Business Report 1 Matters Concerning Shiseido Group (1) …€¦ · · 2015-06-09During the current fiscal year, the fiscal year ended March 31, 2010, economic recession persisted

-6- [Translation: AGM 2010]

Business Report (Fiscal Year from April 1, 2009 to March 31, 2010)

1．Matters Concerning Shiseido Group 1.1 Business Overview

(1) Progress and Results Overview

During the current fiscal year, the fiscal year ended March 31, 2010, economic recession persisted in Japan and overseas, and consumer product markets remained challenging. The domestic cosmetics market contracted sharply as consumer sentiment remained cool. Overseas, economic recession impacted the European market, but the North American market showed signs of recovery in the second half of the fiscal year. The markets of emerging nations were solid, including continued growth in the Chinese market.

Since the fiscal year ended March 31, 2009, the Shiseido Group has been aiming to become a global player representing Asia with its origins in Japan by carrying out a Three-Year Plan to improve the quality of activities across the board. Under this Three-Year Plan Shiseido is concentrating on creating a brand loved by customers throughout the world with a focus on strengthening cultivation of the global brand SHISEIDO, further expanding its business in China, and nurturing core brands/lines in the domestic market. In addition, we are improving our profitability by promoting structural reform, nurturing global human resources and strengthening corporate governance in order to establish an “unsurpassed, world-class quality of business management.” Moreover, as a living corporation that is part of society, we are actively promoting CSR activities, including social contributions and environmental protection.

Although we devoted all of our strengths to these corporate activities during the current fiscal year, conditions for the Shiseido Group as a whole have remained challenging due to the impact of the protracted economic recession.

For the fiscal year ended March 31, 2010, domestic sales decreased because consumer sentiment remained cool. Overseas sales increased steadily on a local-currency basis, but decreased when translated into yen due to the appreciation of the yen. As a result, net sales decreased 6.7 percent compared with the previous fiscal year. Operating income increased 0.9 percent year on year, with lower selling, general and administrative expenses compensating for a decrease in gross profit resulting from the decrease in net sales. The operating margin increased 0.6 percentage points compared with the previous fiscal year to 7.8 percent. Net income increased 73.8 percent compared with the previous fiscal year because net extraordinary losses and income taxes both decreased year on year.


Consolidated Results

110th Business Term

(Current term) (¥ million)

109th Business Term (¥ million) Percentage Change (%)

Net Sales 644,201 690,256 △6.7 Operating Income 50,350 49,914 0.9 Operating Margin (%) 7.8 7.2 [0.6 percentage points] Ordinary Income 51,485 52,061 △1.1 Net Income 33,671 19,373 73.8

Note: [ ] indicates net % change from the previous fiscal term. Triangular marks (△) indicate a decrease.

2) Operational Review by Business Segment Consolidated Sales by Segment

Segment Net Sales (¥ million)

Percentage of Total

Percentage Change (%)

Domestic Cosmetics 397,567 61.7 △3.6 Overseas Cosmetics 236,600 36.7 △9.3

Others 10,033 1.6 △41.0

Total 644,201 100.0 △6.7 Note: Triangular marks (△) indicate a decrease.

Main Activities by Business Segment

Segment Main Activities

Domestic Cosmetics

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, etc.)

Overseas Cosmetics Cosmetics Division (production and sale of cosmetics, cosmetic accessories, toiletries) Professional Division (production and sale of beauty salon products, etc.)

Others Frontier Sciences Division (Production and sale of cosmetic ingredients, medical-use drugs and beauty therapy cosmetics) Operation of restaurant, etc.

Domestic Cosmetics

Sales in the domestic cosmetics segment decreased 3.6 percent year on year to ¥397,567 million. Given a changing market structure that is becoming polarized between high-priced and low-priced products, Shiseido worked to step up distinction and concentration. However, we have not responded fully to the move among customers toward low-priced items amid cooling consumer sentiment.

Cosmetics Division

Shiseido responded to a changing market structure that is becoming polarized by being even more meticulous in combining brands/lines with channels.1 We focused on high-priced counseling products in the core voluntary chain store, department store and general merchandise store channels, and on low-priced self-selection2 and toiletry products in the core drug store channel.

For high-priced counseling products, we generated steady results by expanding sales of relationship-building brands3/lines centered on skincare. We executed sales measures


specializing in the Bénéfique brand exclusively for voluntary chain stores, and made progress with our PS Program4 that is designed to powerfully support voluntary chain stores that want to strengthen cooperation with Shiseido. At department stores, we implemented a Double Counter strategy5 for the top-end prestige clé de peau BEAUTÉ brand, and also strengthened cultivation of the REVITAL GRANAS line targeting the “new luxury segment”6 of women in their 30s or older. At general merchandise stores, we further enhanced the sales counter activities of beauty consultants and, just as at department stores, strengthened cultivation of the REVITAL GRANAS line.

For low-priced self-selection and toiletry products, we concentrated on expanding sales of haircare, skincare and men’s mega lines7 at self-selection sales counters in drug stores and general merchandise stores. In order to meet an even broader range of customer haircare needs, we added a gold-colored Head Spa line to Tsubaki, thus creating a third line in addition to the red and white lines. Moreover, we innovated8 the Aqua Label self-selection skincare brand, and launched Uno Fog Bar, a completely new genre of men’s hair styling mist. At the same time, we worked to establish the Diamond Sales9 system for large store chains and deepened cooperation in this channel.

However, these efforts did not generate outstanding results because of the impact of cooling consumer sentiment on promotional products,10 primarily mid-priced items, and the substantial impact of the trend toward low-priced self-selection and toiletry products.

Professional Division

In the beauty salon services sector, Shiseido emphasized strengthening wedding-oriented beauty salons at wedding halls and hotels. In the esthetic beauty and spa treatment sector, we concentrated on cultivating core salons and concluding new salon contracts. In hair and beauty salon product sales, we continued to promote marketing activities that emphasize the quality of merchandising proposals.

Healthcare Division

In the market for beauty care supplements, sales of Collagen continued to increase, and Shiseido focused attention on launching the In & On line, which combines beauty foods and cosmetics for women in their forties.

Overseas Cosmetics

Sales in the overseas cosmetics segment increased 3.0 percent year on year on a local currency basis, but decreased 9.3 percent to ¥236,600 million when translated into yen due to the impact of the yen’s appreciation. Economic recession impacted the European market, but the North American market showed signs of recovery in the second half of the fiscal year. Results were strong in Asia, driven by China.

Cosmetics Division

Shiseido cultivated the global brand SHISEIDO, which is its iconic prestige brand sold worldwide. We launched a new makeup line, followed by the SHISEIDO Future Solution LX premium skincare line. We also renewed the design of department store sales counters in ways such as introducing a new symbolic sign11 in order to enhance our global image. In addition, we continued to execute our City Concept12 strategy of focusing marketing on cities that have a strong ripple effect on their respective countries as a whole.

In China, a key market, we maintained strong growth by continuing to energetically implement channel-specific brand marketing centered on China-only brands. In


department stores, we introduced MAQUILLAGE, a mega line in Japan, from a sales foundation built on skincare. We also strengthened the makeup domain in ways such as innovating the China-only AUPRES makeup line. In addition, we signed up additional cosmetic specialty stores and worked to increase sales at existing cosmetic specialty stores in ways such as strengthening sales of the China-only brand URARA.

In the masstige13 market, we significantly boosted sales of the Za brand, which targets middle-income consumers. We also expanded the sales area of the self-selection makeup brand MAJOLICA MAJORCA into the countries of Southeast Asia. In these and other ways, we moved to strengthen our foundation in growing markets.

We also made steady progress in expanding business in new markets. We advanced into African markets for the first time by entering the markets of Egypt and Morocco and launched the global brand SHISEIDO in Laos and Azerbaijan. As a result of these efforts, the global brand SHISEIDO was available in 73 countries and regions (including Japan) as of December 31, 2009.

As part of efforts to improve quality and responsiveness at sales counters, we distributed copies of the Shiseido BC Omotenashi Credo to overseas beauty consultants. The Credo is a set of behavioral indicators to help realize the spirit of omotenashi, a Shiseido strength.

Moreover, in the fragrance markets of Europe and North America, Beauté Prestige International S.A. added a new range, A Scent by Issey Miyake, to its ISSEY MIYAKE line of designer fragrances and also worked to strengthen the Jean Paul GAULTIER and NARCISO RODRIGUEZ lines.

(Professional Division)

Zotos International, Inc., which manufactures and sells products for salons globally with a focus on North America, implemented aggressive marketing activities, including stepping up efforts to cultivate its core JOICO line and launching Diamond Shine, a new haircare line. In the esthetic beauty and spa treatment sectors, the contraction of markets in Europe impacted the performance of DECLÉOR.

Others

Sales in the others segment decreased 41.0 percent year on year to ¥10,033 million because of the withdrawal from the boutique business at the end of the previous fiscal year. Bio-hyaluronic acid, a raw material used in cosmetics and pharmaceuticals, performed well in Japan and overseas, and sales of 2e and NAVISION cosmetics for medical institutions increased.

3) Environmental and CSR Activities

Shiseido has been working energetically to cut CO2 emissions, conserve resources and reduce waste. Based on an approach of placing the environment at the center of management, in the fiscal year ended March 31, 2010 we launched the Shiseido Earth Care Project, an environmental initiative in which all Group employees participate, with the mission of “realizing a harmonious, sustainable society in which both humans and the earth are beautiful.” Ways in which we further promoted this initiative included reducing the resources used in the external packaging of Aqua Label products in Japan. In China, we continued our afforestation activities in Gansu Province and began using polylactic containers for the URARA brand to reduce our environmental burden.


