Tradition and Innovation

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2 Tradition and Innovation Contents A Message from the Management 2 Review of Operations 5 Market Data 14 ITO EN Initiatives 15 The ITO EN Group 34 Financial Information 35 Consolidated Financial Review 36 Financial Data 38 Organizational Structure 51 Domestic Network 52 ITO EN Innovation and Growth 54 Investor Information 56 Corporate Data; Board of Directors and Corporate Auditors 57

3 Since its establishment in 1966, ITO EN has provided customers with delicious beverages that embody its emphasis on the gifts of nature. ITO EN developed the world s first Canned Oolong Tea in 1981, and followed this up in 1985 with Canned Green Tea. In the process, the Company successfully developed unsweetened beverages, a feat considered technologically impossible, and pioneered a market for such beverages Ever since, we have consistently our innovativeness. This was first beverages in PET bottles and beverages in heatable PET bottles. anniversary since launching the canned green tea. In the ensuing this brand, which has been warmly stable procurement of the highestinvolved in green tea cultivation This initiative, centering on Japan s in Japan that previously did not exist. led the industry in demonstrating exemplified by our launch of the our subsequent introduction of In 29, we celebrated the 2th Oi Ocha line of ready-to-drink years, we have constantly improved embraced by consumers. To ensure quality tea leaves, we are now also in partnership with local growers. Kyushu region, has produced excellent results. ITO EN s tradition and innovation are inherent in all of its products. Placing top priority on the customer, we strive to foster prosperous and healthy lifestyles by ensuring that our products embody five key qualities: They must be natural, healthy, safe, welldesigned, and delicious. We will continuously explore new possibilities for our products while preserving these five fundamental concepts. ITO EN Corporate Book 29 1

4 A Message from the Management Overview In the year ended April 3, 29, conditions in the Japanese economy became extremely difficult due to a number of factors. In addition to surging prices of crude oil and raw materials, these included the global financial crisis that began in the United States, as well as a significant decline in corporate earnings. With the added challenges of depressed worker incomes and weakening consumer sentiment, the domestic economy deteriorated sharply. Facing these conditions, the ITO EN Group adhered to its principle of Always Putting the Customer First. Based on this principle, we strove to reinforce our brand appeal and solidify our sales base while cutting overall costs, expanding our overseas business, and working to boost earnings. Despite these and other initiatives, we posted a major decline in earnings to an extent never before experienced. While confronted with such challenging conditions, we regard the situation as an opportunity to step up product development and sales activities while constantly seeking to address areas of customer dissatisfaction. Specifically, we will strive to foster prosperous and healthy lifestyles by focusing on the five concepts of natural, healthy, safe, well-designed, and delicious. We will also promote ongoing innovation by closely communicating with all customers whenever we come in contact with them. 2 ITO EN Corporate Book 29

5 Performance In the year under review, the domestic beverage market remained generally weak against the effects of market maturity, unstable weather from August 28, and the subsequent economic downturn, which caused consumer sentiment to wane. In our mainstay business of Japanese tea beverages, our Hojicha (roasted green tea) and Genmaicha (green tea with roasted rice) drinks performed well, largely owing to improvements in materials procurement and manufacturing methods. We also reported increased yearon-year sales of barley tea and mineral water. In the vegetable beverages segment, the market contracted considerably amid rising consumer concern about the safety of imported vegetables. Nevertheless, we sought to ensure peace of mind and strengthen our brand, including through the introduction of products using only domestically produced materials. Consolidated net sales for the year amounted to 332,847 million, up 1.5% from the previous period. Despite this increase in revenue, earnings were affected by soaring raw material prices and higher sales promotion costs. As a result, operating income fell 44.8%, to 1,613 million, and ordinary income declined 43.%, to 1,376 million. Net income dropped 52.8% year-on-year, to 4,765 million. Profit Appropriation Policy ITO EN regards the return of profits to shareholders as a top management priority. With respect to appropriation of profits, our policy is to pay dividends in a consistent manner. Committed to meeting the expectations of shareholders, the Company declared a year-end cash dividend of 19. per ordinary share, which combined with the 19. interim dividend already paid brought annual cash dividends to 38. per share. As for preferred stocks, the Company paid a year- Net Sales Operating Income Net Income per Share (Common Stock) ( millions) ( millions) ( ) 4, 24, 25 3, 18, 2 2, 1, 12, 6, (1) (2) (Years ended April 3) (Years ended April 3) (Years ended April 3) (1) On March 1, 26, the Company implemented a two-for-one stock split. (2) Effective September 3, 27, ITO EN allocated free of charge Class-A Preferred Stock at a ratio of.3 shares to one common stock. ITO EN Corporate Book 29 3

6 A Message from the Management end dividend of 24. per share, which combined with the 24. interim dividend brought total dividends for the year to 48. per share. At the same time, the Company retains sufficient earnings to make investments aimed at increasing corporate value, which means raising investment value for shareholders. We will return profits to shareholders through the future active advancement of our operations. Medium-Term Plan Under our medium-term business plan, we are pursuing the following targets for the year ending April 212: consolidated net sales of 5 billion, five brands selling 1 million cases or more each, ROA of at least 1%, earnings per share of 16 for common stocks and 175 for preferred stocks, and a dividend payout ratio of 4%. To achieve these targets, we will implement effective product and market strategies, reinforce our operational foundation, cut overall costs, advance our overseas businesses, and adopt measures designed for sustained growth. Preferred Stocks With the aim of offering shareholders an additional investment opportunity, in September 27 ITO EN listed its Class-A Preferred Stocks on the First Section of the Tokyo Stock Exchange. This is the first time in Japan that a company has issued preferred stocks that will not be converted to common stocks. By issuing these preferred stocks, we hope to reach consolidated net sales of 5 billion under our medium-term business plan, while broadening options for fund procurement and seizing opportunities for future growth. Looking Ahead Following the principle of Always Putting the Customer First, we will improve our understanding of customers in order to deepen our relationships with them. In the process, we will build a framework ensuring that the voices of all customers are reflected in our management policies. In addition, by maintaining a sound financial position and consistently supplying natural and healthy products, we will create new levels of value going forward. We look forward to the ongoing support and guidance of all shareholders as we embrace the challenges of the future. July 29, 29 Hachiro Honjo, Chairman Daisuke Honjo, President 4 ITO EN Corporate Book 29

7 REVIEW OF OPERATIONS Tea Leaves Japanese Tea Beverages Chinese Tea Beverages Vegetable Beverages Fruit Beverages Coffee Beverages Mineral Water Carbonated, Functional Beverages & Others ITO EN Corporate Book 29 5

8 Tea Leaves The history of tea in Japan stretches back some 1,3 years, when tea was introduced from China by returning Buddhist priests who had studied in that nation. Since then, Japanese tea culture has evolved and developed its own unique history, so that today it holds an important position as one of the nation s most popular beverages. ITO EN has established an integrated system covering all stages related to tea, from the selection and processing of tea leaves to packaging and sales. Since our foundation, we have maintained a relentless commitment to food safety as evidenced in our various safety-related mechanisms, from traceability of raw leaves to stringent quality control of manufacturing, distribution, and sales processes. Targeting ever-higher levels of quality, we develop our own proprietary technologies for cultivating tea leaves and processing tea leaves in order to meet our customers needs. Japan has a low-birthrate, aging society, in which families are getting smaller and people are demanding greater levels of convenience. Addressing these factors, ITO EN is reinforcing its lineup to include easy-touse mini-pack products and a series of teabag and instant-tea products that offer the same delicious flavor as tea freshly made in a pot. In the fiscal year ended April 3, 29, sales of tea leaves amounted to 3,251 million, up 2.6% from the previous year. Net Sales Share 9.1% Net Sales ( millions) 25 3, ,79 28, ,353 3,251 29,497 ONE POINT As people demand more secure lifestyles and lower prices, we are stepping up sales of products in teabag form, including barley tea and green tea. 6 ITO EN Corporate Book 29

9 Japanese Tea Beverages Green tea has a subtle flavor and dramatically varying quality. For this reason, creating canned green tea with a freshly brewed flavor was long regarded as technologically impossible. In 1985, however, ITO EN was the first in the world to develop a canned green tea beverage, based on many years of tireless research and a strong desire to win. Since then, we have constantly striven to enhance the quality of our products by deploying state-of-the-art beverage manufacturing techniques. This has led to major breakthroughs, including commercialization of green tea in plastic PET bottles and the development of PET bottles for hot tea beverages. Our success also derives from our materials procurement system, which capitalizes on merits of scale, as well as our processing technologies, which enable us to extract and preserve the full flavor of original tea leaves. ITO EN has led the green tea beverage market through its ideas for new flavors. These include the Hojicha (roasted green tea) and Genmaicha (green tea with roasted rice) series of subtle-flavored teas with pleasant aromas, as well as seasonal items and Catechin Green Tea, which helps reduce low-density lipoprotein (LDL) cholesterol. At the same time, we have introduced this integral part of Japanese food culture to markets around the world. Sales of Japanese tea beverages in the year under review rose 1.2%, to 163,67 million. Net Sales Share 49.2% Net Sales ( millions) 163, , , , , ONE POINT Our Hojicha and Genmaicha offerings, which reflect our commitment to enhancing ingredients and manufacturing techniques, have been very well received. These items are attracting attention as potential drivers of new market demand. ITO EN Corporate Book 29 7

10 Chinese Tea Beverages ITO EN became Japan s first importer of oolong tea leaves in 1979, when it signed an import agency agreement with the China National Native Produce and Animal Byproducts Import and Export Corporation. In 1981, the Company became the first in the world to launch an all-natural Canned Oolong Tea. In the process, we ushered in the brand-new concept of sugar-free tea, which did not exist in the beverage market at the time, and thus created a new level of value. Since then, we have played an important role in establishing oolong tea as a favorite beverage among a wide spectrum of Japanese society. We have also pioneered the introduction of other new teas to the Japanese market. Two such beverages are Kin no Uron Cha (golden oolong tea), made from the much-prized and rare Chinese Ogonkei (huangjin gui) tea leaves, as well as Jasmine Tea, which is green tea scented with jasmine flowers. In the fiscal year ended April 3, 29, sales of Chinese tea beverages edged down.1%, to 13,889 million. Net Sales Share 4.2% Net Sales ( millions) 13, , , , , ONE POINT Naturally scented Jasmine Tea, with its sweet and delightful aroma, is particularly popular among women. We use top-grade jasmine tea with a higher-than-normal content of scented flowers to a create a strong natural perfume. 8 ITO EN Corporate Book 29

11 Vegetable Beverages The sweet taste of ITO EN s vegetable beverages is completely natural, as they are made without adding sugar or salt. Our emphasis on safety and nutritional benefits has also boosted the popularity of these products. Two perennial favorites among consumers are Jujitsu Yasai (Vegetables Galore) and Ichinichibun no Yasai (A Day s Worth of Vegetables). The latter contains the equivalent of 35 grams of vegetables the daily amount recommended in 24 by the Ministry of Health, Labour and Welfare. Demand for domestically produced vegetable beverages is growing amid concerns about food safety and the falling rate of Japan s food self-sufficiency. In response, ITO EN launched two new products that use only domestic ingredients in the year under review, one made only of vegetables one with a fruitvegetable mix. We are also working to address people s concerns by clearly identifying the country of origin of ingredients on our product labels and our corporate website. In the year ended April 3, 29, sales of vegetable beverages declined 9.9%, to 35,467 million. Net Sales Share 1.7% Net Sales ( millions) 35, , , , , ONE POINT We are upgrading our lineup of carton vegetable beverages aimed at people living alone or with insufficient vegetable intake in their daily diets. ITO EN Corporate Book 29 9

