , ,933 (2) Intersegment sales or transfer 198 9,857 7,473 13,976 31,505 53,296 84,802 (84,802) - Total 870,690 17,374 42,644 24, ,838 65,897 1,020,735 (84,802) 935,933 Segment income (loss) 14,075 (2,363) (79) 1,416 13,049 1,944 14,994 (1,321) 13,672 Notes 1. The other businesses segment includes the services of manufacturing, exporting, importing, wholesaling, distribution, temporary personnel and data processing that are not included in other reporting segments. 2. The segment adjusted loss of 1,321 million is an intersegment elimination. 3. Segment income (loss) is adjusted with operating income. 3. There are no applicable items concerning impairment of fixed assets or goodwill. Not applicable (6) Notes on significant changes in the amount of shareholders equity (if any) Not applicable