Moreover, in Japan and overseas, we provided makeup advice for people with serious skin concerns such as prominent birthmarks and vitiligo, and held beauty seminars in facilities such as homes for the elderly and the physically challenged as part of our Shiseido Life Quality Beauty Program. We also established centers to promote such activities in Shanghai and Taiwan, and held beauty seminars in elderly care and other facilities in countries including China, Singapore, Italy and Germany. In Japan, we have a system in which employees participate in these activities as volunteers to expand the circle in which societies and corporations can work together to provide beauty and comfort.

(2) Capital Expenditures

Investment (¥ million) Purpose of Investment

Property, plant and equipment 18,400 Construction of a plant in Vietnam, introduction of retail terminals

Intangible assets 4,970 Overseas introduction of a new SAP core business processing system

Long-term prepaid expenses 5,286 Installations of sales counters and fixtures Total 28,657

(3) Acquisition of Shares of Other Companies

On March 12, 2010, Shiseido completed a tender offer and other actions to acquire for approximately US$1.74 billion the outstanding shares and other equity instruments of Bare Escentuals, Inc, a natural cosmetics company listed on NASDAQ, and made this company a wholly owned subsidiary. The total acquisition cost was approximately US$1.96 billion.

The pioneer of mineral-based foundation, Bare Escentuals has a high level of support in the U.S. market and strong brand recognition through television shopping. Its business model complements the Shiseido Group’s strength in sales through department stores and boutiques.

(4) Financing

On December 9, 2009, the Shiseido Group issued ¥50 billion in unsecured yen bonds to fund bond redemption, investments and loans, and working capital.

In addition, Shiseido Co., Ltd. and a U.S. subsidiary procured bank loans totaling ¥120,840 million to fund the acquisition of Bare Escentuals.


(5) Summary of Consolidated Income and Assets of the Shiseido Group (Millions of yen except for Net Income per Share)

107th Business Term

(4/1/2006 - 3/31/2007)

108th Business Term

(4/1/2007 - 3/31/2008)

109th Business Term

(4/1/2008 - 3/31/2009)

110th BusinessTerm

(current term) (4/1/2009 - 3/31/2010)

Net Sales 694,594 723,484 690,256 644,201Operating Income 50,005 63,465 49,914 50,350Operating Income to Net Sales (%) 7.2 8.8 7.2 7.8Ordinary Income 53,465 65,088 52,061 51,485Net Income 25,293 35,459 19,373 33,671Net Income per Share (Yen) 60.89 86.05 48.04 84.62Return on Equity (%) 6.6 9.2 5.4 9.8Total Assets 739,832 675,864 606,568 775,445Net Assets 403,796 399,738 351,951 365,207Net Assets per Share (Yen) 940.79 946.22 839.89 875.72Equity Ratio (%) 52.5 56.6 55.6 44.9Price/Earnings Ratio (Times) 39.3 30.6 29.9 24.0Cash Flows from Operating Activities 69,431 75,307 42,767 69,431

Cash Flows from Investing Activities Δ18,482 Δ 5,802 Δ 28,157 Δ 204,884Cash Flows from Financing Activities 1,836 Δ 95,882 Δ 32,283 120,359

Cash and Cash Equivalents at End of Year 145,259 120,393 91,857 77,157

Notes: 1. Net income decreased during the 109th Business Term due to factors including

extraordinary losses including restructuring expense and impairment loss reported by overseas subsidiaries. Total assets and net assets decreased because of the effect of foreign currency translation resulting from the appreciation of the yen.

2. Net sales and income for the 110th Business Term (the current term) do not include the net sales and income of Bare Escentuals.

3. Summary of Non-Consolidated Income and Assets (Millions of yen)

107th Business Term

(4/1/2006 - 3/31/2007)

108th Business Term

(4/1/2007 - 3/31/2008)

109th Business Term

(4/1/2008 - 3/31/2009)

110th Business Term

(current term) (4/1/2009 - 3/31/2010)

Net Sales 282,091 273,158 264,511 244,470Operating Income 15,637 16,263 8,583 14,874Ordinary Income 28,891 31,031 26,564 23,515Net Income 16,749 23,819 16,294 21,012Total Assets 559,407 491,009 481,137 612,417Net Assets 375,317 355,244 343,724 339,108


(6) Income Distribution (Millions of yen, unless otherwise noted)

107th Business Term

(4/1/2006 - 3/31/2007)

108th Business Term

(4/1/2007 - 3/31/2008)

109th Business Term

(4/1/2008 - 3/31/2009)

110th BusinessTerm

(current term)(4/1/2009 - 3/31/2010)

Annual cash dividends per share (Yen) 32 34 50 50 (P)

Annual dividends 13,205 13,730 20,148 19,881 (P) Share buybacks — 24,450 4,488 6,752 Consolidated payout ratio (%) 52.6 39.5 104.1 59.1 (P) Total return ratio (%) 52.6 108.8 127.2 79.1 (P) Notes: 1. Annual cash dividends per share and annual dividends are predicated on the

approval of the First Item of Business, Dividends of Retained Earnings, at the ordinary general meeting of shareholders to be held on June 25, 2010. These figures were used to calculate the consolidated payout ratio and the total return ratio.

2. Share buybacks are the total value of treasury stock purchased by resolution of the Board of Directors based on Article 155-3 of the Corporation Law of Japan.

3. Total return ratio = (Annual dividends + Share buybacks) / Net income

(7) Issues to Address 1) Three-Year Plan

We are approaching the fiscal 2010 completion of our Three-Year Plan to improve quality of activities across the board with the goal of realizing our management vision of becoming a “global player representing Asia with its origins in Japan.” The three strengths of the SHISEIDO brand are richness, human science, and the spirit of omotenashi (hospitality). We will build on this foundation by continuing to work on two tasks: creating a brand loved by customers throughout the world and establishing an unsurpassed, world-class quality of business management.

[Shiseido’s Strengths]

Richness Being thoroughly meticulous about the high quality of products and services.

Human science In R&D, not only making the skin beautiful, but also pursuing benefits that reach all the way to people’s minds.

Spirit of omotenashi (hospitality)

Enriching people’s spirits through interactions between customers and products.

Under the Three-Year Plan, we set targets for the fiscal year ending March 31, 2011

of an overseas sales ratio of 40 percent or higher, a consolidated operating margin of 10 percent or higher and consolidated return on equity (ROE) that is 1 to 2 points higher than the operating margin. However, we realized when the first year of the plan ended in March 2009 that achieving these numerical targets would be difficult due to the impact of the global recession. We therefore decided to move forward without changing the strategies of our Three-Year Plan and strive to achieve our numerical targets at the earliest possible time in the next Three-Year Plan.


2) Strategies in the Fiscal Year Ending March 31, 2011 The domestic market remains unclear because of the global recession that began in

the second half of 2008, although overseas markets are beginning to show signs of recovery. We will wrap up the present Three-Year Plan in March 2011, making the fiscal year ending March 31, 2011 a time to build a firm footing for getting on a growth trajectory during the next Three-Year Plan. We are concentrating on establishing an undisputed presence in Asia as we work to build a foundation for globalization.

Create a Brand Loved by Customers throughout the World Demonstrating our “Japanese Origins”

In the fiscal year ending March 31, 2011, Shiseido will continue to focus on nurturing relationship-building brands/lines and mega lines. We will work to develop long-selling brands/lines by focusing on existing hit products to attract and retain loyal customers, while preparing to address a changing market structure that is becoming increasingly polarized.

We have combined channels and brands/lines into three domains that reflect customer (buyer) purchasing behavior: value-added counseling, spot counseling and self-selection. We will pursue the most effective sales techniques in each of these domains. In addition, our initiatives include increasing the number of voluntary chain stores in the PS Program, implementing the Double Counter strategy at department stores and improving the capabilities of beauty consultants at general merchandise stores. We are also working to adopt various approaches tailored to major chains in the drug store channel. To reinforce these efforts, we have reassessed our channel-specific sales system, and in April 2010 reorganized it into a system that can adapt to markets from the perspectives of both area and store chains.

Domains Combinations of Channels and Brands/Lines

Value-Added Counseling Sales techniques in which beauty consultants communicate value to value-conscious customers seeking cosmetics most suited to them

Voluntary chain stores, department stores, general merchandise stores X high-priced counseling products centered on relationship-building brands/lines

Spot Counseling Sales techniques involving mass advertising and “one-point counseling” (tips) for customers who are very interested in cosmetics trends

Drug stores X mid-priced counseling products centered on mega lines such as MAQUILLAGE and Elixir Prior

Self-Selection Sales techniques involving delivery of information at the sales counters for price-conscious customers who make their own choices

Self-selection counters at drug stores and general merchandise stores X low-priced self-selection and toiletry products centered on mega lines such as Aqua Label, Integrate, TSUBAKI and Uno)

Representing Asia

In Asia, Shiseido aims to build a base for sustained growth. In the prestige market, we will work for steady sales growth. Meanwhile, in the expanding masstige market we will reinforce our sales base for existing brands/lines such as Za and MAJOLICA MAJORCA. At the same time, we will prepare for full-scale development integrated with the low-end market in Japan. One such initiative was the April 2010 start of operations at the Vietnam plant, a key production and shipment hub supporting our masstige strategy in Asia.