12 Fruit Beverages ITO EN launched the Vitamin Fruit line in 26 with the introduction of Ripe Apple, a delicious, freshly squeezed apple juice that has remained highly popular. The Vitamin Fruit line is now firmly entrenched as a mainstay brand. The 1% pure fruit beverage market remains stable owing to the trend toward healthier lifestyles. In this context, our Vitamin Fruit line, which offers the genuine delicious taste of fruit and the health benefits of supplementing vitamin C intake, continues to be warmly received. In addition to items that can be enjoyed year-round, we will expand our range of beverages made from seasonal fruits that are available for a limited time only, so that customers can enjoy the flavors they associate with each season. In the year under review, sales of fruit beverages declined 4.%, to 18,3 million. Net Sales Share 5.4% Net Sales ( millions) 18, , , , , ONE POINT One 35g bottle of Vitamin Fruit contains around 25mg of vitamin C, enabling consumers to easily supplement their vitamin C intake while enjoying a delicious and healthy drink. 1 ITO EN Corporate Book 29

13 Coffee Beverages The W Coffee line of canned coffee beverages, launched in 26, combines taste and functionality and is made using a new technology called the Double Block method. The result is a can of coffee with twice as much coffee polyphone (also known as chlorogenic acid) as a regular can of coffee. In 27, we entered the deeply rooted market for chilled cup coffee with the launch of a drink developed jointly with the Tully s Coffee chain of specialty coffee shops, operated by a member of the ITO EN Group. Another popular item is Tully s Coffee Winter Shot, the first cup coffee in the industry that can be heated when sold. Since its launch, we have enhanced that product by adopting an easy-to-open lid and a shape that facilitates drinking, while broadening its sales territory. Going forward, we will actively leverage the Tully s Coffee brand to further expand our coffee business. In the year ended April 3, 29, sales of coffee beverages rose 2.1%, to 19,579 million. Net Sales Share 5.9% Net Sales ( millions) 19, , , , , ONE POINT Growing health-consciousness in Japan has boosted the popularity of our diet coffees, including drinks with little or no sugar and items with zero calories. ITO EN Corporate Book 29 11

14 Mineral Water We entered the domestic mineral water market in March 28, when we concluded an agreement with French company Groupe DANONE. The agreement gave ITO EN the exclusive marketing rights in Japan for the evian brand of natural mineral water. Today, mineral water is a growth market in Japan. Along with green tea, vegetable juices, and other beverages, it is an important product segment earmarked by ITO EN for further expansion. We will broaden our sales channels nationwide and actively promote evian as a drink with an excellent mineral balance and health benefits. In the year ended April 3, 29, sales of mineral water jumped 9.2%, to 11,879 million. Net Sales Share 3.6% Net Sales ( millions) 6,246 11, , , ONE POINT evian is a hard water with an appropriate mineral content that Japanese people find easy to drink. In addition to its rehydration properties, it helps people supplement their intake of such minerals as calcium and magnesium. 12 ITO EN Corporate Book 29

15 Carbonated, Functional Beverages & Others In the field of carbonated and functional beverages, a long-selling favorite among consumers is our line of Natural Water Ciders, which are sold in vending machines and elsewhere. In the year under review, we augmented this line with the launch of a healthy carbonated drink containing 1,mg of vitamin C. Also popular is our Vitamin Fruit line, featuring the healthy taste of 1% fruit ingredients. During the year, we augmented this line with Vitamin Fruit Sparkling, delivering the refreshing feel of a carbonated beverage. In these ways, we continue to strengthen the appeal of our product lineup. In the domestic market for supplements, where demand is growing due to strong awareness of health and beauty, people are turning their attention to such items as multi-vitamins, collagen, hyaluronic acid, turmeric, and garlic. In this field, we engage in joint product development with Mason Distributors, Inc., an ITO EN Group company. Using ingredients traditionally regarded in Japan as good for the body, we deliver high-quality supplements made with the health and safety of customers foremost in our minds. In the year under review, sales in this segment grew 1.7%, to 4,77 million. Net Sales Share Net Sales % ( millions) 4,77 39,42 31,454 23,839 24,543 ONE POINT ITO EN recently launched Vegestick, a delicious nutritional supplement bar based on two of its vegetable beverages, Jujitsu Yasai (Vegetables Galore) and Midori no Yasai (Green Vegetables). Vegestick is proving highly popular at a time of growing consumer awareness of health issues and as a meal replacement for the busy people of today. ITO EN Corporate Book 29 13

16 Market Data Calendar year Beverage Market billions YOY % change billions YOY % change billions YOY % change billions YOY % change billions YOY % change Tea % % % % % Coffee % % % % % Vegetable % % % % % Fruit % % % % % Carbonated % % % % % Other % % % % % Total 3, % 3, % 3, % 3, % 3, % Calendar year Tea Beverage Market billions YOY % change billions YOY % change billions YOY % change billions YOY % change billions YOY % change Green Tea % % % % % Barley Tea % % % % % Blended Tea % % % % % Chinese Tea % % % % % Black Tea % % % % % Total % % % % % Calendar year Domestic Crude Tea Leaf Production Capacity (Tons) 1,7 1, 91,8 94,1 95,5 Green Tea Leaf Market ( billions) Note: Source: Years: Figures for 28 are estimates ITO EN, LTD. Jan. Dec. Beverage Market Tea Beverage Market Tea Beverages Fruit Beverages ( billions) Coffee Beverages Carbonated Beverages ( billions) 4, Vegetable Beverages Other Beverages 5 Green Tea Barley Tea Blended Tea Chinese Tea Black Tea 3, 2, 1, (Est.) Domestic Crude Tea Leaf Production Capacity (Tons) 12, (Est.) Green Tea Leaf Market ( billions) 4 9, 3 6, 2 3, ITO EN Corporate Book 29

17 ITO EN Initiatives Working in Partnership with Our Customers Marketing P.16 Progressively Improving Product Lineup Brands P.18 Safe and Reliable Materials Supply Production P.2 World Pioneer in Tea-Related Research R&D P.22 Proactive Overseas Business Development Overseas P.24 Promoting Self-Motivation in the Workplace Employees P.26 Respect for Laws and Ethical Rules Corporate Governance P.28 Innovative Approach to Protecting Our World Environment P.3 Growing in Partnership with Society Society P.32 ITO EN Corporate Book 29 15

18 Marketing Working in Partnership with Our Customers Since our founding, our marketing strategies have been underpinned by a spirit of challenge, where we focus on what we can do to meet customer needs and raise satisfaction levels. ITO EN Customers Always Putting the Customer First Since its establishment in 1966, ITO EN has adhered to its principle of valuing all customers in line with its motto of Always Putting Consumers Stockholders the Customer First. Based on this commitment, we aim to always focus on our customers, create mutual benefits, and build and maintain trusting relationships. Distributors ITO EN Suppliers One of the Company s strengths is its Route Sales System. Under the system, we deploy our nationwide network of 24 offices to supply customers directly with our offerings. Our frontline salespeople gather the latest market information while building Financial institutions Local communities up a dialog with each customer they visit, offering merchandising suggestions, and providing value-added services. For customers to whom we cannot make direct deliveries, we have our Field 16 ITO EN Corporate Book 29 Always emphasizing communication with customers, our Field Marketing salespeople make suggestions to enhance selling environments.

19 Domestic sales network 24offices Under our Route Sales System and our Field Marketing System, we have salespeople appointed to 24 offices nationwide. Going forward, we will expand our distribution network in order to build closer relationships with our customers. Hokkaido/Tohoku Kanto Chubu Kansai Chugoku/Shikoku Kyushu 27 Offices 98 Offices 19 Offices 26 Offices 17 Offices 17 Offices Marketing System, where we visit stores to secure shelf space for mainstay items and strengthen our sales promotion activities. In The Route Sales System is an integral part of our marketing strategy. these ways, our salespeople provide meticulous service while serving as bridges that link ITO EN with its customers. Our sales network is configured to address customer demands by enabling people to purchase ITO EN products whenever and wherever they want. This is achieved by providing products via a well-balanced network of sales channels, including convenience stores, supermarkets, vending machines, and general retailers. ITO EN s Business Model Consumers Route Sales System Always Searching for Consumers Dissatisfaction Still Now Sales Companywide Proposal System by Employees and Customers Regional Block Production and Distribution System 7,766 Suggestions (As of April 29) Voice System Management Ingredients (Tea Leaves, Coffee Beans) Own Manufacturing System for Realizing High Quality Beverages Fabricationless* Production for Reduction of Investing in Equipment and Transportation Costs * Factories not directly owned by the Company R & D Production Seeking to build relationships of trust with new customers, we are pursuing proactive sales initiatives and expanding our sales routes. ITO EN Corporate Book 29 17

20 Brands Progressively Improving Product Lineup ITO EN is successively creating new lines based on its original product concepts. Japan s Leading Brand: Oi Ocha Product Development Concept In 1985, ITO EN revolutionized the beverage industry by introducing the Canned Sencha line of canned green tea. Four years later in 1989, we launched the Oi Ocha line, which recently celebrated its 2th anniversary as a mainstay brand. Our scrupulous attention to quality has enabled Oi Ocha to become a firm favorite among consumers. We continue to offer beverages with a natural taste, by not only highlighting design, function, and health benefits, but also concentrating on elements unique to Japan s food culture, such as seasonality and variety. To further enhance the flavor of the Oi Ocha brand, we have established tea plantations expressly for this product. We will continue solidifying the unassailable position of the Oi Ocha brand, both in name and reality, as a leading Japanese beverage, with a shipment target of 1 million cases annually. Delicious Welldesigned Natural Safe Healthy Hojicha (roasted tea) and Genmaicha (green tea with roasted rice) are two recent additions to the Oi Ocha lineup, which celebrated its 2th anniversary in ITO EN Corporate Book 29

21 Since Oi Ocha launch As it approaches the 2th anniversary of its launch, Oi Ocha has topped cumulative sales of 15 billion units. We will further reinforce this brand with the aim of reaching shipments of 1 million cases per year. 2years Diversified Brand Development In the vegetable beverage category, our popular Jujitsu Yasai (Vegetables Galore) line is showing steady market proliferation, as is Ichinichibun no Yasai (A Day s Worth of Vegetables), a 1% vegetable beverage. In the year under review, we launched a version of Jujitsu Yasai made only from domestically produced vegetables, to address people s safety-related concerns. We will continue conducting R&D aimed at delivering safety and peace of mind to consumers. We also offer the Vitamin Fruit line of natural fruit juices, highly acclaimed for being delicious and healthy and providing excellent nutritious benefits. During the year, we augmented this line with Vitamin Fruit Sparkling, which delivers the refreshing feel of a carbonated beverage. We will work hard to penetrate the carbonated beverage market going forward. In the mineral water market, in 28 ITO EN commenced exclusive marketing in Japan of evian, the world s top natural mineral water. To reinforce these efforts, we are expanding sales nationwide using our powerful Route Sales System. We are also working to tap the market for commercial-use products. In the coffee beverage segment, we develop our business jointly with Tully s Coffee Japan Co., Ltd., a member of the ITO EN Group. Highly popular among customers is Tully s Coffee Winter Shot. This is the first drink in the industry using Seattle Top, which is similar to lids on hot drinks offered by cafés. Tully s Coffee established the first chain of specialty coffee shops in Japan. With around 35 shops nationwide, it has received much acclaim for the high quality of its coffees. We will leverage the respective taste strengths of ITO EN and Tully s Coffee Japan to launch new products and further improve the value of the Tully s Coffee brand. ITO EN plans to further develop the evian brand, which it recently acquired. Tully s Coffee is a central pillar of our brand strategy. ITO EN Corporate Book 29 19

22 Production Safe and Reliable Materials Supply The safe and reliable supply of raw materials is ITO EN s top priority. We pursue safety and reliability in all stages, from the production of raw materials to manufacturing systems. Supply System for Raw Materials ITO EN s top brand Oi Ocha has enjoyed enduring popularity among consumers since its launch. ITO EN strives to produce a natural taste by not using fragrances or flavorings, ensuring that the tea leaves are 1% locally grown in Japan, and by adopting exhaustive quality and production control processes. Because tea is an agricultural product, its leaves are subject to subtle variations in flavor, depending on year-round climate, production region, and method of cultivation. In order to obtain tea leaves of dependable quality, our employees carefully check the quality of leaves at plantations and procure leaves directly from the market and tea producers. The strong ties we have built with tea producers over many years of direct contact, as well as our track record in procuring more than 2% of the crude tea leaves produced in Japan, are the source of our high-quality offerings. On the manufacturing side, ITO EN has built a system of cooperation with outsourced vendor factories that possess expertise in beverage manufacturing and have operations nationwide. These factories undertake manufacture using a meticulous quality control system, based on detailed production manuals that are classified according to manufacturing line and product. Through our ongoing beverage manufacturing activities, we will continue proposing new levels of value through the mutually beneficial partnerships we have with our outsourced vendor factories. We have a reliable system of cooperation with outsourced vendor factories around Japan. 2 ITO EN Corporate Book 29 Our large-scale tea plantation business has extended to Miyazaki Prefecture.

23 ITO EN procures 24.7% of crude tea leaves grown in Japan 24.7% Our long-lasting relationships with tea-production regions and growers allow the direct and reliable procurement of high-quality tea leaves. In fiscal 28, ITO EN procured 24.7% of the crude tea leaves grown in Japan. Traceability The traceability of domestically produced raw materials used to make tea begins with tea growers. We check their cultivation control records, paying particular attention to information concerning the use of agricultural chemicals. Next, there are the manufacturing control records kept by crude tea leaf producers. We trace the history of shipped crude tea leaves by checking shipment manifests. Crude tea leaves collected at ITO EN s Shizuoka Sagara Plant are then processed into the raw materials used to make green tea beverages. We keep manufacturing control and shipment records for this process, as do our outsourced vendor factories that come next in the supply system. Using information stamped on green tea beverages purchased by the consumer, this system makes it possible to trace a product s history right back to how and by whom the tea leaves were cultivated. We ensure the same level of traceability for vegetable beverages made from raw materials produced overseas. We also check that these overseas vegetable growers use only fertilizers and pesticides that comply with Japanese laws and regulations. ITO EN employees are dispatched to production areas to monitor the use of agricultural chemicals and check quality control systems. Current Status of Green Tea Materials Traceability System Crude tea leaf factory Tea wholesaler (intermediary) Tons Tons YOY % Change Tons YOY % Change Domestic Crude Tea Leaf Production 91,8 94,1 2.5% 95,5 1.5% Imports 11,254 9, % 7, % Exports 1,576 1, % 1,71 4.7% Domestic Consumption 16,9 16,2 -.7% 14, -2.1% ITO EN Utilization 21,8 22, % 23, % Sources: The Ministry of Agriculture, Forestry and Fisheries, Japan Tea Industry Central Committee, ITO EN, LTD. Years: ITO EN Utilization: May April; Others: Jan. Dec. Traceability System Written pledge clarifying appropriate use of pesticides Recording of plantation and cultivation data Written pledge and certification covering safety of crude tea leaves List of pesticides used at each factory Recording of crude tea leaf manufacture and management data Producer information Contract covering safety of tea to be sold Crude tea leaf factory data Shizuoka Sagara Plant Documentation of processes (tea leaves beverage ingredients) Beverage factory Documentation of processes (beverage ingredients green tea drinks) Retailer Customer The origins of ingredients used in our products are clearly labeled. * ITO EN is currently building a traceability system and also exchanges documents with business partners in the form of written pledges, certification, and contracts. Through these mechanisms, we now have a framework permitting supply of safe ingredients and products. ITO EN Corporate Book 29 21

24 R&D World Pioneer in Tea-Related Research With a long history of pioneering R&D, we continue to make important advances in tea and a variety of ingredients, both independently and in collaboration with other research institutions. Central Research Institute The ability to continually create new value constitutes the motive force for a company to generate sustained growth, and R&D plays a crucial role in this regard. ITO EN is constantly exploring new possibilities for a variety of ingredients, centering on green tea, that have been an integral part of Japan s traditional culture. Today, we pursue our research at a time of growing interest in various aspects besides flavor, such as safety and functionality. The Central Research Institute spearheads medium- and longterm research targeting development of new products. Research themes include functional beverages, such as those certified as food for specified health uses, developed with the objective of preventing adult diseases. This research work involves testing the functions of ingredients, centering on tea leaves and vegetables, and the development of functional elements. ITO EN undertakes this research in collaboration with universities and other outside research organizations. We conduct research into the role that green tea s main components, catechin and theanine, play in maintaining good health. Our research has revealed that taking green tea capsules containing a significant amount of theanine over a long period helps prevent the deterioration of cognitive functions among the elderly. This research points to the potential efficacy of theanine in preventing dementia. R&D Expenses ( million) 2,5 2, 1,5 1, (Years ended April 3) The Central Research Institute works tirelessly to achieve new R&D breakthroughs. 22 ITO EN Corporate Book 29

25 92 ITO Tea-related patents patents EN has taken out a total of 92 patents related to tea, comprising 76 in Japan and 16 overseas. We will continue striving to obtain patents in Japan and overseas in the pursuit of advances driven by our R&D activities. Product Development Department and Agricultural Technology Department The Company s regular product development activities, spearheaded by the Product Development Department, involve research into processing methods for raw materials, new product formulas, and manufacturing technologies. These are based on product concepts supported by market research and analyses of consumer preferences. We also conduct R&D related to effective utilization of used tea leaves and other waste. The Agricultural Technology Department conducts research into green tea cultivation and manufacturing processes with the aim of ensuring stable supplies of premium-quality tea leaves. We also conduct research aimed at developing and nurturing tea and vegetable plantations, both in Japan and overseas. One highly successful project, centering on the Kyushu region, targets the development of tea-producing regions. We also conduct trial cultivation of vegetables. Number of Patents Obtained (Japan and Overseas) 3 The Institute undertakes wide-ranging research related to tea. Research into Components of Green Tea Research Undertaken during the Year Research into Components of Green Tea Catechins - Lowering of blood cholesterol - Antiobesity effect - Cancer prevention effect Theanine - Protection of brain neurons 25 Major Research Successes (Years ended April 3) Research into Components of Green Tea Gallate-type catechin - Confirmed serum cholesterol lowering effect - Confirmed metabolic syndrome prevention effect Epigallocatechin gallate - Identified antiallergenic effect - Confirmed allergic reaction reduction effect Theanine - Identified mechanism for brain neuron protection effect - Confirmed possibility for prevention of dementia among elderly ITO EN Corporate Book 29 23

26 Overseas Proactive Overseas Business Development Our overseas business development strategy focuses on entering highly promising markets, such as the United States, and on advancing our operations in key regions, notably Australia and China. Penetrating the U.S. Market In the United States, consolidated subsidiary ITO EN (North America) INC. is charged with establishing the ITO EN brand by introducing authentic green tea to American consumers. Its activities include sales targeting natural food markets across the country. Amid growing consumer awareness of green tea, we have set up the Route Sales System in the New York district of Manhattan. Here, we are gradually broadening our base for green tea beverages through meticulous customer-focused sales activities. Today, obesity is recognized as one of the most important health threats facing U.S. people. Accordingly, there is heightening interest in healthy eating habits and exercise. The health benefits of green tea, well recognized in Japan, are gaining wider acceptance in the United States, boosting demand throughout the country. Products made by ITO EN (North America) won four first prizes at the World Tea Expo held in Las Vegas in May 29. Oi Ocha Koi Aji won the Best Unflavored Green Tea category, Weil for Tea Oolong Shot the Best Unflavored Oolong category, TEA S TEA Green Jasmine the Best Flavored Green Tea category, and TEA S TEA Natural Sweet Citrus Black the Best Flavored Black Tea category. ITO EN (North America) INC. Sales ($ thousands) 6, 4, 2, (Years ended April 3) Sales of Mason Distributors, Inc. World Tea Expo ITO EN Corporate Book 29 We are expanding our product range for the U.S. market, centering on the TEAS TEA brand.

27 Overseas network Ningbo Shunyi Tea Products Co., Ltd. Fujian New Oolong Drink Co., Ltd. ITOEN (USA) INC. ITO EN (North America) INC. Mason Distributors, Inc. 6locations ITO EN AUSTRALIA PTY. LIMITED In the United States, ITO EN is committed to nurturing the green tea market as a reflection of Japanese food culture. We now have sales operations in New York, Florida, and Hawaii. In Australia and China, meanwhile, we have production facilities for tea materials and beverages. Tea Cultivation Business in Australia ITO EN constantly seeks to ensure stable supply sources in anticipation of future growth in demand for green tea. With this in mind, in 1994 we established ITO EN AUSTRALIA PTY. LIMITED in the Australian state of Victoria, thus launching our tea plantation business in that nation. In October 24, we built a crude tea factory, also in Victoria, and commenced shipments to Japan. Our green teas produced in Australia are available in specialty stores under various brands, including ITO EN, Chajuttoku, and Tea. Pi.O. Sold as Japanese tea produced in Australia, these teas are unveiled twice a year in Japan, enabling customers to enjoy the freshest taste. Steadily Progressing Overseas Business ITOEN (USA) INC., established in Hawaii in 1987, makes and sells tropical juice, unsweetened teas, coffee, and other canned beverages. Its core brand is the Aloha Made series of tropical juices, which are highly popular among local people. In recent years, sales of tea-based beverages have been increasing in light of growing health-consciousness. In an initiative aimed at expanding its operations, in 26 ITO EN (North America) acquired Mason Distributors, Inc., a manufacturer and distributor of supplements, making it into a wholly owned subsidiary. We plan to further reinforce and expand our operations base in the United States by taking advantage of the strengths that both companies bring to the market. ITO EN (North America) INC.: Sales Breakdown (Excluding Sales of Mason Distributors, Inc.) Others 5% TEAS TEA 3% Products under the ITO EN brand are now steadily proliferating in the U.S. market. Tea leaves 43% Sweetened tea 5% Japanese products 17% Products of Mason Distributors, Inc. ITO EN Corporate Book 29 25

28 Employees Promoting Self-Motivation in the Workplace ITO EN helps improve worker motivation by building original systems and frameworks that empower all employees to demonstrate their full capabilities. Frameworks to Boost Motivation Since its founding, ITO EN has consistently adopted a merit-based approach to employment. This system fosters and makes effective use of skilled human resources, evaluating each individual s abilities fairly and affording equal opportunities to everyone. We have a unique education and training system in place, providing an environment conducive to learning among employees. Our forums include the ITO EN Business College and the Tea Taster Achievement and Qualification System, as well as study programs in Japan and abroad and a system to help employees gain other qualifications. We also established our Voice system, under which salespeople make suggestions to the Company, drawing on inspirational ideas they have in the course of their daily work, as well as opinions and requests received from customers. The incorporation of their suggestions in actual products in this way also contributes to enhanced employee motivation. ITO EN Business College The ITO EN Business College is an internal training program that encourages self-development by providing an environment for all employees to freely develop their individual abilities. Established in 1989, the College conforms to the belief that all employees should invest in developing their own skills. They can select from a variety of courses, covering such subjects as sales and marketing, management, and international business, with the objective of furthering their careers and becoming more effective in the workplace. In the current fiscal year, we will open the ITO EN Graduate College to further nurture the people who will become the Company s future leaders. In this way, we are constantly upgrading our educational systems. 26 ITO EN Corporate Book 29 The ideas and actions of individual employees represent the motive force behind ITO EN s operations.