Shiseido is targeting continued strong expansion in China, which is an engine of growth. At department stores, we are working to enhance the sales counter activities of beauty consultants, as well as expand sales of the global brand SHISEIDO and the


China-only brand AUPRES, centered on high-end department stores. At cosmetics specialty stores, we are seeking to improve our responsiveness to customers by collecting customer data with a focus on the URARA brand exclusively for this channel. With the launch of the DQ skincare brand in March 2010 we entered the pharmacy channel, our third channel following department stores and cosmetics specialty stores. In the same month, we also established a presence in the professional market at high-end hair salons in Beijing and Shanghai. Going forward, we will work to increase the market penetration of the SHISEIDO Professional and JOICO brands for hair salons.

Becoming a Global Player

Shiseido aims to become a global multibrand company centered on the global brand SHISEIDO, with multiple major brands/lines on the same scale. For the global brand SHISEIDO, we will expand the number of stores incorporating our new global counters and will follow up on the 2009 launch of the SHISEIDO Future Solution LX premium skincare line by strengthening our lineup of skin-brightening, anti-aging and other products.

We will move forward with our City Concept strategy in Europe and North America. We will also focus on implementing this strategy in Asia, where markets are expected to grow and cities significantly affect their respective countries as a whole.

In addition, we will advance aggressively into new markets based on their unique characteristics. We also intend to establish sales subsidiaries to handle direct sales in markets where we currently consign sales to local distributors.

Moreover, we have initiated collaborative projects with the recently acquired Bare Escentuals, and are conducting concrete studies to maximize synergies. Going forward, the Shiseido Group will deploy its strengths in skincare research and its marketing base in Japan and the rest of Asia while working in Europe and North America to further strengthen sales via television shopping, stores and the Internet.

Establish an Unsurpassed, World-Class Quality of Business Management

Nurture Human Resources on a Global Basis and Improve Organizational Culture

In order to nurture human resources on a global basis, Shiseido will take two approaches: globalizing Japanese employees and nurturing employees in local markets overseas. We will promote an action plan aimed at ensuring that our corporate culture consistently supports the promotion of women into leadership positions. This plan will ensure that we attract the most suitable people for the most suitable roles, while removing barriers related to age, gender and nationality.

Undertake Initiatives to Raise Efficiency

In January 2010, Shiseido began introducing its new SAP core business processing system overseas, starting in Europe. We will introduce it in stages elsewhere overseas in order to raise management visibility and standardize operations globally. In addition, the Shiseido International Procurement Center has begun operating in Shanghai, and we intend to capture the cost benefits of consolidating purchases of sales support materials that overseas subsidiaries formerly handled individually.

Actively Promote Environmental Protection and CSR Activities

The origin of the company name “Shiseido” is the phrase from the Chinese classic I Ching meaning, “praise the blessings of the great Earth, which nurtures new life and


brings forth new values.” We are thankful for these limited blessings, and see our mission as vigorously protecting them and passing them along to future generations. Our goal is to “propose new lifestyles in which human beauty and the environment coexist.” We will therefore continue to promote the Shiseido Earth Care Project composed of employees worldwide and focused on the three tasks of reducing CO2 emissions, conserving resources and protecting biodiversity.

Our CSR activities also include the Shiseido Life Quality Beauty Program, which develops products to help people with serious skin concerns and strengthens cooperation with medical institutions. In the fiscal year ended March 31, 2010, we held approximately 3,000 beauty seminars at a wide range of venues including elderly care facilities. We will broaden the scope of this initiative to cover more facilities and expand activities overseas, including increasing the number of regions covered.

3) Shiseido’s Income Distribution Policy Going Forward

The total shareholder return policy of Shiseido Co., Ltd. aims to maximize returns to shareholders through direct means, in addition to generating medium- and long-term share price gains. To this end, our fundamental policy is to make strategic investments that drive earnings growth while raising capital efficiency, which will lead to medium- and long-term increases in dividends and share price.

Going forward, our goal for returns over the medium-term is a consolidated payout ratio of 40 percent. Based on this target, we will prioritize payment of stable dividends while implementing share buybacks in a flexible manner.

Our former income distribution policy was a total return ratio of 60 percent in the medium term, calculated as the sum of dividends paid and share buybacks, as a proportion of consolidated net income. During the current three-year period, we have been establishing our base as a global player and raising quality of operations, and have not undertaken large-scale investments for growth. Therefore, the intent of our policy was to aggressively provide returns to shareholders by distributing 60 percent of net income, while giving consideration to increasing return on equity. However, the next three-year period is positioned as a time to get into a growth trajectory. In light of this, we are implementing more aggressive growth strategies such as the acquisition of Bare Escentuals. Therefore, Shiseido has changed its income distribution policy from the fiscal year ending March 31, 2011, and will appropriate a majority of net income for investments in growth. In addition, we will raise the predictability of shareholder returns by removing the uncertain component of flexible, ad hoc share buybacks, and will use the payout ratio as a numerical target.

Thus, Shiseido aims to become a global player representing Asia with its origins in

Japan as it works to create a brand loved by customers throughout the world and establish an unsurpassed, world-class quality of business management.

During the fiscal year ending March 31, 2011, Shiseido will complete the Three-Year Plan to improve the quality of activities across the board, and the entire Group will work to build a firm footing for getting into a growth trajectory toward globalization during the subsequent three-year period.

We look forward to the continuing support of our shareholders.

Notes: 1. Channel: Sales, distribution and other routes, including voluntary chain stores, drug stores and department stores. 2. Self-selection: Sales in which customers freely select products from displays in open spaces at stores.


3. Relationship-building brands/lines: Brands/lines that deepen relationships with customers through counseling. The five relationship-building brands/lines are clé de peau BEAUTÉ, Bénéfique, &FACE, REVITAL GRANAS, and d program.

4. PS Program: A strategy for nurturing voluntary chain stores with growth potential that want to strengthen cooperation with Shiseido that involves the formulation of shared goals and focused execution tailored to each store’s unique characteristics.

5. Double Counter strategy: This strategy involves the installation of separate counters for clé de peau BEAUTÉ and SHISEIDO.

6. New luxury segment: People in this segment, often the children of baby boomers, are acutely aware of new trends and spend freely on products and services that match their values.

7. Mega lines: Lines aimed at expanding points of contact with customers; Shiseido concentrates advertising and sales promotion by skincare and makeup category in order to attain category leadership. The six mega lines are MAQUILLAGE, Uno, Aqua Label, TSUBAKI, Integrate and Elixir Superieur.

8. Innovation: Product improvements and renewals that increase brand/line value dramatically. 9. Diamond Sales: A sales system in which Shiseido and structured retailers work together through multi-layer interaction

by function and hierarchy in areas including product purchasing, sales and logistics. 10. Promotional products: Mass-advertised mid-priced products sold primarily in the drugstore channel that target customers

who are strongly interested in fashion. Promotional products include the mega lines MAQUILLAGE, Elixir Superieur and HAKU.

11. Symbolic sign: A sign that symbolizes the value of the global brand SHISEIDO. It is a visual used at stores and in advertising that expresses Shiseido’s three strengths (core values) of richness, human science, and the spirit of omotenashi.

12. City Concept: A strategy in which the world’s major markets are viewed as city-based rather than country-based units, and resource deployment is concentrated in target cities.

13. Masstige: A word coined from “mass” and “prestige.” Masstige products are positioned as more expensive than mass-produced products, but more moderately priced than prestige products.


1.2 Outline of the Shiseido Group (As of March 31, 2010) (1) Principal Business of the Shiseido Group

Segment Main Business

Domestic Cosmetic Business

Cosmetic 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), etc.

Overseas Cosmetic Business

Cosmetics Division (production and sale of cosmetics, cosmetic accessories and toiletries) Professional Division (production and sale of beauty salon products, etc.)

Others Frontier Science Division (production and sale of cosmetic ingredients, medical-use pharmaceuticals, and beauty therapy cosmetics) Operation of restaurants, etc.

(2) Major Business Hubs Head Office: 5-5, Ginza 7-chome, Chuo-ku, Tokyo Shiodome Office: 6-2, Higashi-Shimbashi 1-chome, Minato-ku, Tokyo Factories

Name Location

Kamakura Factory Kamakura-shi, Kanagawa Pref.

Kakegawa Factory Kakegawa-shi, Shizuoka Pref.

Osaka Factory Higashi-Yodogawa-ku, Osaka-shi, Osaka Pref.

Kuki Factory Kuki-shi, Saitama Pref.

Laboratories

Name Location Research Center (Shin-Yokohama) Tsuzuki-ku, Yokohama-shi, Kanagawa Pref. Research Center (Kanazawa-Hakkei) Kanazawa-ku, Yokohama-shi, Kanagawa Pref. Beauty Solution Development Center Shinagawa-ku, Tokyo


(3) Major Subsidiaries and Affiliated Companies of Shiseido Group

Company Name Location Paid-in Capital

Ownership percentage of Voting

Rights Principal Business

Shiseido Sales Co., Ltd. Minato-ku, Tokyo

(JPY million)100

％100.0 Sale of cosmetics, etc.

Shiseido FITIT Co., Ltd. Chuo-ku, Tokyo

(JPY million)10 100.0 Sale of cosmetics, etc.

Shiseido International Inc. Chuo-ku, Tokyo


The Ginza Co., Ltd. Chuo-ku, Tokyo


FT Shiseido Co., Ltd. Chuo-ku, Tokyo

(JPY million)100 100.0 Sale of toiletries

Shiseido Professional Co., Ltd. Chuo-ku, Tokyo

(JPY million)250 100.0 Sale of beauty salon

products, etc. Shiseido Beauty Salon Co., Ltd. Chuo-ku,

Tokyo (JPY million)

100 100.0 Operation of beauty salons Shiseido Pharmaceutical Co., Ltd.

Chuo-ku, Tokyo

(JPY million)100 100.0 Sale of over-the-counter

drugs, etc.