29 Voice system suggestions 7,766 received during the year suggestions The Tea Tasters Achievement and Qualification System In the year under review, the Voice system attracted 7,766 suggestions. This system is based on our Still Now spirit, seeking to discover what the customers are right now not satisfied with. Voice System Employees We established this system as an original ITO EN qualification system aimed at disseminating information and promoting awareness about tea and tea culture, both inside and outside the Company. In order to receive the Tea Taster qualification, candidates are tested on their overall knowledge, not only of green tea, but also black tea and oolong tea. They are also assessed on their individual skills and their competency in making presentations. Sales activities Customer opinions and requests Employee ideas Submitted to Voice System Utilize product development and merchandising success stories Tea Taster qualification exam Products Developed from the Voice System Graduates of ITO EN Business College (People) 6 Number of Qualified Tea Tasters (People) 1,2 Number of Employees (Non-Consolidated) (People) 6, 4 8 4, 2 4 2, (Years ended April 3) (Years ended April 3) Green Tea Taster Grade 3 Tea Taster Grade (Years ended April 3) ITO EN Corporate Book 29 27

30 Corporate Governance Respect for Laws and Ethical Rules In our belief that effective corporate governance is fundamental to raising corporate value, we are working to build various frameworks and an internal control system. Corporate Governance ITO EN regards corporate governance as a fundamental part of improving corporate value. Reflecting our belief that the longterm pursuit of sustained growth and earnings is the most effective way to enhance corporate value, we have positioned corporate governance a crucial issue for management. To ensure effective corporate governance, we are building various frameworks and an internal control system. Internal Control System In setting up an internal control system, we have set four objectives: (1) raise the effectiveness and efficiency of processes across all business activities; (2) guarantee reliability of financial reporting; (3) ensure compliance with laws and other regulations; and (4) protect our corporate assets by properly observing appropriate procedures. To achieve these objectives, we have formulated basic policies for our internal control system. These include policies covering information management, effective audits, and operational management. With respect to operational management, our aim is to achieve sustained growth and development while raising corporate value. This end, we are renewing our emphasis on our various stakeholders, including local society, consumers, stockholders, sales partners, suppliers, and financial institutions. At the same time, we are committed to fulfilling our corporate social responsibilities. In a related initiative, we compiled the ITO EN Group Code of Conduct to guide the daily activities of all Group executives and employees. General Meeting of Shareholders Election, dismissal Election, dismissal Board of Directors (Management, supervision) Audit Meeting of Auditors (Management monitoring) Election, supervision Audit Election, dismissal Representative Director [Business Execution] [Internal Control] Executive Board Internal Auditing Department Audit Independent Auditor (Management monitoring) Compliance Department Dedicated committees Budget Committee Environment Committee Long-Term Planning Committee Distribution System Improvement Committee Personnel System Improvement Committee Internal Control Promotion Committee 3 other committees Advice, guidance External lawyers, etc. 28 ITO EN Corporate Book 29

31 Holders of ITO EN s common and preferred stock 145,159 At stockholders Corporate Auditor System We have adopted a corporate auditor system, whereby corporate auditors closely monitor the representative directors of Group companies, relevant directors in charge of business operations, and employees to confirm the status of business, decision-making processes, and other aspects of our operations. Corporate auditors attend all meetings of the Board of Directors to provide objective and fair opinions with respect to the status of companywide or item-specific audits. They also audit the job performances of directors according to auditing policies set by the Board of Corporate Auditors. At present, we have two full-time corporate auditors and three part-time ones, for a total of five, of whom four are outside auditors. In addition to the aforementioned corporate governance activities, ITO EN has embraced a policy emphasizing comprehensive disclosure of information about its business activities and future plans. In these ways, we intend to ensure proper communication with our various stakeholders. the end of April 29, the Company had 79,85 holders of its common stock, as well as 66,74 holders of its class-a preferred stock, for a total of 145,159 shareholders. Number of ITO EN stockholders (People) 15, 12, 9, 6, 3, (Years ended April 3) Common Stockholder Class-A Preferred Stockholder Our IR activities include disclosure of timely information on our website. Financial results announcement meeting ITO EN Corporate Book 29 29

32 Environment Innovative Approach to Protecting Our World Each and every ITO EN employee adopts a proactive approach to promoting environmental protection activities ahead of other companies. Entire Company and All Divisions Certified under ISO 141 Today, the earth s environment is under attack from a variety of sources, including global warming and destruction of the ozone layer. Other environmental issues affect our daily lives, including water and soil contamination. As a manufacturer of beverages, ITO EN cannot overlook these problems. The Company is continually reinforcing its environmental protection activities, which conform to its environmental management system. In 2, for example, we obtained ISO 141 certification, an international standard for environmental management systems, for the Shizuoka Sagara Plant and the Central Research Institute. In the following year, all of our factories were certified. In April 27, our Head Office, the Nishi-Shinjuku Building, and Taito Asakusa Building, also obtained ISO 141 certification. Our East Hiroshima Branch was certified in June 26 our first sales office to do so and in March 29 all of our other offices obtained certification. We also take various proactive, pro-environment initiatives, such as recycling empty containers, introducing low-emission vehicles, and utilizing used tea leaves and coffee grounds from production processes for composting or conversion into animal feed. ISO 141 certificate Hybrid vehicles introduced in sales offices ITO EN Environmental Report 3 ITO EN Corporate Book 29

33 98.4 In % Used tea leaves recycling ratio addition to converting used tea leaves into fertilizer and animal feed, we also deploy our Used Tea Leaves Recycling System, which transforms tea leaves into beneficial products used in people s everyday lives. Through these initiatives, we have achieved a recycling ratio of 98.4% for our used tea leaves. Benefits of Used Tea Leaves In the fiscal year ended April 3, 29, the Company generated 41,2 tons of used tea leaves during the course of its beverage manufacturing operations (ITO EN estimates). The volume has continued to increase, highlighting the need for effective recycling methods. Rather than simply discard this as waste, we recycle used tea leaves into fertilizer and other useful substances. Some of it goes through our Used Tea Leaves Recycling System, where it is transformed into Chahaigo (containing used tea leaves) Resin and cardboard boxes. In recognition of its recycling activities, ITO EN received the Grand Prize from the Minister for Agriculture, Forestry and Fisheries in the Energy Services Section at the 25 Eco Products Awards. We received the same prize in the same section at the 28 Eco Products Awards Eco Products Awards thanks to the efforts of our tea plantation business. This award recognizes the environmental benefits of our tea trees, which promote absorption and long-term storage of carbon dioxide in the course of their growth. We are working hard to encourage all employees to think and act in ways that foster steady progress in protecting the environment. Recycling Used Tea Leaves Beverage Vendor Factory Used tea leaves Antibacterial and deodorizing properties of green tea retained R&D Aimed at Effective Product Utilization Emission and processing of used tea leaves (28) Chahaigo Board Plasterboard containing used tea leaves Chahaigo Resin Hydrated tea leaves Converted to fuel 16.2 Animal feed 5.1 Building materials.5 Developed jointly with Chiyoda Ute Co., Ltd. Developed jointly with NOF Corporation Volume emitted 41,2 tons Landfill 1.6 Tatami mat made from Chahaigo Board Bench made from Chahaigo Resin Vending machines made using Chahaigo Resin blend harmoniously with natural surroundings Cardboard boxes filled with tea Paper made with used tea leaves (business cards) Fertilizer 76.7 Final products Developed jointly with Kitaichi Shouten Co., Ltd. Developed jointly with Chuo Kagaku Co., Ltd. Developed jointly with Rengo Co., Ltd. Developed jointly with Hokuetsu Paper Mills, Ltd. ITO EN Corporate Book 29 31

34 Society Growing in Partnership with Society Through its social contribution activities, ITO EN helps foster prosperous lifestyles and the development of a healthy society. ITO EN Ladies Golf Tournament Professional Golfers Sponsored by ITO EN Sporting events bring us closer together in various ways. This is because such events excite and fascinate people, giving them feelings of exhilaration. ITO EN has a long association with sports, having held its annual ITO EN Ladies Golf Tournament each November since This year, we will celebrate the 25th anniversary since the first event. The recent prominence of young professional female golfers and their activities on the international stage have greatly boosted the popularity of ladies golf tournaments. The ITO EN tournament is a major event, often determining the final winner of the annual prize-money contest, and for this reason it has been the scene of vigorous competition and famous victories and defeats. Through this tournament, ITO EN hopes to provide everyone with a taste of the thrills and excitement offered by sports. Ikuyo Shiotani Tomoko Kusakabe Yumiko Baba The ITO EN Ladies Golf Tournament celebrates its 25th anniversary in ITO EN Corporate Book 29

35 Cumulative total for ITO EN Oi Ocha New Haiku Contest 17,747,598 entries The ITO EN Oi Ocha New Haiku Contest has grown into one of Japan s largest creative writing competitions. The 2th annual contest, held in 28, attracted 1,649,82 entries, bringing the total number since the first contest to 17,747,598 entries. New Haiku Contest The Company recently held its 2th annual ITO EN Oi Ocha New Haiku Contest, which began in Haiku is a traditional form of Japanese poetry based on a simple syllable structure. New Haiku is unique in that it allows people to express their feelings in haiku form, without concern for seasonal words or the set syllable format. This year, too, the contest enjoyed support from all ages, attracting more than 1.6 million entries and bringing the cumulative total of entries over the 2-year history of the contest to 17.7 million. The contest includes an English language section, enabling entrants from around the world to submit their poems. Indeed, the contest has begun to spread overseas in tandem with Japanese food culture. Winning entries are printed on the packaging of ITO EN s core Oi Ocha green tea products in Japan and TEAS TEA products in the United States, allowing many people to appreciate the poems. By extending the reach of new haiku in this way, we are helping develop a new genre from one of Japan s traditional forms of poetry. Judges screening Oi Ocha New Haiku Contest entries 2th Annual Oi Ocha New Haiku Contest Grand Prize, Ministry of Education, Culture, Sports, Science and Technology Award Grand Prize, Primary School Division (including pre-school) Grand Prize, Junior High School Division Grand Prize, High School Division Grand Prize, Adult Category A (under 4) Grand Prize, Adult Category B (4 and over) Grand Prize, English Language Haiku Division Summer heat in the shadow of a chimney pigeons gather ITO EN Corporate Book 29 33

36 The ITO EN Group Company name: ITO EN, LTD. Business lines: Manufacture and sales of green tea and beverage products Location: 47-1, Honmachi 3-chome, Shibuya-ku, Tokyo, Japan Established: August 22, 1966 Capital: 19,912 million Fiscal year-end: April 3 Company name: ITOEN (USA) INC. Business lines: Manufacture and sales of beverages Location: Honolulu, Hawaii, USA Established: July 7, 1987 Capital: US$21.5 million Fiscal year-end: April 3 Company name: ITO EN SANGYO, LTD. Business lines: Manufacture, sales, and cargo transportation of teas Location: , Sakabe, Makinohara-shi, Shizuoka Prefecture, Japan Established: May 11, 1981 Capital: 3 million Fiscal year-end: April 3 Company name: ITO EN (North America) INC. Business lines: Sales of green tea and beverage products, and operation of tea shop Location: New York, USA Established: May 1, 21 Capital: US$81 million Fiscal year-end: April 3 Company name: OKINAWA ITO EN, LTD. Business lines: Sales of beverages and tea leaves Location: 1-4, Nishizakicho 4-chome, Itoman-shi, Okinawa Prefecture, Japan Established: August 1, 1981 Capital: 9 million Fiscal year-end: April 3 Company name: Ningbo Shunyi Tea Products Co., Ltd. Business lines: Location: Manufacture, export, and sales of tea leaves Yuyao, Zhejiang Province, China Established: September 14, 1994 Capital: RMB7.6 million Fiscal year-end: December 31 Company name: ITO EN KANSAI CHAGYO, LTD. Business lines: Manufacture and sales of green tea, barley tea, and gift products Location: 1-4, Yasakadai 3-chome, Suma-ku, Kobe-shi, Hyogo Prefecture, Japan Established: April 2, 1976 Capital: 1 million Fiscal year-end: April 3 Company name: Tully s Coffee Japan Co., Ltd. Business lines: Operation of restaurants and franchise business Location: 22, Tansu-cho, Shinjuku-ku, Tokyo, Japan Established: May 12, 1998 Capital: 1 million Fiscal year-end: March 31 Company name: Fujian New Oolong Drink Co., Ltd. Business lines: Location: Manufacture, export, and sales of tea beverages Fuzhou, Fujian Province, China Established: February 25, 1998 Capital: RMB1 million Fiscal year-end: December 31 Company name: ITO EN AUSTRALIA PTY, LIMITED Business lines: Manufacture and sales of tea leaves Location: Victoria, Australia Established: September 9, 1994 Capital: A$22.2 million Fiscal year-end: April 3 Company name: ITOEN-ITOCHU MINERAL WATERS CO., LTD. Business lines: Location: Import and sales of mineral water 22, Tansu-cho, Shinjuku-ku, Tokyo, Japan Established: April 1, 28 Capital: 3 million Fiscal year-end: April 3 Company name: Mason Distributors, Inc. Business lines: Manufacture and distribution of supplements Location: Florida, USA Established: April 24, 1967 Capital: US$6 Fiscal year-end: April 3 34 ITO EN Corporate Book 29

37 FINANCIAL INFORMATION Consolidated Financial Highlights Millions of yen YOY % Change Years ended April 3 Net sales 263, ,77 31,2 328,71 332, Tea leaves 28,353 28,68 29,79 29,497 3, Beverages 232, ,225 27,71 28, ,727.8 Other 3,1 3,171 1,41 18,25 19, Operating income 19,71 21,66 22,796 19,236 1, Ordinary income 19,216 2,527 22,267 18,215 1, Net income 1,451 11,685 12,261 1,96 4, Capital expenditures 2,773 4,517 4,32 7,85 2, Research and development expenses 1,864 1,655 1,692 2,225 2, Depreciation and amortization 1,111 1,232 1,813 2,33 4, Free cash flow 1,116 8,371 3,421 9,221 1, As of April 3 Total assets 19, , , ,687 16,83 4. Total net assets 69,311 77,419 85,936 14,519 99, Return on equity (%) Return on assets (%) Per share (Yen): Net income (common stock) * Net income (**Class-A Preferred Stock) Notes: 1. Free cash flow = Cash flows from operating activities + Cash flows from investing activities 2. Return on equity = Net income/average total net assets 1 3. Return on assets = Net income/average total assets 1 * On March 1, 26, the Company implemented a two-for-one stock split. The increase/decrease rate does not reflect the stock split. ** On September 3, 27, ITO EN allocated free of charge Class-A Preferred Stock at a ratio of.3 shares to one common stock. Net Sales ( millions) Net Income ( millions) Free Cash Flow ( millions) Total Net Assets ( millions) 36, 16, 12, 12, 27, 12, 9, 9, 6, 18, 8, 6, 3, 9, 4, 3, 1,871 3,421 12, 9, ITO EN Corporate Book 29 35

38 Consolidated Financial Review Net Sales Composition Performance Overview ( millions) 36, 27, 18, 9, Other Beverages Tea Leaves In the fiscal year ended April 3, 29, the Japanese economy was impacted by a number of factors, including surging prices of crude oil and raw materials and the global financial crisis, which began in the United States and caused the world economy to deteriorate. As corporate earnings declined, meanwhile, worker incomes languished and consumer sentiment weakened, resulting in continued rapid economic decline and extremely difficult conditions overall. Facing these challenges, the ITO EN Group adhered to its principle of Always Putting the Customer First. Based on this principle, we pursued active business initiatives, while constantly seeking to identify and address areas of customer dissatisfaction. As a result, consolidated net sales for the year amounted to 332,847 million, up 1.5% from the previous period. However, operating income fell 44.8%, to 1,613 million, and ordinary income declined 43.%, to 1,376 million, due mainly to the impact of soaring raw materials prices and higher sales promotion expenses. Net income for the year decreased 52.8%, to 4,765 million. Results by Segment Operating Income ( millions) 24, Tea Leaves In calendar 28, the volume of crude tea leaf production in Japan was up 1.5%, to 95, tons, while domestic tea leaf consumption slipped 2.1%, to 14, tons. On the demand side, sales of tea leaves at the retail level struggled as the shift in consumer preferences toward ready-to-drink beverages gained momentum. Under these circumstances, ITO EN enjoyed steady demand for ready-to-drink beverages that customers can enjoy at any time. A highlight of the year was the solid performance of our barley tea in teabag form. Made using our unique steaming and deep far-infrared roasting processes, this barley tea produces delicious aroma and taste even when prepared using cold water. We also upgraded our mainstay Oi Ocha lineup of green tea leaf products to accommodate customer demands with respect to the preservation and storage of tea. Initiatives here included adoption of zip-lock packaging. As a result, sales of tea leaves totaled 3,251 million, up 2.6 % from the previous year. 18, 12, 6, Beverages In the year under review, the Japanese beverage market remained mostly flat due to market maturity and unseasonal weather from August 28, followed by a sudden downturn in consumer sentiment stemming from the economic recession. In this market, PET bottles have become the predominant form of packaging, and their popularity has increased since the arrival of small PET bottles. Due to languishing consumption, however, this trend lost momentum during the period. Under these circumstances, we worked hard to strengthen the ITO EN brand by focusing on the five concepts of natural, healthy, safe, well-designed, and delicious. To this end, we actively developed new products and improved existing ones. 36 ITO EN Corporate Book 29

39 R & D Expenses ( millions) 2,4 1,8 1, In the mainstay category of Japanese tea drinks, we reported solid performances of Oi Ocha Yakitate no Kaori Hojicha (roasted green tea) and Oi Ocha Yakitate no Kaori Genmaicha (green tea with roasted rice), reflecting our ongoing commitment to improving raw materials and manufacturing methods. We also strengthened our lineup with the launch of new products, including Oi Ocha Amaka Kiyoraka, an easy-to-drink beverage with a sweet aroma. Accordingly, sales of Japanese tea beverages rose 1.2%, to 163,67 million. In the vegetable beverages category, the market contracted significantly due to rising concern among consumers about the safety of imported vegetables. In response, we sought to ensure customer peace of mind and strengthen our brand, including through the launch of new products, such as Jujitsu Yasai 1% Made in Japan, made entirely from locally grown vegetables. Nevertheless, sales of vegetable beverages declined 9.9%, to 35,467 million. In other areas, ITO EN reported steady increases in sales of barley tea, with shipments reaching 1 million cases for the year. Our mineral water lineup also performed well. During the year, we strengthened our range of coffee beverages with the launch of Tully s Coffee Barista s Special, a chilled-cup coffee beverage, and broadened the sales territory for Tully s Coffee Winter Shot, a warmed-cup coffee beverage. In these and other ways, we worked actively to bolster sales. As a result, total sales of beverages edged up.8%, to 282,727 million. Others Sales from other businesses increased 9.1%, to 19,867 million, thanks largely to the contribution of Tully s Coffee Japan Co., Ltd. Cash Flows Total Net Assets/ Total Liabilities ( millions) 16, 12, 8, 4, As of April 3, 29, cash and cash equivalents stood at 13,988 million. Net cash provided by operating activities amounted to 5,35 million. Factors boosting cash flows included 9,778 million in income before income taxes and 4,287 million in depreciation and amortization. Factors holding down cash flows included a 1,498 million decrease in notes and accounts payable and 6,687 million in income taxes paid. Net cash used in investing activities totaled 7,222 million. Major components included 6,6 million in acquisitions of fixed assets and investments in information systems and 54 million in additional purchases of shares in Tully s Coffee Japan Co., Ltd. Net cash used in financing activities was 6,615 million. Major factors included 5,6 million in dividends paid Total Net Assets Total Liabilities ITO EN Corporate Book 29 37

40 Consolidated Balance Sheets (Unaudited) as of April 3, 28 and 29 Millions of yen ASSETS Current assets: Cash and deposits 22,549 14,334 Notes and accounts receivable trade 28,62 28,617 Inventories 23,939 24,4 Advances to suppliers 7,125 8,391 Deferred income tax assets 1,699 1,63 Other 1,677 1,41 Allowance for doubtful accounts (129) (123) Total 84,923 78,624 Fixed assets: Property, plant and equipment; Buildings and structures 15,857 15,592 Land 14,77 14,61 Lease assets 12,539 Construction in progress Other 3,417 3,96 Subtotal 33,626 46,226 Intangible fixed assets; Goodwill 14,682 14,65 Lease assets 166 Software 437 1,358 Software in progress 2,774 5,56 Other 2,939 2,655 Subtotal 2,833 23,33 Investments and other assets; Investments in securities 3,979 2,941 Long-term prepaid expenses Security deposit 5,442 5,536 Deferred income tax assets Deferred income tax assets related to revaluated land 2,16 Other 3,196 3,39 Allowance for doubtful accounts (331) (353) Subtotal 15,33 12,649 Total 69,763 82,178 Total assets 154,687 16,83 38 ITO EN Corporate Book 29

41 Millions of yen LIABILITIES AND NET ASSETS Current liabilities: Accounts payable 24,449 22,921 Lease obligations 2,796 Income taxes payable 3,447 1,354 Consumption tax payable Accrued expenses 12,87 12,382 Accrued bonuses 2,674 2,565 Other 1,86 1,661 Subtotal 45,384 43,75 Non-current liabilities: Lease obligations 1,832 Deferred income tax liabilities 1,2 Allowance for retirement and severance benefits for employees 3,23 3,679 Other 1,58 1,531 Subtotal 4,783 17,64 Total liabilities 5,168 6,814 Shareholders equity: Common stock and preferred stock 19,912 19,912 Capital surplus 2,259 2,259 Retained earnings 72,537 72,141 Treasury stock, at cost (4,88) (4,876) Total shareholders equity 17,828 17,435 Valuation, translation adjustments and others: Unrealized holding gains on securities, net of tax Deferred gains (losses) on hedges (11) (23) Land revaluation difference, net of tax (3,69) (6,196) Foreign currency translation adjustments (1,85) (1,658) Total accumulated gains (losses) from valuation, translation adjustments and others (3,41) (7,67) Stock acquisition rights Minority interests Total net assets 14,519 99,989 Total liabilities and net assets 154,687 16,83 ITO EN Corporate Book 29 39

42 Consolidated Statements of Income (Unaudited) for the years ended April 3, 28 and 29 Millions of yen Operating income and expenses: Net sales 328,71 332,847 Cost of sales 16, ,994 Selling, general and administrative expenses 148, ,239 Operating Income 19,236 1,613 Non-operating income and expenses: Non-operating income; Interest income and dividend income from securities Other Non-operating expenses; 1, Interest expense Loss on disposal of obsolete inventories 892 Other 78 4 Ordinary Income 18,215 1,376 Extraordinary gains and losses: Extraordinary gains; Gain on sales of fixed assets 9 Gain on sales of investment in securities 3 Other Extraordinary losses; Loss on disposal of fixed assets Loss on devaluation of investments in securities Loss on sales of investments in securities 4 3 Other Income before income taxes 18,26 9,778 Income taxes current 8,232 4,596 Income taxes deferred (37) 344 Minority interests in income (31) 72 Net income 1,96 4,765 4 ITO EN Corporate Book 29

43 Consolidated Statements of Cash Flows (Unaudited) for the years ended April 3, 28 and 29 Millions of yen Cash flows from operating activities: Income before income taxes 18,26 9,778 Depreciation and amortization 2,33 4,287 Amortization of goodwill Stock compensation expenses 14 Gain on foreign currency translation (1) 6 Loss on devaluation of investments in securities Loss (gain) on sales of investments in securities 4 Gain on withdrawal of golf memberships (9) Reversal of allowance for doubtful accounts (121) Decrease (increase) in allowance for doubtful accounts (939) 16 Decrease (increase) in accrued bonuses for employees (142) (19) Increase in allowance for retirement and severance benefits for employees Interest and dividends income (134) (96) Decrease (increase) in notes and accounts receivable trade (3,189) (57) Decrease (increase) in inventories (4,546) (54) Decrease (increase) in other current assets 1,229 (62) Decrease (increase) in other fixed assets Increase in notes and accounts payable 95 (1,498) Increase (decrease) in consumption tax payable (6) 411 Increase in other current liabilities 1,374 (848) Other, net (125) 55 Subtotal 15,553 12,282 Interest and dividend income received in cash Interest expenses paid in cash (16) (346) Income taxes paid in cash (1,755) (6,687) Net cash flows from operating activities 4,945 5,35 Cash flows from investing activities: Acquisition of investments in securities (92) (12) Proceeds from sales of investments in securities Proceeds from redemption of investments in securities Acquisition of fixed assets and long-term prepaid expenses (9,661) (6,236) Acquisition of golf memberships and other investments () (1) Acquisition of investments in affiliates (4,834) (54) Acquisition of capital investments in affiliates (6) Proceeds from repayment of long-term loans 75 1 Acquisition of investments in subsidiaries accompanied with changes in scope of consolidation Other, net 325 (44) Net cash flows from investing activities (14,167) (7,222) Cash flows from financing activities: Proceeds from issuance of Class-A Preferred Stock 14,513 Increase (decrease) in short-term debt Repayment of long-term debt Purchase of treasury stock (47) (12) Proceeds from sales of treasury stock 33 6 Repayment of finance lease obligations (1,543) Proceeds from stock issuance to minority shareholders 15 Dividends paid (4,553) (5,6) Other, net (6) Net cash flows from financing activities 1,5 (6,615) Effect of exchange rate fluctuation on cash and cash equivalents (28) (74) Net increase (decrease) in cash and cash equivalents 8 (8,56) Cash and cash equivalents at beginning of year 21,748 22,549 Cash and cash equivalents at end of year 22,549 13,988 ITO EN Corporate Book 29 41