Shiseido Americas Corporation Delaware, U.S.A.

(USD thousand)

403,070100.0 Holding company and sale

of cosmetics, etc. in U.S.A. Shiseido America, Inc. New York,

U.S.A. (USD

thousand)28,000

- (100.0) Production of cosmetics, etc.

Blush Holdings LLC Delaware, U.S.A.

(USD) 100

- (100.0)

Holding company of Bare Escentuals, Inc.

Bare Escentuals, Inc. Delaware, U.S.A.

(USD) 0.01

- (100.0) Sale of cosmetics, etc.

Zotos International, Inc. Connecticut, U.S.A

(USD thousand)

25,000-

(100.0) Production and sale of beauty salon products, etc.

Shiseido International Europe S.A.

Paris, France

(EUR thousand)

256,133100.0 Holding company in Europe

Shiseido International France S.A.S.

Paris, France

(EUR thousand)

36,295-

(100.0) Production of cosmetics, etc.

Shiseido Deutschland GmbH Dusseldorf, Germany

(EUR thousand)

5,200-

(100.0) Sale of cosmetics, etc.

Shiseido Cosmetici (Italia) S.p.A. Milan, Italy

(EUR thousand)

2,400-


Shiseido Europe S.A.S. Paris, France

(EUR thousand)

9,000-


Beauté Prestige International S.A.

Paris, France

(EUR thousand)

17,760-

(100.0) Sale of designer perfumes, etc.

Laboratoires Decléor S.A.S. Paris, France

(EUR thousand)

19,374-

(100.0) Production and sale of esthetic and spa products

Shiseido China Co., Ltd. Shanghai, China

(RMB thousand)

565,093100.0 Holding company and sale

of cosmetics, etc. in China

Shanghai Zotos Citic Cosmetics Co., Ltd.

Shanghai, China

(RMB thousand)

418,27120.0

(92.6) Production of cosmetics, etc.


Shiseido Liyuan Cosmetics Co., Ltd.

Beijing, China

(RMB thousand)

94,30032.0

(65.0) Production and sale of cosmetics, etc.

Shiseido Dah Chong Hong Cosmetics Ltd.

Hong Kong, China

(HKD thousand)

123,00050.0 Sale of cosmetics, etc.

Taiwan Shiseido Co., Ltd. Taipei, Taiwan

(TWD thousand)1,154,588

51.0 Production and sale of cosmetics, etc.

Shiseido Parlour Co., Ltd. Chuo-ku, Tokyo

(JPY million)100 99.3 Operation of restaurants

Selan Anonymous Association Chiyoda-ku, Tokyo

(JPY million)11,600

- [100.0] Management of real estate

Note: Figures in parentheses ( ) in the Ownership percentage of Voting Rights column include the share of indirect ownership. Those in brackets [ ] indicate share of related or approved parties.

(4) Matters Concerning Employees of the Group

Business Category Number of Employees Comparison with the previous fiscal year

Domestic Cosmetics 12,288 [10,098] +182 [Δ60] Overseas Cosmetics 15,958 [ 661] No change [+77] Others 722 [ 402] Δ24 [Δ130]

Total 28,968 [11,161] +158 [Δ113] Notes:

1 Triangular marks (∆) indicate negative figures. 2. The numbers of employees shown are full-time employees. Annual average

number of temporary employees are shown in [ ]. Temporary employees are part-time workers and non-regular staffs, and dispatched employees are excluded.

(5) Main Supplies of Loans to the Group

Lender Outstanding Balance Mizuho Bank, Ltd. 119,237 million JPY

Mizuho Corporate Bank, Ltd. 240 930

4,950

million USD thousand AUD million KRW


2. Matters Concerning Shares Issued by the Company (As of March 31, 2010) (1) Total Number of Shares Authorized to be Issued:

1,200,000,000 shares

(2) Number of Shares Issued and Outstanding: 410,000,000 shares （including 12,241,810 treasury stock） The Company, pursuant to Article 178 of the Corporation Law, resolved at the Board of Directors Meeting held on April 28, 2010 to cancel 10,000,000 of its treasury stock as of May 21, 2010. The number of shares issued and outstanding after cancellation shall be 400,000,000 shares.

(3) Number of Shareholders

48,011

(4) Principal Shareholders Investment in the Company

Shareholders Number of shares held

Percentage of shareholding

The Master Trust Bank of Japan, Ltd. (Trust Account)

(thousand shares) 30,745

％ 7.72<7.49>

Japan Trustee Services Bank, Ltd (Trust Account) 22,089 5.55<5.38> Mizuho Bank, Ltd. 21,226 5.33<5.17> The Bank of New York Mellon as Depositary Bank for Depositary Receipt Holders 13,972 3.51<3.40>

Asahi Mutual Life Insurance Company 12,079 3.03<2.94> NIPPONKOA Insurance Company, Limited 11,277 2.83<2.75> Shiseido Employees’ Stockholding 8,795 2.21<2.14> Mitsui Sumitomo Insurance Company, Limited 8,000 2.01<1.95> Nippon Life Insurance Company 7,798 1.96<1.90> Tokio Marine & Nichido Fire Insurance Co., Ltd. 5,277 1.32<1.28>

Notes: 1.Calculations of percentage of shareholding are based on the total number of

issued and outstanding shares excluding treasury stock. Calculations of shareholding indicated in < > are based on the total number of issued and outstanding shares including treasury stock.

2. Although the Company holds 12,241,810 treasury stock, it has been excluded from the above principal shareholders.

3. All shares held by The Master Trust Bank of Japan, Ltd. (Trust Account) and Japan Trustee Services Bank, Ltd. (Trust Account) are in connection with the respective bank’s trust business.

4．The Company has received a report of amendment to large shareholdings from Mizuho Bank, Ltd. that on October 7, 2009, it held 28,539 thousand shares through joint holdings (Percentage of shareholding: 7.17%), of which 21,226 thousand shares (5.33%) are held by Mizuho Bank, Ltd.

The number of shares held by Mizuho Bank, Ltd., 21, 226 thousand shares as indicated above, include their holding 11,226 thousand shares in its own name and holding by its employee pension trust of 10,000 thousand shares (6,000 thousand shares with voting rights and 4,000 thousand shares without voting rights) under a registered name, Mizuho Trust & Banking Co., Ltd. re-trusted to


Trust & Custody Services Bank, Ltd. Employees Pension Trust for Mizuho Bank.

5. The Bank of New Mellon as Depositary Bank for Depositary Receipt Holders is the nominee holder for the Bank of New York Mellon, a depositary bank for the American Depositary Receipts (“ADRs”) of the Company.

6. The Company has received a report of amendment to large shareholdings from Mitsubishi UFJ Financial Group, Inc that on October 5, 2009, it held 27,138 thousand shares through joint holdings (Percentage of shareholding: 6.82%), of which 22,182 thousand shares (5.57%) are held by the Mitsubishi UFJ Trust and Banking Corporation. However, the Mitsubishi UFJ Financial Group has been excluded from the above principal shareholders, as the actual number of shares held by the said company has not been confirmed by the Company as of the end of the fiscal year.


3. Matters Concerning Shares Held by the Company (As of March 31, 2010)

1) Number of issues and the amount reported on the Balance Sheet, which the Company holds for purposes other than realizing direct investment gains:

Number of issues Amount on Balance Sheet

125 (million yen) 25,081

2) Issues of listed companies within the top ten largest amounts on the Balance Sheet

which the Company holds for purposes other than realizing direct investment gains Top Ten Issues(including issues whose amounts reported on the Balance Sheet exceed one percent of capital):

Issues Number of shares

Amount on Balance Sheet

Purpose for holding shares

Mizuho Financial Group, Inc. (thousand

shares)16,625

(million yen)

3,075To facilitate financial, accounting and administrative operations

TOPPAN PRINTING CO., LTD. 1,628 1,374 To facilitate operations involving the Group’s products and services

Mitsubishi UFJ Financial Group, Inc. 2,496 1,223 To facilitate financial, accounting and administrative operations

Dai Nippon Printing Co., Ltd. 871 1,101 To facilitate operations involving the Group’s products and services

Tokio Marine Holdings, Inc. 300 789 To facilitate financial, accounting and administrative operations

MEDIPAL HOLDINGS CORPORATION 562 622 To facilitate operations involving the

Group’s products and services Mitsui Sumitomo Insurance Group Holdings, Inc. 239 621 To facilitate financial, accounting and

administrative operations NIPPONKOA Insurance Company, Limited 983 577 To facilitate financial, accounting and

administrative operations WACOAL HOLDINGS CORP. 439 512 To facilitate operations involving the

Group’s products and services Chuo Mitsui Trust Holdings, Inc. 1,432 502 To facilitate financial, accounting and

administrative operations Notes:

1. The Company does not hold shares for the purpose of realizing direct investment gains.

2. In terms of the top five issues listed above, their amounts reported in the Balance Sheet exceed one percent of the amount of capital of the Company.

3. Following their business integration, Mitsui Sumitomo Insurance Group Holdings, Inc., has changed its company name to MS & AD Insurance Group Holdings, as of April 1, 2010.

Additionally, following the share transfer in conjunction with their business integration, the 983 thousand shares of NIPPONKOA Insurance Company, Limited have become 884 thousand shares of NKSJ Holdings, Inc. from April 1, 2010.


4. Matters Concerning Stock Acquisition Rights (As of March 31, 2010) The Company issues stock acquisition rights for directors, corporate officers, employees

and directors and employees of related companies. These are classified into two categories, which are executive compensation-type stock options (2 types), and employee incentive-type stock options.