44 Consolidated Statements of Changes in Net Assets (Unaudited) for the years ended April 3, 28 and 29 Millions of yen Shareholders Equity Total Common Capital Retained Treasury stock, shareholders stock surplus earnings at cost equity Balance at April 3, 27 12,655 13,2 67,98 (4,949) 87,86 Changes during the fiscal year ended April 3, 28 Issuance of new stocks 7,256 7,256 14,513 Cash dividends paid (4,564) (4,564) Net income 1,96 1,96 Purchase of treasury stock (47) (47) Disposal of treasury stock (64) Reversal of land revaluation difference, net of tax (28) (28) Net changes of items other than shareholders equity Total changes during the fiscal year ended April 3, 28 7,256 7,256 5, ,21 Balance at April 3, 28 19,912 2,259 72,537 (4,88) 17,828 Millions of yen Valuation, Translation Adjustments and Others Unrealized Land Foreign Total valuation, holding gains Deferred revaluation currency translation Stock on securities, gains (losses) difference, translation adjustments acquisition Minority Total net of tax on hedges net of tax adjustments and others rights interests net assets Balance at April 3, 27 1,317 (3,98) (111) (1,892) 22 85,936 Changes during the fiscal year ended April 3, 28 Issuance of new stocks 14,513 Cash dividends paid (4,564) Net income 1,96 Purchase of treasury stock (47) Disposal of treasury stock 52 Reversal of land revaluation difference, net of tax (28) Net changes of items other than shareholders equity (551) (11) 28 (973) (1,58) (4) 73 (1,439) Total changes during the fiscal year ended April 3, 28 (551) (11) 28 (973) (1,58) (4) 73 18,582 Balance at April 3, (11) (3,69) (1,85) (3,41) ,519 Millions of yen Shareholders Equity Total Common Capital Retained Treasury stock, shareholders stock surplus earnings at cost equity Balance at April 3, 28 19,912 2,259 72,537 (4,88) 17,828 Changes during the fiscal year ended April 3, 29 Issuance of new stocks Cash dividends paid (5,8) (5,8) Net income 4,765 4,765 Purchase of treasury stock (12) (12) Disposal of treasury stock (5) 16 1 Reversal of land revaluation difference, net of tax Other (75) (75) Net changes of items other than shareholders equity Total changes during the fiscal year ended April 3, 29 (396) 3 (392) Balance at April 3, 29 19,912 2,259 72,141 (4,876) 17,435 Millions of yen Valuation, Translation Adjustments and Others Unrealized Land Foreign Total valuation, holding gains Deferred revaluation currency translation Stock on securities, gains (losses) difference, translation adjustments acquisition Minority Total net of tax on hedges net of tax adjustments and others rights interests net assets Balance at April 3, (11) (3,69) (1,85) (3,41) ,519 Changes during the fiscal year ended April 3, 29 Issuance of new stocks Cash dividends paid (5,8) Net income 4,765 Purchase of treasury stock (12) Disposal of treasury stock 1 Reversal of land revaluation difference, net of tax Other (75) Net changes of items other than shareholders equity (495) (12) (3,126) (573) (4,26) (3) 72 (4,137) Total changes during the fiscal year ended April 3, 29 (495) (12) (3,126) (573) (4,26) (3) 72 (4,53) Balance at April 3, (23) (6,196) (1,658) (7,68) , ITO EN Corporate Book 29

45 Non-Consolidated Operating Highlights Millions of yen Years ended April YOY % Change Sales by product 26,9 283,79 297,881 38, , Tea leaves 28,144 28,488 28,63 28,926 29, Japanese tea beverages 134,1 147, ,27 16, , Chinese tea beverages 14,49 12,164 12,627 13,42 13,461.3 Fruit and vegetable beverages 41,792 51,79 56,838 57,275 52, Coffee beverages 17,421 17,942 18,92 18,754 19, Carbonated, functional beverages & others 24,141 25,757 28,511 3,31 35, Sales by container (thousands of cases) 127, ,95 153, ,51 169, Cans 19,488 19,128 19,5 18,872 18,935.3 PET bottles (2l) 25,46 3,78 33,298 39,2 41, PET bottles (5ml) 37,48 43,445 46,337 46,716 48, PET bottles (35ml and smaller) 25,294 26,693 27,178 3,594 3, PET bottles (others) 13,312 14,638 16,118 16,6 15, Cartons 5,511 7,949 1,292 11,327 12, Others ,475 1, Sales by business category Supermarkets 69,92 81,278 96,112 14,61 18, Convenience stores 64,489 69,897 71,123 72,449 73, Vending machines 53,682 56,53 57,774 57,72 55, Others 72,16 76,11 72,871 74,418 75, Sales by region Hokkaido/Tohoku 27,492 29,544 3,259 3,236 3,495.9 Kanto 129, ,56 144,973 15,936 15,43.4 Chubu 22,59 24,6 27,192 28,254 29, Kansai 3,83 33,595 35,675 36,97 38, Chugoku/Shikoku 13, 14,942 15,823 16,218 16, Kyushu 11,714 17,368 18,817 19,922 2, Sales by Product (Year ended April 3, 29) Sales by Container (Volume Basis) (Year ended April 3, 29) Sales by Business Category (Year ended April 3, 29) Sales by Region (Year ended April 3, 29) Tea leaves 9.5% Cans 11.2% Supermarkets 34.6% Hokkaido/Tohoku 1.7% Japanese tea beverages 51.9% PET bottles (2l) 24.5% Convenience stores 23.5% Kanto 52.5% Chinese tea beverages 4.3% PET bottles (5ml) 28.6% Vending machines 17.7% Chubu 1.5% Fruit and vegetable beverages 16.8% PET bottles (35ml and smaller) 18.3% Others 24.2% Kansai 13.3% Coffee beverages 6.1% PET bottles (others) 9.2% Chugoku/Shikoku 5.8% Carbonated, functional 11.3% Cartons 7.2% Kyushu 7.2% beverages & others Others 1.% Years ended April Vending Machine Installation (units) 111, , ,82 123, ,624 Number of Sales Offices (offices) Number of Employees (people) 4,559 4,817 5,1 5,223 5,346 ITO EN Corporate Book 29 43

46 Financial Data (Profitability/Growth) Net Sales ( millions) Non-Consolidated Net Sales 36, Consolidated Net Sales Operating Income ( millions) Non-Consolidated Operating Income 24, Consolidated Operating Income 27, 18, 18, 12, 9, 6, Ordinary Income ( millions) Non-Consolidated Ordinary Income 24, Consolidated Ordinary Income Net Income ( millions) Non-Consolidated Net Income 14, Consolidated Net Income 18, 1,5 12, 7, 6, 3, Years ended April Net Sales (Consolidated) 173, ,79 24,73 214,88 239,235 (Non-consolidated) 171,628 19,242 21, , ,629 Operating Income (Consolidated) 14,266 15,666 15,148 15,694 17,55 (Non-consolidated) 13,788 15,185 15,439 16,38 17,678 Ordinary Income (Consolidated) 13,79 15,68 14,417 14,879 16,69 (Non-consolidated) 13,317 14,598 14,733 15,36 16,858 Net Income (Consolidated) 6,53 8,17 6,753 8,3 8,731 (Non-consolidated) 6,32 7,852 7,328 8,724 9,451 Cost of Sales (Consolidated) 9,593 98,171 13,37 17, ,85 (Non-consolidated) 89,739 97,292 12,11 17,62 117,846 Operating Income Ratio (%) (Consolidated) (Non-consolidated) Ordinary Income Ratio (%) (Consolidated) (Non-consolidated) Return on Sales (%) (Consolidated) (Non-consolidated) Ratio of Cost of Sales (%) (Consolidated) (Non-consolidated) ITO EN Corporate Book 29

47 Operating Income Ratio (%) Non-Consolidated Operating Income Ratio 12 Consolidated Operating Income Ratio Ordinary Income Ratio (%) Non-Consolidated Ordinary Income Ratio 8 Consolidated Ordinary Income Ratio Return on Sales (%) Non-Consolidated Return on Sales 6. Consolidated Return on Sales Ratio of Cost of Sales (%) Non-Consolidated Ratio of Cost of Sales 6 Consolidated Ratio of Cost of Sales millions Years ended April Net Sales (Consolidated) 263, ,77 31,2 328,71 332,847 (Non-consolidated) 26,9 283,79 297,881 38, ,622 Operating Income (Consolidated) 19,71 21,66 22,796 19,236 1,613 (Non-consolidated) 19,59 2,82 22,557 19,65 1,227 Ordinary Income (Consolidated) 19,216 2,527 22,267 18,215 1,376 (Non-consolidated) 19,145 2,537 22,665 18,955 1,449 Net Income (Consolidated) 1,451 11,685 12,261 1,96 4,765 (Non-consolidated) 9,253 12,55 12,765 11,123 4,293 Cost of Sales (Consolidated) 13, ,14 15,526 16, ,994 (Non-consolidated) 129, , 146, ,62 162,176 Operating Income Ratio (%) (Consolidated) (Non-consolidated) Ordinary Income Ratio (%) (Consolidated) (Non-consolidated) Return on Sales (%) (Consolidated) (Non-consolidated) Ratio of Cost of Sales (%) (Consolidated) (Non-consolidated) ITO EN Corporate Book 29 45

48 Financial Data (Efficiency/Stability) Total Assets & Asset Turnover ( millions / times) Inventories & Inventory Turnover ( millions / times) Non-Consolidated Total Assets Non-Consolidated Asset Turnover Non-Consolidated Inventories Non-Consolidated Inventory Turnover 16, Consolidated Total Assets Consolidated Asset Turnover , Consolidated Inventories Consolidated Inventory Turnover 2 12, , 15 8, , 1 4,.7 6, Total Net Assets & Equity Ratio ( millions / %) Non-Consolidated Total Net Assets Non-Consolidated Equity Ratio Current Assets & Current Ratio ( millions / %) Non-Consolidated Current Assets Non-Consolidated Current Ratio 12, Consolidated Total Net Assets Consolidated Equity Ratio 8 1, Consolidated Current Assets Consolidated Current Ratio 2 9, 6 75, 15 6, 4 5, 1 3, 2 25, Years ended April Total Assets (Consolidated) 82,386 91,645 92,773 97,726 12,55 (Non-consolidated) 82,68 91,539 92,928 98,839 14,123 Asset Turnover (times) (Consolidated) (Non-consolidated) Inventories (Consolidated) 12,865 17,427 15,863 15,531 15,94 (Non-consolidated) 12,328 16,86 15,23 14,894 14,518 Inventory Turnover (times) (Consolidated) (Non-consolidated) Total Net Assets (Consolidated) 4,783 47,31 52,58 56,679 62,258 (Non-consolidated) 41,458 47,491 53,9 58,245 64,784 Equity Ratio (%) (Consolidated) (Non-consolidated) Current Assets (Consolidated) 5,13 58,395 6,355 65,832 7,278 (Non-consolidated) 49,177 57,193 58,67 63,566 67,779 Current Ratio (%) (Consolidated) (Non-consolidated) Fixed Assets Capitalization (%) (Consolidated) (Non-consolidated) Total Liabilities (Consolidated) 41,536 44,282 4,211 41,46 39,797 (Non-consolidated) 41,222 44,48 39,837 4,593 39,339 Debt/Equity Ratio (%) (Consolidated) (Non-consolidated) Return on Equity (%) (Consolidated) (Non-consolidated) Return on Assets (%) (Consolidated) (Non-consolidated) ITO EN Corporate Book 29

49 Fixed Assets Capitalization (%) Non-Consolidated Fixed Assets Capitalization 1 Consolidated Fixed Assets Capitalization Total Liabilities & Debt/Equity Ratio ( millions / %) Non-Consolidated Total Liabilities Non-Consolidated Debt/Equity Ratio 6, Consolidated Total Liabilities Consolidated Debt/Equity Ratio , 3 5 3, , Return on Equity (%) Non-Consolidated Return on Equity 2 Consolidated Return on Equity Return on Assets (%) Non-Consolidated Return on Assets 2 Consolidated Return on Assets millions Years ended April Total Assets (Consolidated) 19, , , ,687 16,83 (Non-consolidated) 11, ,58 134, ,546 16,652 Asset Turnover (times) (Consolidated) (Non-consolidated) Inventories (Consolidated) 15,958 18,866 19,554 23,939 24,4 (Non-consolidated) 15,286 17,75 17,373 21,643 22,5 Inventory Turnover (times) (Consolidated) (Non-consolidated) Total Net Assets (Consolidated) 69,311 77,419 (1) 85,936 14,519 99,989 (Non-consolidated) 7,713 78,94 (1) 87,491 18,5 13,617 Equity Ratio (%) (Consolidated) (Non-consolidated) Current Assets (Consolidated) 76,844 82,919 77,6 84,923 78,624 (Non-consolidated) 74,125 79,532 73,997 82,778 77,79 Current Ratio (%) (Consolidated) (Non-consolidated) Fixed Assets Capitalization (%) (Consolidated) (Non-consolidated) Total Liabilities (Consolidated) 4,69 43,865 51,377 5,168 6,814 (Non-consolidated) 4,7 42,675 46,993 45,541 57,35 Debt/Equity Ratio (%) (Consolidated) (Non-consolidated) Return on Equity (%) (Consolidated) (Non-consolidated) Return on Assets (%) (Consolidated) (Non-consolidated) (1) Effective from the year ended April 3, 27, the Company and its domestic consolidated subsidiaries adopted the new accounting standard, Accounting Standard for Presentation of Net Assets in the Balance Sheet (Statement No. 5 issued by the Accounting Standards Board of Japan on December 9, 25), and the implementation guidance for the accounting standard for presentation of net assets in the balance sheet (Guidance No. 8 issued by the Accounting Standards Board of Japan on December 9, 25), (collectively, the New Accounting Standards ), and Accounting Standard for Treasury Shares and Appropriation of Legal Reserve (Accounting Standards Board of Japan, August 11, 26 final revised, Statement No. 1) and Implementation Guidance on Accounting Standard for Treasury Shares and Appropriation of Legal Reserve (Accounting Standards Board of Japan, August 11, 26 final revised, Guidance No. 2). ITO EN Corporate Book 29 47

50 Financial Data (Performance Indicators) Book Value per Share (Common Stock) ( ) Non-Consolidated Book Value per Share (Common Stock) 1,6 Consolidated Book Value per Share (Common Stock) Book Value per Share (Class-A Preferred Stock) ( ) Non-Consolidated Book Value per Share (Class-A Preferred Stock) 1,6 Consolidated Book Value per Share (Class-A Preferred Stock) 1,2 1, Earnings per Share (Common Stock) ( ) Non-Consolidated Earnings per Share (Common Stock) 24 Consolidated Earnings per Share (Common Stock) Earnings per Share (Class-A Preferred Stock) ( ) Non-Consolidated Earnings per Share (Class-A Preferred Stock) 24 Consolidated Earnings per Share (Class-A Preferred Stock) Years ended April Book Value per Share (Yen) (Common Stock) (Consolidated) , , , ,388.4 (Non-consolidated) , , , , (Class-A Preferred Stock) (Consolidated) (Non-consolidated) Earnings per Share (Yen) (Common Stock) (Consolidated) (Non-consolidated) (Class-A Preferred Stock) (Consolidated) (Non-consolidated) Price Earnings Ratio (times) (Common Stock) (Consolidated) (Non-consolidated) (Class-A Preferred Stock) (Consolidated) (Non-consolidated) Price Book Value Ratio (Common Stock) (Consolidated) (times) (Non-consolidated) (Class-A Preferred Stock) (Consolidated) (Non-consolidated) Cash Dividends per Share (Common Stock) (Non-consolidated) (Yen) (Class-A Preferred Stock) (Non-consolidated) Consolidated Payout Ratio (%) (1) The Company implemented a two-for-one stock split on March 1, 26. (2) Effective September 3, 27, ITO EN allocated free of charge Class-A Preferred Stock at a ratio of.3 shares to one common stock. 48 ITO EN Corporate Book 29

51 Price Earnings Ratio (times) Consolidated Price Earnings Ratio (Common Stock) 8 Consolidated Price Earnings Ratio (Class-A Preferred Stock) Price Book Value Ratio (times) Consolidated Price Book Value Ratio (Common Stock) 16 Consolidated Price Book Value Ratio (Class-A Preferred Stock) Cash Dividends per Share (Common Stock) ( ) Non-Consolidated Cash Dividends per Share (Common Stock) 8 Non-Consolidated Cash Dividends per Share (Class-A Preferred Stock) Consolidated Payout Ratio (%) Years ended April Book Value per Share (Yen) (Common Stock) (Consolidated) 1,55.52 (1) (3) (Non-consolidated) 1, (1) (3) (Class-A Preferred Stock) (Consolidated) (2) (Non-consolidated) (2) Earnings per Share (Yen) (Common Stock) (Consolidated) (1) (Non-consolidated) (1) (Class-A Preferred Stock) (Consolidated) (2) (Non-consolidated) (2) Price Earnings Ratio (times) (Common Stock) (Consolidated) (Non-consolidated) (Class-A Preferred Stock) (Consolidated) (2) (Non-consolidated) (2) Price Book Value Ratio (Common Stock) (Consolidated) (times) (Non-consolidated) (Class-A Preferred Stock) (Consolidated) (2) (Non-consolidated) (2) Cash Dividends per Share (Common Stock) (Non-consolidated) 7 (1)(3) (Yen) (Class-A Preferred Stock) (Non-consolidated) (2) Consolidated Payout Ratio (%) (4) 48.3 (4) 16.6 (3) Effective from the year ended April 3, 27, the Company and its domestic consolidated subsidiaries adopted the new accounting standard, Accounting Standard for Presentation of Net Assets in the Balance Sheet (Statement No. 5 issued by the Accounting Standards Board of Japan on December 9, 25), and the implementation guidance for the accounting standard for presentation of net assets in the balance sheet (Guidance No. 8 issued by the Accounting Standards Board of Japan on December 9, 25), (collectively, the New Accounting Standards ), and Accounting Standard for Treasury Shares and Appropriation of Legal Reserve (Accounting Standards Board of Japan, August 11, 26 final revised, Statement No. 1) and Implementation Guidance on Accounting Standard for Treasury Shares and Appropriation of Legal Reserve (Accounting Standards Board of Japan, August 11, 26 final revised, Guidance No. 2). (4) The payout ratio is calculated based on total dividends paid to holders of common stock and Class-A Preferred Stock. ITO EN Corporate Book 29 49

52 Financial Data (Cash Flows) Consolidated Cash Flows ( millions) 2, Cash Flows from Operating Activities Cash Flows from Investing Activities Free Cash Flows 1, 1, 2, Capital Expenditures & Depreciation and Amortization ( millions) Non-Consolidated Capital Expenditures Non-Consolidated Depreciation and Amortization 8, Consolidated Capital Expenditures Consolidated Depreciation and Amortization R & D Expenses ( millions) Non-Consolidated R & D Expenses 2,4 Consolidated R & D Expenses 6, 1,8 4, 1,2 2, millions Years ended April Cash Flows from Operating Activities (Consolidated) 12,49 13,23 13,95 11,127 4,945 5,35 (Non-consolidated) 12,865 13,652 13,352 12,451 4,447 4,348 Cash Flows from Investing Activities (Consolidated) 95 3,113 4,723 14,549 14,167 7,222 (Non-consolidated) 1,511 4,95 4,686 22,288 13,61 5,867 Free Cash flows (Consolidated) 11,584 1,116 8,371 3,421 9,221 1,871 (Non-consolidated) 11,353 9,557 8,666 9,837 9,163 1,518 Capital Expenditures (Consolidated) 481 2,773 4,517 4,32 7,85 2,84 (Non-consolidated) 32 2,73 3,824 2,827 5,544 1,218 Depreciation and Amortization (Consolidated) 1,25 1,111 1,232 1,813 2,33 4,287 (Non-consolidated) 1, ,32 1,29 1,363 3,121 R & D Expenses (Consolidated) 1,553 1,864 1,655 1,692 2,225 2,188 (Non-consolidated) 1,553 1,864 1,655 1,692 2,225 2,188 5 ITO EN Corporate Book 29

53 Organizational Structure (As of May 1, 29) Meeting of Auditors Auditors General Meeting of Shareholders Board of Directors Chairman President Vice-Chairman of the Board Executive Board Administration Division Human Resources and General Affairs Division Product Planning Division National Business Development Division National Sales Division Area Sales Control Headquarters Special Sales Division Production Headquarters Hokkaido and Tohoku Area Sales Division Northern and Eastern Kanto Area Sales Division Tokyo Area Sales Division Southern Kanto Area Sales Division Chubu Area Sales Division Kansai Area Sales Division Chugoku, Shikoku and Kyushu Area Sales Division Area Sales Management Division Shizuoka Sagara Plant Internal Auditing Department Secretarial Department Merchandise Department Sales Planning Department Public Relations Department Investor Relations Department Environment Department Customer Consultation Department Financial & Accounting Department Information Management Department Operation Management Department Management Planning Department Intellectual Property Department Personnel Department Career Development Department Personal Ability Development Department Legal Department Compliance Department General Affairs Department Purchasing Department Transportation Department Liaison Department Vending Machine Operation Department Advertising Department Merchandising Department Product Planning Department I Product Planning Department II Product Planning Department III Management Department National Business Development Department I National Business Development Department II National Business Development Department III Public Transportation Sales Department Convenience Store Sales Department I Convenience Store Sales Department II Chilled Beverage Sales Department Volume Retailer Sales Department I Volume Retailer Sales Department II International Department Sales Research and Support Department Logistics Control Department Sales Management Department Hokkaido Area Sales Department Northern Tohoku Area Sales Department Southern Tohoku Area Sales Department Sales Office Management Department Joetsu Area Sales Department Eastern Saitama Area Sales Department Western Saitama Area Sales Department Tochigi Area Sales Department Ibaraki Area Sales Department Central Chiba Area Sales Department Eastern Chiba Area Sales Department Sales Office Management Department Eastern Tokyo Area Sales Department Southern Tokyo Area Sales Department Western Tokyo Area Sales Department Northern Tokyo Area Sales Department Tama Area Sales Department Sales Office Management Department Koshin Area Sales Department Eastern Kanagawa Area Sales Department Western Kanagawa Area Sales Department Kanagawa Sales Promotion Department Shizuoka Area Sales Department Sales Office Management Department Northern Chubu Area Sales Department Southern Chubu Area Sales Department Hokuriku Area Sales Department Chubu Volume Retailer Department Chubu Sales Promotion Department Sales Office Management Department Northern Kinki Area Sales Department Eastern Kinki Area Sales Department Western Kinki Area Sales Department Hyogo Area Sales Department Kansai Volume Retailer Department Kansai Department Store Department Kansai Sales Promotion Department I Kansai Sales Promotion Department II Sales Office Management Department Eastern Chugoku Area Sales Department Western Chugoku Area Sales Department Shikoku Area Sales Department Northern Kyushu Area Sales Department Southern Kyushu Area Sales Department Kyushu Volume Retailer Department Kyushu Sales Promotion Department Sales Office Management Department Mason Supplement Sales Promotion Department Sales Research and Support Department Vending Machine Business Planning Department Sales Management Department Special Sales Department I Special Sales Department II Special Sales Department III Special Sales Department IV Mail-Order Department Retail Sales Department I Retail Sales Department II Retail Sales Department III Retail Sales Department IV Department Store Department Product Planning and Sales Promotion Department Sales Management Department Production Control Department Management Department Manufacturing Control Department Procurement Department First Manufacturing Department Second Manufacturing Department Third Manufacturing Department Beverages Materials Department Beverages Department Logistics Department Quality Control Department I Quality Control Department II Product Development Department Agricultural Technology Department Central Research Institute ITO EN Corporate Book 29 51