Total number of shares that are the object of all stock acquisition rights issued as of March

31, 2010 and the percentage thereof to the total number of shares issued and outstanding as of the same date excluding treasury stock are as follows:

Total number of shares that are the object of stock acquisition rights

Percentage of total number of shares issued and outstanding (excluding

treasury stock) shares

2,287,900 %

0.58 (1) Executive Compensation-type Stock Options

1) Stock compensation-type stock options as medium-term incentives

To make the directors and corporate officers of the Company share with its shareholders merits and risks pertaining to its stock prices and afford incentives to them to achieving much improved results and higher stock prices, the Company issued stock acquisition rights as stock options.

The stock acquisition rights, which are characterized as remuneration linked with the stock prices of the Company, are stock compensation-type stock options as medium-term incentives to directors and corporate officers of the Company and this is one of the performance-linked compensation in the previous system of executive remuneration by the fiscal year ending 2008. For this purpose, stock acquisition rights with the exercise price of Yen one (1) per share are provided to directors as stock option.

In the previous Three-Year Plan, one of the management targets was set at 8% of consolidated operating income sales at the end of March 2008. The exercisable stock acquisition rights were issued according to the rate of achievement to the target figure, which recorded 109.6%. These stock acquisition rights were issued and became excisable in accordance with the achievement to the target.

No stock acquisition rights are allotted to external directors and corporate auditors. [Stock acquisition rights issued during the past fiscal years]

As of March 31, 2010

Issue date of stock

acquisition rights

Grantees of stock

acquisition rights

Amount paid for

stock acquisition

rights

Amount contributed

upon exercise of

stock acquisition

rights

Exercise period of

stock acquisition

rights

Holding condition and position of the stock acquisition

rights

Class and number of shares to be issued upon exercise of stock acquisition

rights Director of the Company

1 person 6 rights

Common stock of the Company

6,000 shares

Corporate auditor of the Company

1 person 7 rights

7,000 shares

Stock acquisition rights issued free of charge

July 28, 2005

Directors and corporate officers of the Company 25 persons

Gratis issue

1 yen per share

From July 1, 2008 to June 30, 2011

Corporate officer who does not serve as director

1 person 11 rights

11,000 shares


Others 6 persons 49 rights

49,000 shares

Director of the Company

1 person 2 rights


2,000 shares

August 23, 2006


2,204 yen per share

1 yen per share

From July 1, 2008 to June 30, 2011 Corporate officers

who do not serve as director

2 persons 6 rights

6,000 shares


1 person 6 rights


6,000 shares

Stock acquisition rights issued in consideration of duty

August 23, 2007


2,372 yen per share

1 yen per share


Corporate officers who do not serve as director

2 persons 2 rights

2,000 shares

Note: Holding of the stock acquisition rights as of March 31, 2010 by a corporate auditor of the Company was granted during his term of office as a corporate officer.

2) Stock options as long-term incentives

To link remuneration of the directors and corporate officers of the Company with an increase in its shareholder value on a long-term basis, while placing emphasis on their sharing interests with its shareholders, securing good human resources and thus to increase the enterprise value of the whole Shiseido Group, the Company issued stock acquisition rights as stock options.

These stock acquisition rights were stock options characterized as long-term incentive to directors and corporate officers of the Company and as remuneration which fluctuate with the share prices. There are two kinds: one is the performance-linked compensation as remuneration to incumbent directors since fiscal 2008 and whose amount payable for exercise is set at Yen one (1). And another is the performance-linked stock option as remuneration to currently non-incumbent directors having offices by fiscal 2007 and whose amount payable for exercise is set based on the market fair value of the share of the Company at that time.

No stock acquisition rights are allotted to external directors and corporate auditors.

[Stock acquisition rights issued during the current fiscal year] As of March 31, 2010

Issue date of stock

acquisition rights

Grantees of stock

acquisition rights

Amount paid for

stock acquisition

rights

Amount contributed

upon exercise of

stock acquisition

rights

Exercise period of stock

acquisition rights

Holding condition and position of the

stock acquisition rights


rights Directors of the Company

8 persons 814 rights


81,400 shares Stock

acquisition rights issued in consideration of duty

August 28, 2009


1,468 yen per share

1 yen per share

From August 1, 2012 to July 30, 2019



53,500 shares

Note: The number of allotted stock acquisition rights and allotted person is shown on "Holding condition and position of the stock acquisition rights" as of March 31, 2010.


[Stock acquisition rights issued during in the past fiscal years] As of March 31, 2010

Issue date of stock

acquisition rights

Grantees of stock

acquisition rights

Amount paid for

stock acquisition

rights

Amount contributed

upon exercise of

stock acquisition

rights


acquisition rights


rights


rights Corporate auditor of the Company

1 person 15 rights


15,000 shares July 16,

2002


Gratis issue

1,669 yen per share

From July 1, 2004 to June 26, 2012 Others


195,000 shares

Directors of the Company

2 persons 2 rights


2,000 shares

July 31, 2003


Gratis issue

1,287 yen per share

From July 1, 2005 to June 26, 2013 Others


107,000 shares




109,000 shares


1 person 10 rights

10,000 shares

July 26, 2004


Gratis issue

1,427 yen per share



380,000 shares


5 persons 63 rights


63,000 shares


1 person 6 rights

6,000 shares

Corporate officer who do not serve as director

1 person 6 rights

6,000 shares


July 28, 2005


Gratis issue

1,481 yen per share



183,000 shares


5 persons 48 rights


48,000 shares


1 person 4 rights

4,000 shares


3 persons 12 rights

12,000 shares

Stock Acquisition rights issued in consideration of duty

August 23, 2006


Gratis issue

2,300 yen per share



77,000 shares


As of March 31, 2010 Issue date of stock

acquisition rights

Grantees of stock

acquisition rights

Amount paid for

stock acquisition

rights

Amount contributed

upon exercise of

stock acquisition

rights


acquisition rights


rights


rights Directors of the Company

6 persons 81 rights


81,000 shares


7 persons 29 rights

29,000 shares

August 23, 2007


Gratis issue

2,615 yen per share



49,000 shares


7 persons 49 rights


49,000 shares



34,000 shares

August 21, 2008


2,381 yen 1 yen per share


Others 1 person 3 rights

3,000 shares

Note: Holding of the stock acquisition rights as of March 31, 2010 by a corporate auditor of the Company was granted during his term of office as a corporate officer.

(2) Employee-incentive-type Stock Options

To afford incentives to and raise the morale of the employees of the Company and the directors and employees of the Shiseido group companies to achieving much improved results and secure good human resources and thus to increase the enterprise value of the whole Shiseido Group, the Company issued stock acquisition rights as stock options.

The stock acquisition rights are stock options as incentives to the employees of the Shiseido Group to achieving much improved results while sharing interests with its shareholders.

[Stock acquisition rights issued in previous fiscal years]

As of March 31, 2010 Issue date of stock

acquisition rights

Grantees of stock

acquisition rights

Amount paid for stock

acquisition rights

Amount contributed

upon exercise of stock

acquisition rights

Exercise period of

stock acquisition

rights


rights

Class and number of shares to be

issued upon exercise of stock acquisition rights


1 person 1 right

Common stock of the Company 1,000 shares


2 persons 2 rights

Common stock of the Company 2,000 shares


November 7, 2005

Employees of the Company, directors and employees of related companies 1,159 persons

Gratis issue 1,896 yen per share



599,000 shares

Note: Holding of the stock acquisition rights as of March 31, 2010 by a director of the Company and corporate officers who do not serve as director of the Company were granted during their term of office as employee of the Company or employee or director of the related company.


5. Matters Concerning Officers of the Company

(1) Name, Position and Duty and Occupation for the Directors and Corporate Auditors of the Company

Duty and Major Occupation Position Name As of March 31, 2010 As of April 1, 2010

President & CEO (Representative Director)

Shinzo Maeda CEO & COO CEO

Executive Vice President (Representative Director)

Kimie Iwata Responsible for Public Relations, Consumer Information, Corporate Culture, Corporate Culture Reforms, Environmental Measures, Life Quality Beauty Program, and Committees under Direct Control of the Board of Directors

Responsible for Public Relations, Consumer Information, Corporate Culture, Advertising Creation, Beauty Solutions, Environmental Measure, CSR, Organizational Climate Reforms and Committees under Direct Control of the Board of Directors

Corporate Senior Executive Officer (Director)

Yasuhiko Harada Chief Financial Officer Responsible for Finance, Investor Relations, Information System Planning and Internal Control


Toshimitsu Kobayashi Responsible for Domestic Cosmetics Business Sales -


Masaaki Komatsu Responsible for Research & Development, Production, Technical Affairs and Logistics

-

Corporate Executive Officer (Director)

Carsten Fischer Responsible for Global Business (International Business, China Business and Professional Business) Chief Officer of International Business Division

Corporate Officer (Director)

Hisayuki Suekawa General Manager of Corporate Planning Department

Corporate Officer (Director)

Tatsuomi Takamori Responsible for Business Strategy and Marketing of Domestic Cosmetics Business

Responsible for Domestic Cosmetics Business, Healthcare Business and Clé de Peau BEAUTÉ Marketing Unit Chief Officer of Domestic Cosmetics Business Division

External Director <Independent>

Shoichiro Iwata - External Director <Independent>

Tatsuo Uemura - Corporate Auditor (Full time)

Kiyoharu Ikoma - Corporate Auditor (Full time)

Kazuko Ohya - External Corporate Auditor <Independent> (Part time)

Akio Harada -

External Corporate Auditor <Independent> (Part time)

Reiko Kuroda -

External Corporate Auditor <Independent> (Part time)

Nobuo Otsuka -

Notes: 1. Mr. Shoichiro Iwata and Mr. Tatsuo Uemura are external directors as provided in Item 15 of Article 2 of the Corporation law.

2. Mr. Akio Harada, Ms. Reiko Kuroda, and Mr. Nobuo Otsuka are external corporate auditors as provided in Item 16 of Article 2 of the Corporation law.


3. The Company designates Mr.Shoichiro Iwata, Mr. Tatsuo Uemura, Mr. Akio Harada, Ms. Reiko Kuroda, and Mr. Nobuo Otsuka as independent officers provided in Article 436-2 of the Securities Listing Regulations of Tokyo Stock Exchange, Inc.

4. Mr. Hisayuki Suekawa, director, and Mr. Tatsuomi Takamori, director, were newly elected at the 109th ordinary general meeting of shareholders of the Company held on June 24, 2009, and assumed their office as of the same date. Other directors and external corporate auditor, Mr. Akio Harada were reelected at the same meeting.

5. Mr. Toshimitsu Koboyashi, and Mr. Masaaki Komatsu retired as corporate senior executive officer on March 31, 2010.

6. Mr. Carsten Fischer, corporate senior executive officer, Mr. Hisayuki Suekawa, corporate executive officer, and Mr. Tatsuomi Takamori, corporate executive officer were promoted on April 1, 2010.

7. Corporate auditor, Mr. Kiyoharu Ikoma has once held the position of general manager of Corporate Planning Department and Financial Department, etc. and has respectable knowledge in finance and accounting.

(2) Matters concerning Important Position of Other Organizations Concurrently

Assumed by Directors and Auditors (As of March 31, 2010)

Position Name Important position of other organizations concurrently assumed

President & CEO (Representative Director)

Shinzo Maeda Board of Director of Shiseido Academy


Yasuhiko Harada President & CEO of Shiseido Business Solutions Co., Ltd.


Toshimitsu Kobayashi

President and Representative Director of Shiseido Sales Co., Ltd. President and Representative Director of FT Shiseido Co., Ltd.

External Director Shoichiro Iwata President & CEO of ASKUL Corporation External Director Tatsuo Uemura Dean of Faculty of Law and the School of Law, Waseda

University Professor, School of Law, Waseda University Professor, Waseda Law School

Corporate Auditor (Full time)

Kiyoharu Ikoma Auditor of Shiseido Social Welfare Foundation Auditor of Director of Shiseido Academy

External Corporate Auditor (Part time)

Akio Harada External director of Seiko Holdings Corporation External Director of Japan Post Holdings Co., Ltd. External Corporate Auditor of Sumitomo Corporation External Corporate Auditor of Enterprise Turnaround Initiative Corporation of Japan President of Tokyo Woman's Christian University President of International Civil and Commercial Law Centre Foundation President of Japan Criminal Policy Society


Reiko Kuroda Professor, Department of Life Sciences, Graduate School of Arts and Sciences, The University of Tokyo


Nobuo Otsuka President of Keiseikai Hospital


(3) Important Position of Other Organizations Concurrently Assumed by the External Officers and the Relationships Between these Organizations and the Company

Name Company in which

concurrent position is held

Important position of other organizations concurrently assumed and the relationships between

these organizations and the Company

Shoichiro Iwata

ASKUL Corporation

The Company purchases stationeries, etc. from ASKUL and such purchases of stationeries, etc. from ASKUL represented less than 0.1% of the total amount of the cost of sales and the selling, general and administrative expenses for the current fiscal year. Moreover, purchases by the Shiseido Group of stationeries, etc. from ASKUL represented less than 0.1% of the total amount of the consolidated cost of sales and the consolidated selling, general and administrative expenses for the current fiscal year. A subsidiary of the Company sells toiletries, etc. for office use to ASKUL and such sales represented less than 0.1% of the consolidated net sales of the Company for the current fiscal year. Toiletries, etc. for office use from a subsidiary of the Company accounted for approximately 0.1% of ASKUL’s cost of sales for the fiscal year ended May 31, 2009. ASKUL sells through catalogue sales toiletries, etc. for office use, which are not products of the Shiseido Group and such sales represented approximately 0.5% of net sales of ASKUL for the fiscal year ended May 31, 2009.

ASKUL sells stationeries to the Company and such sales represented less than 0.1% of the net sales for the fiscal year ended May 31, 2009, and the sales of stationeries to the Shiseido Group represented approximately 0.1% of the net sales for the same fiscal year.

External Directors

Tatsuo Uemura

Waseda University

The Company is engaged in joint studies on beauty and health with Waseda University. Mr. Uemura is not involved in these joint studies.

Seiko Holdings Corporation

The Company’s subsidiaries sell cosmetics to the subsidiaries of Seiko Holding Corporation and the Sheseido Group’s sales of cosmetics to said subsidiaries accounted for less than 0.1% of the Company’s consolidated net sales for the current fiscal year. Cosmetics from the Company’s subsidiaries accounted for less than 0.1% of the consolidated cost of sales of the group of said company for the fiscal year ended March 31, 2010.

Japan Post Holdings Co., Ltd.

The Company has no special relationships of interest with Japan Post Holdings Co., Ltd.

Sumitomo Corporation

The Company and the subsidiaries of Sumitomo Corporation engage in transactions such as the purchase of raw materials, equipment rental and outsourcing of equipment maintenance, and the Company’s total payments to the group of said company accounted for less than 0.1% of the total amount of the Company’s cost of sales and selling, general and administrative expenses for the current fiscal year. Subsidiaries of the Sheseido Group purchase raw materials, etc. from the group of said company and the Group’s total payments to the group of said company for raw materials, equipment rental and outsourcing of equipment maintenance represented less than 0.1% of the total amount of the Group’s consolidated cost of sales and selling, general and administrative expenses for the current fiscal year. Sales by the group of said company to the Sheseido Group accounted for less than 0.1% of total net sales of the group of said company for the fiscal year ended March 31, 2010.

External Corporate A

uditors

Akio Harada

Enterprise Turnaround Initiative Corporation of Japan

The Company has no special relationships of interest with the Enterprise Turnaround Initiative Corporation of Japan.


Tokyo Woman’s Christian University

The Company has no special relationships of interest with the Tokyo Woman’s Christian University.

International Civil and Commercial Law

Centre Foundation

The Company has no special relationships of interest with the International Civil and Commercial Law Centre Foundation.

Japan Criminal Policy Society

The Company has no special relationships of interest with the Japan Criminal Policy Society.

Reiko Kuroda University of Tokyo

The Company is engaged in joint studies on beauty and health with the University of Tokyo. Ms. Kuroda is not involved in these joint studies.

Nobuo Otsuka Keseikai Hospital Group

The Company has no special relationships of interest with the Keiseikai Hospital Group.

(4) Corporate Officers who do not serve as Director

Duty and Major Occupation Position Name As of March 31, 2010 As of April 1, 2010

Corporate Executive Officer Kiyoshi Kawasaki

Responsible for Advertising Creation and Beauty Solutions and Domestic Non-Shiseido Brand Business

-

Corporate Officer Kozo Hanada Chief Officer of Professional Business Operations Division

Corporate Officer Tsunehiko Iwai Responsible for Technical Planning and Technical Affairs General Manager of Quality Management Department

Responsible for Technical Planning, Quality Management and Frontier Sciences Business

Corporate Officer Masaru Miyagawa Chief Officer of China Business Division Chief Area Managing Officer of China Chairman of Shiseido China Co., Ltd.

Corporate Officer Shoji Nishiyama Responsible for Cosmetics Products Research & Development and Software Development

Responsible for Functional Food Research & Development, Innovative Science Research & Development, Research Administration and Technology Alliances

Corporate Officer Shoji Takahashi Responsible for Americas Chairman & CEO of Shiseido Americas Corporation

Corporate Officer Mitsuo Takashige Responsible for Personnel General Manager of Personnel Department

Corporate Officer Kazuo Tokubo Responsible for Functional Food, Innovative Science Research & Development and Patents

-

Corporate Officer Takafumi Uchida Responsible for General Affairs, Legal Affairs and Executive Affairs General Manager of General Affairs Department

Corporate Officer Ryuichi Yabuki

Responsible for Sales Operations Planning of Domestic Cosmetics Business General Manager of Sales Department, Specialty Stores Executive Vice President and Director of Shiseido Sales Co., Ltd.

Responsible for Sales of Domestic Cosmetics Business President & CEO of Shiseido Sales Co., Ltd. President & CEO of FT Shiseido Co., Ltd.

Corporate Officer Toshio Yoneyama

Responsible for Healthcare Business and Frontier Science Business Chief Officer of Healthcare Business Division President and Representative Director of Shiseido Beauty Foods Co., Ltd.

Corporate Advisor

Notes: 1. Corporate Officers who retired on March 31, 2010 are as follows:

Position at the time of Retirement Name Corporate Executive Officer Kiyoshi Kawasaki Corporate Officer Kazuo Tokubo Corporate Officer Toshio Yoneyama


2. Corporate Officers who were designated on April 1, 2010 are as follows: Position Name Duty and Major Occupation

Corporate Officer Asa Kimura Responsible for Cosmetics Products Research & Development and Software Development

Corporate Officer Yu Okazawa General Manager of International Sales Department, International Business Division President of Shiseido Europe S.A.S. President of Shiseido International Europe S.A. President of Taishi Trading Co., Ltd.

Corporate Officer Toru Sakai Responsible for Production, Purchasing and Logistics Corporate Officer Youichi Shimatani Responsible for Marketing of Domestic Cosmetics Business and

Domestic Non-Shiseido Brand Businesses (5) Remunerations, etc. to Directors and Corporate Auditors 1) Outline of the executive remuneration policy of the Company

The executive remuneration policy of the Company is established by the Remuneration Committee which consists of members outside the Company and chaired by an external director, to maintain objectivity and high transparency.

The remunerations under this system consist of a basic fixed portion and a performance-linked portion that fluctuates depending on achieving of performance targets and share price. The fixed remuneration portion is around 40% and that of performance-linked remuneration portion is around 60%.

Performance-linked remuneration consists of a bonus 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 the Company’s performance and share price.

External directors and corporate auditors receive fixed basic remuneration only, as performance-linked remuneration is inconsistent with their supervisory functions from a stance independent from business execution.

The Company sets appropriate remuneration levels by making comparisons with companies in the same industry or of the same scale taking the Company’s performance into consideration.

Meanwhile, the Company abolished its officer's retirement benefit plan as of June 29, 2004 on which the 104th ordinary general meeting of shareholders was held.

2) Amount of remunerations, etc. to Directors and Corporate Auditors of the fiscal year under review

(millions of yen) Basic fixed

remuneration Bonuses Stock Options Total

Directors (10 persons) 281 142 101 525

External directors among directors (2 persons) 26 ― ― 26

Corporate Auditors (5 persons) 96 ― ― 96

External corporate auditors among corporate auditors (3 persons)

36 ― ― 36

Total 377 142 101 621 Notes:

1. Basic remuneration for directors has the ceiling amount of Yen 30 million per month as per the resolution of the 89th ordinary general meeting of shareholders held on June 29, 1989. Basic remuneration for corporate auditors


has the ceiling amount of Yen10 million per month as per the resolution of the 105th ordinary general meeting of shareholders held on June 29, 2005.

2. The above amount to be paid as bonuses to directors during fiscal year 2009 is subject to the approval of the Fourth Item of Business (Payment of Bonuses to Directors) at this ordinary general meeting of shareholders.

A total amount of Yen 36 million was paid as bonus to four of the six directors (excluding the external directors) during fiscal year 2008 (based on the resolution of the 109th ordinary general meeting of shareholders held on June 24, 2009). The directors who did not receive payment were the two representative directors. The amount of bonuses paid to the Company’s directors is determined on the basis of the Company’s annual consolidated results (assessment of the degree of attainment of planned net sales, operating profitability and net income), results of the business for which the director is responsible and individual personnel evaluations, and the system has been designed so that the higher the level of the corporate executive officer the greater the extent to which the Company’s annual consolidated results will be reflected in the bonus. Bonuses to the two representative directors are determined solely on the basis of consolidated results and consequently, they were not paid bonuses in fiscal year 2008.

3. In addition to the above payments, Yen 7 million was recorded for the current fiscal year as expenses associated with stock options granted to three directors of the Company, at the time they served as corporate executive officers not assuming the offices of directors.

4. In addition to the above payments, Yen 38 million was recorded for the current fiscal year as performance-linked remuneration (linked to the previous Three-Year Plan by the fiscal year ending 2008) granted to one director of the Company, at the time who served as corporate executive officer not assuming the offices of director.

5. In addition to the above payments, 3 subsidiaries of the Company paid a total amount of Yen 27 million as basic remuneration during the current fiscal year to 2 directors of the Company concurrently assuming the offices of directors of subsidiaries of the Company, and they will pay Yen 9 million as bonus for the fiscal year. And 2 of the said subsidiaries paid Yen 1 million to 2 directors as bonus for the fiscal year 2008.

6. None of the directors or the corporate auditors will be paid remunerations other than the executive remunerations described above (including those described in notes 1 through 5).

3) Amounts of remunerations, etc. of representative directors and directors whose

total amount of remunerations, etc. exceeds Yen 100 million, by type of payment for the fiscal year under review

(millions of yen) Basic fixed

remuneration Bonuses Stock Options Total

Shinzo Maeda, Representative Director 49 35 36 121

Kimie Iwata, Representative Director 37 18 10 66

Carsten Fischer, Director 77 50 13 141 Notes:

1.The above amount to be paid as bonuses to three directors during fiscal year 2009 is subject to the approval of the Fourth Item of Business (Payment of Bonuses to Directors) at this ordinary general meeting of shareholders. Bonus to the above three directors, two representative directors did not receive payment and Yen 28 million was paid to Mr. Carsten Fischer, Director during fiscal year 2008.


2. The above three directors do not serve concurrently as directors or corporate auditors of the subsidiaries of the Company.

3. In addition to the above payments, a total amount of Yen 2 million has been recorded as expenses associated with stock options granted to Mr. Carsten Fischer, Director, at the time he served as corporate executive not concurrently assuming the office of director. Yen 38 million was recorded for the fiscal year under review as performance-linked remuneration (linked to the previous Three-Year Plan by the fiscal year ending 2008) granted to one director of the Company, at the time who served as corporate executive officer not assuming the offices of director.


(6) Other matters related to External Officers 1) Major Activities

Position Name Major activities

External Director Shoichiro Iwata

Mr. Iwata attended 13 out of 15 Board of Directors meetings (Attendance rate: 86.7%). Based on his views to the management of the Company, which are free from the Company's established structure, he made remarks from a standpoint of a manager in other industry as necessary and fulfilled a supervisory function in regard to the management.

External Director Tatsuo Uemura

Mr. Uemura attended 13 out of 15 Board of Directors meetings (Attendance rate: 86.7%). Based on his experiences and knowledge through in the area of the capital market and corporate governance, in addition to his legal knowledge as a university professor specializing in legal research, he made remarks as necessary and fulfilled a supervisory function in regard to the management.

External Corporate Auditor

(Part time)

Akio Harada

Mr. Harada attended 12 out of 15 Board of Directors meetings (Attendance rate: 80.0%) and 14 out of 14 Board of Corporate Auditors meetings (Attendance rate: 100%). Based on his legal experiences and knowledge, he made remarks as necessary and fulfilled a supervisory function in regard to the management.


(Part time)

Reiko Kuroda

Ms. Kuroda attended 13 out of 15 Board of Directors meetings (Attendance rate: 86.7%) and 13 out of 14 Board of Corporate Auditors meetings (Attendance rate: 92.9%). Based on her broad experiences as university professor and a member of Committee for Realizing Gender Equal Society, Cabinet Office, Government of Japan and The Japanese National Commission for UNESCO, and Vice-President for External Relations of the International Council for Science, and insight in wide range of field, she made remarks as necessary and fulfilled a supervisory function in regard to the management.


(Part time)

Nobuo Otsuka

Mr. Otsuka attended 15 out of 15 Board of Directors meeting (Attendance rate: 100%) and 14 out of 14 Board of Corporate Auditors meeting (Attendance rate: 100%). Based on his knowledge and experiences as a management executive of medical corporations, he made remarks as necessary and fulfilled a supervisory function in regard to the management.

2) Outline of execution of liability limitation agreements The Company established provisions in the Articles of Incorporation enabling the

Company to enter into an agreement with external directors and external corporate auditors limiting their liability through a resolution at the 106th ordinary general meeting of shareholders held on June 29, 2006 for the purpose of inducing external directors and external corporate auditors to fully perform expected roles and enabling the Company to invite competent personnel.

Pursuant to these provisions the Company concluded such an agreement with all of the 5 external directors and external corporate auditors under which his/her liability for compensation shall be limited to the minimum limited liability provided in the laws and ordinances.


6．Matters Concerning Accounting Auditor (1) Name of Accounting Auditor

KPMG AZSA & Co. Notes 1:The Company does not conclude execution of agreements for limitation of

liabilities with KPMG AZSA & Co. 2: Of the significant subsidiaries of the Company, 15 overseas subsidiaries are

subject to audits of accounts (including similar documents) by a certified public accountant or incorporated accounting firm (including overseas auditors possessing similar qualifications) other than the accounting auditor of the Company.

3: Effective July 1, 2010, KPMG AZSA & Co. will become a limited liability audit firm and plans to change its name to KPMG AZSA LLC.

(2) Remuneration, etc. to the Accounting Auditor (Millions of yen)

Category 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 the accounting auditors 185

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 paid for services rendered as accounting auditors for the fiscal year under review” above.

(3) Details of duties other than audit Not applicable.

(4) Policy relating to determination of dismissal of or not to reappoint accounting

auditor In the event that the Company determines that keeping an accounting auditor as its

accounting auditor causes material troubles to the Company for the reasons, among other things, that the accounting auditor violates its duties, negates its duties or behaves in a manner inappropriate as accounting auditor, the Board of Corporate Auditors shall dismiss the accounting auditor pursuant to Article 340 of the Corporate Law. Furthermore, in addition, in the event that it is deemed that the accounting auditor is unable to carry out its duties duly or change of the accounting auditor to another audit firm is reasonably required to enhance the appropriateness of accounting audit, the Company shall submit a proposal to the general meeting of shareholders for the dismissal of the accounting auditor or not reappointing the accounting auditor upon obtaining consent of the Board of Corporate Auditors or receiving request from the Board of Corporate Auditors.


7．Status of Corporate Governance 7.1 Outline of the Company’s Framework for the Management and Execution of Business and Reasons for Adopting the Current Framework

(1) Corporate Governance Policy The Company is setting higher standards of corporate governance based on the

understanding that maximizing corporate and shareholder value, fulfilling social responsibilities and achieving sustainable growth and development are the keys to maintaining support as a valuable company from stakeholders (customers, business partners, shareholders, employees and society).

（2）Outline of the Company’s system for the management and execution of business

The outline of the Company’s system for the management and execution of business is as follows:

<Committees associated with Corporate Executive Officers> Corporate Executive Officer Committee: Final decision-making body comprising

corporate executive officers in charge of business execution, regarding material matters of business execution

Policy Meeting of Corporate Executive Officers: Committee of corporate executive officers to deliberate the Company’s medium-to-long-term strategies and decide the direction the strategies are to take

In addition to the above, corporate executive officers hold Decision-Making Meetings of

Corporate Executive Officers to make decisions regarding the execution of business in their respective business divisions, as well as deliberate matters to be proposed to the Board of Directors and the Corporate Executive Officer Committee.


<Advisory committees to the Board of Directors> Remuneration Committee Makes reports regarding the remuneration system

for directions and corporate auditors as well as evaluation of their performance (Chairperson: External director)

Nomination Advisory Committee Makes reports on the selection of candidates for officers and their promotions and demotions (Chairperson: External director)

<Committees under the jurisdiction of the Board of Directors> CSR Committee Based on the idea that fulfilling corporate social

responsibility (CSR) is crucial to Shiseido’s sustained development, the CSR Committee carries out comprehensive monitoring from a company-wide perspective, with the aim of increasing corporate value (Chairperson: Executive vice president).

Compliance Committee The Compliance Committee works to ensure legitimate and fair business practices in the Group, and promotes activities including the dissemination of corporate ethics, formulating risk management countermeasures and information security to enhance management quality. (Chairperson: Executive vice president).

（3）Reasons for adopting the current framework The Company has adopted the framework of a company with the Board of Corporate

Auditors system, which exercises the dual checking functions over business execution by the Board of Directors and over the legality and effectiveness by the Board of Auditors. Furthermore, as the Company aims to become a truly global enterprise, it holds the establishment of corporate governance that is capable of surviving global competition to be of paramount importance. Consequently, the Company, to the end of improving the “Management transparency, fairness and speed,” has been engaged in reforms to its corporate governance from the following four perspectives:

• Clarifying the allocation of responsibility (Introduction of the corporate executive officer system and the like)

• Enhancing management transparency and soundness (Establishment of the Nomination Advisory Committee and the Remuneration Committee)

• Reinforcing supervisory and auditing functions (Inviting external directors, appointing highly independent external directors and external auditors)

• Strengthening decision-making function (Establishment of the Corporate Executive Officer Committee and the like)

In order to strengthen these functions, the Company has adopted the framework of a company with the Board of Corporate Auditors system as its base to which it has integrated the superior functions of a company with Committees, satisfying the scrutiny and trust of global-level stakeholders and the reinforcement of top management.


7.2 System under which execution of duties by Directors is ensured to comply with laws, ordinances, and the Articles of Incorporation of the Company; system under which business of the Company is ensured duly to be conducted

The status for arrangement of the Company, in "Basic Policy regarding Internal Control Systems" as stated below.

(1) System under which execution of duties by directors and employees is ensured to

comply with laws, ordinances, and the Articles of Incorporation of the Company; system under which business of the Company and its subsidiaries and affiliates as a group is ensured duly to be conducted.

The Board of Directors shall determine important matters which will affect the Company and its subsidiaries and affiliates as a group. Representative director of the Company shall regularly report the status of execution of business to the Board of Directors. The Company shall appoint external directors to strengthen and maintain the Board of Directors' supervisory functions in regard to operational execution. The corporate auditors audit legality and appropriateness of the director's execution of business. Upon request of any corporate auditor, directors and employees shall report the status of execution of business to the corporate auditor.

The Company enacted “Corporate Ideals,” “The Shiseido Way (Corporate Behavior Declaration)” and “The Shiseido Code (Corporate Ethics and Behavior Standards)” common to the Shiseido group, with which each individual in the group should comply in executing business so that legitimate and fair corporate activities are promoted. *

Compliance Committee, under jurisdiction of the Board of Directors, shall be responsible for improving the quality of the Company by enhancing legitimate and fair corporate activities of the group, and risk management. The committee shall propose and report the plans and activities to the Board of Directors.

The Company positions a “Code Leader” at each business office, who shall promote legitimate and fair corporate activities, and the Company shall conduct regular training programs for compliance to all employees. The “Code Leaders” shall report the status of such activities to the “Compliance Committee”.

The Company shall provide multiple reporting and consultation help lines, which include external lawyers, to detect and correct at an early stage actions that contravene the law, ordinances, the Articles of Incorporation and other regulations of the Company.

Internal audit shall be conducted with respect to the overall group companies to assure appropriateness of business. The results of audit shall be reported to directors and corporate auditors.

(2) System under which directors shall be ensured to efficiently execute duties The Company adopted a corporate executive officer system to actualize smooth and highly

efficient corporate management, wherein functions of directors, who are responsible for decision-making and overseeing execution of business are separate from those of corporate officers, who are responsible for business execution.

A Representative Director responsible for execution of business coordinates execution of the overall group business aimed at achieving corporate targets. A corporate officer shall fix the specified target in the assigned field and set up a business system by which the target shall efficiently be achieved. Furthermore, with respect to the execution of important business, the Corporate Executive Officer Committee consisting of corporate officers shall deliberate the business execution from viewpoints of various aspects.

The Board of Directors and the Corporate Executive Officer Committee shall confirm the status of development vis-à-vis the target and conduct necessary improvement measure.

(3) System under which information regarding execution of business by directors

shall be maintained and controlled Important documents such as minutes of the Board of Directors meetings and minutes of

the Corporate Executive Officer Committee meetings shall be controlled pursuant to the


internal regulations of the Company and presented to directors and corporate auditors immediately whenever requested for inspection.

In addition, information with respect to execution of business by directors and employees shall be controlled pursuant to “Information System Controlling Regulation”, “Confidential Information Controlling Regulation” and other regulations.

(4) Regulation regarding Control of Risk for Loss and other Regulation Systems The “Compliance Committee,” under the jurisdiction of the Board of Directors, shall

manage risks associated with corporate activities of the whole group. Risks associated with management strategy and business execution shall be recognized and evaluated to designated teams so that necessary measures shall be taken.

A contingency manual shall be prepared to deal with emergency situation. In the case of emergency, countermeasure headquarters, projects or teams shall be set up pursuant to the levels of the emergency and shall take countermeasures.

(5) Matters related to employees to assist duties of corporate auditors when corporate

auditors request to do so and matters related to the independence of such employees from directors

Employees shall be positioned to assist the Board of Auditors and corporate auditors as the Board of Auditors Staff Group. The personnel of the Board of Auditors Staff Group shall be determined by taking corporate auditors’ opinion into consideration.

(6) System under which directors and employees report to corporate auditors and

other systems, under which any report is made to corporate auditors Directors and employees shall report the status of business execution to corporate auditors

through meetings of the Board of Directors and other important meetings, and the results of audit performed by the Internal Audit Department.

In addition, the status of business and conditions of assets shall be reported to corporate auditors upon their request.

(7) Other systems under which audit by corporate auditors is ensured efficiently to be

performed Opinion exchange meetings shall be held regularly between Representative Directors and

corporate auditors. The Company shall ensure a system under which corporate audits are implemented efficiently. Liaison meeting shall be held among corporate auditors, accounting auditors and the internal audit department upon request of corporate auditors. In addition, corporate auditors shall be ensured to attend meetings of various meetings.

* Fundamental thought toward exclusion of anti-social power and the status for

arrangement therefor In the Shiseido Code (Corporate Ethics and Behavior Standards), the Company has

declared that it will firmly stand on its ground against any person or group of people having anti-social power and it will never give such person or group any benefits. A coordination office was established in the CSR Group of the General Affairs Department for the purpose of intensively collecting information and at the same time the Manual on how to cope with such power is revised on the intranet. Consulting with the local police offices for cooperation, the Company became a member of the “Conference on how to cope with particular violence” so that it strengthened to collect outside information and the cooperation with outside organizations.


8．Important Matters Occurred Subsequent to the Settlement of Accounts

At its meeting held on April 28, 2010, the Board of Directors passed resolutions on the following items.

(1) Retirement of treasury stock The Board of Directors passed a resolution to retire treasury stock pursuant to Article 178 of the Corporation Law. The details are as outlined below. 1) Type of shares to be retired Common stock 2) Number of shares to be retired 10,000,000

(equivalent to 2.43% of total shares prior to retirement) 3) Retirement date May 21, 2010

Following this retirement, the Company will have a total of 400,000,000 shares outstanding.

(2) Issue of unsecured yen bonds

The Board of Directors passed a resolution to issue unsecured yen bonds. The details are outlined below. 1) Total amount of issue Maximum of ¥40.0 billion (however, multiple issues are

possible within this total amount) 2) Payment amount ¥100 for each ¥100 bond issued 3) Interest rate Up to 0.5 percent over the yield on Japanese government

bonds with similar maturities 4) Term Maximum of five years 5) Redemption method Bullet payment at maturity 6) Period of issue From the date of the Board of Directors’ resolution through

September 30, 2010 7) Application of funds procured

Repayment of debt, etc.

The Company plans to use this bond issue to repay part of the bridge loan from banks totaling ¥100 billion used to fund the acquisition of Bare Escentuals. The Company will convert the remainder of the bridge loan to long-term bank loans.

Amounts in this Business Report have been rounded down to the nearest million yen,

thousand US dollar, thousand euro, thousand yuan, thousand HK dollar, and thousand NT dollar. In the notation of 1,000 shares, shares of less than one unit have been omitted.

Documents

Business Report 1 Matters Concerning Shiseido Group (1) …€¦ · · 2015-06-09During the current fiscal year, the fiscal year ended March 31, 2010, economic recession persisted