54 Domestic Network (As of July 31, 29) Hokkaido Area 9 Sales Offices Southern Sapporo Branch Eastern Sapporo Branch Joetsu Area 8 Sales Offices Maebashi Branch Isesaki Branch Ibaraki Area 7 Sales Offices Eastern Mito Branch Western Mito Branch Meguro Branch Shinagawa Branch Tokyo Ota Branch Western Sapporo Branch Tomakomai Branch Hakodate Branch Asahikawa Branch Obihiro Branch Kitami Sales Office Takasaki Branch Shibukawa Branch Eastern Niigata Branch Western Niigata Branch Nagaoka Branch Joetsu Sales Office Hitachi Branch Tsuchiura Branch Tsukuba Branch Toride Branch Kashima Branch Western Tokyo Area 4 Sales Offices Shinjuku Branch Chuo Branch Suginami Branch Setagaya Branch Kushiro Branch Northern Tohoku Area 8 Sales Offices Aomori Branch Hirosaki Branch Hachinohe Branch Morioka Branch Kamaishi Branch Mizusawa Branch Akita Branch Yokote Branch Southern Tohoku Area 1 Sales Offices Southern Sendai Branch Sendai Branch Eastern Sendai Branch Furukawa Branch Koriyama Branch Aizu Sales Office Fukushima Branch Iwaki Branch Yamagata Branch Sakata Sales Office Eastern Saitama Area 6 Sales Offices Omiya Branch Kawaguchi Branch Yashio Branch Kasukabe Branch Kuki Branch Kumagaya Branch Western Saitama Area 5 Sales Offices Urawa Branch Kawagoe Branch Tokorozawa Branch Niiza Branch Higashimatsuyama Branch Tochigi Area 8 Sales Offices Eastern Utsunomiya Branch Western Utsunomiya Branch Nikko Representative Office Nasu Branch Tochigi Branch Sano Branch Oyama Branch Ota Branch Central Chiba Area 5 Sales Offices Chiba Branch Ichikawa Branch Matsudo Branch Kashiwa Branch Yachiyo Branch Eastern Chiba Area 5 Sales Offices Narita Branch Asahi Branch Mobara Branch Kisarazu Branch Ichihara Branch Eastern Tokyo Area 6 Sales Offices Eastern Tokyo Branch Koto Branch Asakusa Branch Sumida Branch Katsushika Branch Edogawa Branch Southern Tokyo Area 6 Sales Offices Takaido Branch Minato Branch Northern Tokyo Area 6 Sales Offices Ikebukuro Branch Nerima Branch Itabashi Branch Kita Branch Arakawa Branch Adachi Branch Tama Area 6 Sales Offices Chofu Branch Western Tokyo Branch Fuchu Branch Tachikawa Branch Hachioji Branch Oume Branch Koshin Area 5 Sales Offices Kofu Branch Matsumoto Branch Ina Branch Nagano Branch Komoro Branch Tokyo Konan Branch 52 ITO EN Corporate Book 29

55 Eastern Kanagawa Area 7 Sales Offices Yokohama Isogo Branch Yokohama Izumi Branch Southern Chubu Area 7 Sales Offices South Nagoya Branch Toyota Branch Western Kinki Area 6 Sales Offices Umeda Branch Yodogawa Branch Niihama Branch Tokushima Branch Kochi Branch Shin-Yokohama Branch Yokohama Kohoku Branch Mikawa Branch Toyokawa Branch Ibaragi Branch Osaka Tsurumi Branch Northern Kyushu Area 1 Sales Offices Kawasaki Branch Yokkaichi Branch Miyakojima Branch Fukuoka Branch Shonan Branch Tsu Branch Neyagawa Branch East Fukuoka Branch Yokosuka Branch Ise Branch West Fukuoka Branch Western Kanagawa Area 7 Sales Offices Yokohama Midori Branch Machida Branch Sagamihara Branch Ebina Branch Kawasaki Miyamae Branch Hokuriku Area 5 Sales Offices Toyama Branch Takaoka Sales Office Kanazawa Branch Komatsu Branch Fukui Branch Hyogo Area 7 Sales Offices Kobe Branch East Kobe Branch West Kobe Branch Amagasaki Branch Itami Branch Kakogawa Branch Yahata Branch Kokura Branch Kurume Branch Saga Branch Nagasaki Branch Sasebo Branch Oita Branch Atsugi Branch Odawara Branch Shizuoka Area 7 Sales Offices Shizuoka Branch Sagara Branch Hamamatsu Branch Numazu Branch Izu Sales Office Northern Kinki Area 6 Sales Offices Kyoto Branch West Kyoto Branch Fukuchiyama Branch Nara Branch Shiga Branch Otsu Branch Himeji Branch Eastern Chugoku Area 6 Sales Offices Okayama Branch Tsuyama Sales Office Kurashiki Branch Matsue Branch Tottori Representative Office Fukuyama Branch Southern Kyushu Area 7 Sales Offices Kumamoto Branch Miyazaki Branch Nobeoka Sales Office Miyakonojo Branch Kagoshima Branch Izumi Representative Office Kirishima Sales Office Fuji Branch Kakegawa Branch Eastern Kinki Area 7 Sales Offices Sakai Branch Western Chugoku Area 5 Sales Offices Area Sales Control Headquarters: 24 Sales Offices Northern Chubu Area 7 Sales Offices Nanba Branch Ikuno Branch Hiroshima Branch East Hiroshima Branch Nagoya Branch East Nagoya Branch West Nagoya Branch North Nagoya Branch Komaki Branch Gifu Branch Tono Branch Yao Branch Suminoe Branch Kishiwada Branch Wakayama Branch North Hiroshima Branch Yamaguchi Branch Shunan Sales Office Shikoku Area 6 Sales Offices Takamatsu Branch Sakaide Branch Head Office Nishi-Shinjuku Building Taito Asakusa Building Kansai Headquarters Central Research Institute Shinmeicho Building Matsuyama Branch ITO EN Corporate Book 29 53

56 ITO EN Innovation and Growth 1966 August The Frontier Tea Corporation, ITO EN s predecessor, established in Shizuoka City, Shizuoka Prefecture February First sales branch, the Kanagawa Branch (now the Yokohama Midori Branch), opened in Yokohama City, Kanagawa Prefecture May Company name changed to ITO EN, LTD July Headquarters relocated to Shinjuku Ward, Tokyo February Introduction of high-speed automatic wrapping equipment developed by Industrial Gesellshaft of Switzerland. Development of vacuum pack technology to preserve the freshness of green tea leaves May Shizuoka Sagara Plant constructed in Sagara Town (now Makinohara City), Haibara, Shizuoka Prefecture, and production systems consolidated there June First directly managed speciality store of the Chajuttoku chain opened in Yokohama City, Kanagawa Prefecture August Signed a contract with the China National Native Produce and Animal By-Products Import and Export Corporation, a Chinese company, to become the first company to import oolong tea into Japan. Oolong tea sales also commenced February Developed and commenced sales of Canned Oolong Tea. Full-scale entry into beverage market followed. September Commenced sales of black tea directly imported from Sri Lanka. February 1981 Canned Oolong Tea 1982 September Developed new green tea cultivation technology based on organic fertilizer. Became first company to display best by dates on packaged tea February Successfully developed and launched Canned Green Tea. August First ITO EN Ladies Golf Tournament held February Canned green tea product is awarded as the Outstanding Product of the Year by the Nihon Keizai Shimbun. September Featuring cutting-edge technology, ITO EN s Central Research Institute is established in Sagara Town (now Makinohara City), Shizuoka Prefecture July Established ITOEN (USA) INC. in Hawaii to play a key role in overseas expansion. February 1985 Canned Green Tea 1988 February Established additional headquarters in Kansai and the Kobe Distribution Center in Kobe City, Hyogo Prefecture. March Received an award from the China Tea Import and Export Corporation for increasing the market for oolong tea in Japan February Canned green tea line renamed under the Oi Ocha brand. December Awarded the Henmi Prize by the Canners Association of Japan for the development of technology that removes the retort odor from canned green tea May Initial public offering. August Headquarters relocated to Shibuya Ward, Tokyo February Completion of coffee roasting and processing plant at the Sagara Plant. December Issued convertible bonds worth 14 million Swiss francs. February 1989 Oi Ocha 1994 April Awarded the Director General s Prize from the Director General of the Science and Technology Agency for the successful development of canned green tea. June September Issued convertible bonds worth 1 million Swiss francs. Established ITO EN AUSTRALIA PTY. LIMITED in Australia. Joint venture established with Ningbo Shunyi Tea Products Co., Ltd., in China 54 ITO EN Corporate Book 29

57 1995 October Awarded the top prize of the second Radio Tanpa Over-the-Counter Stock Blue Chip Awards April Established a green tea packing plant in Fukushima City, Fukushima Prefecture. Opened the first Natural Station store in Shinjuku, offering freshly squeezed fruit and vegetable juice and freshly brewed coffee. July September November Received patent for technology used in the production of PET bottle green tea, known as the Natural Clear production method. Stock listed on the Second Section of the Tokyo Stock Exchange. Awarded the Ministry of Agriculture, Forestry and Fisheries Prize for developing the green tea beverage market September Cooperated in clinical tests carried out by the M. D. Anderson Cancer Center at the University of Texas, having been granted permission by the U.S. Food and Drug Administration October Stock advanced to the First Section of the Tokyo Stock Exchange January Awarded the Superior Financial Disclosure Company by the Tokyo Stock Exchange. 2 October Became first in the industry to release beverages in heatable PET bottles. December Shizuoka Sagara Plant and Central Research Institute earn ISO 141 certification. 21 May Established ITO EN (North America) INC. June New research building completed in Sagara Town (now Makinohara City), Shizuoka Prefecture. October 2 Heatable PET bottle 22 March ITO EN (North America) INC. opened tea store ITO EN New York and restaurant KAI, marking fullscale entry into the U.S. market. April Production headquarters received ISO 91 certification. 24 January Double award from the Tokyo Stock Exchange: ninth Superior Financial Disclosure Award and second Increase in Individual Shareholders Award. May ITO EN AUSTRALIA PTY. LIMITED built and commenced production at new crude tea leaf factory. 25 December Used Tea Leaf Recycling System received the Grand Prize from the Minister for Agriculture, Forestry and Fisheries in the Energy Services Section at the 25 Eco Products Awards. 26 June The Company strengthened its U.S. business by acquiring shares in Mason Distributors, Inc., a Florida-based supplier of nutritional supplements. October Seeking to expand its coffee business, ITO EN made FoodX Globe Co., Ltd., which operates the Tully s Coffee chain, into a consolidated subsidiary. October 26 Tully s Coffee 27 April Head office divisions received ISO 141 certification. September Class-A Preferred Stock listed on the First Section of the Tokyo Stock Exchange. 28 March Agreement signed with Groupe DANONE (France) giving ITO EN exclusive marketing rights in Japan for evian natural mineral water. April November Tully s Coffee Japan Co., Ltd. established through merger of FoodX Globe Co., Ltd. and Tully s Coffee Japan. ITO EN and ITOCHU Corporation establish joint venture, ITO EN ITOCHU Mineral Waters Co. Tea Plantation Business: Planting Tea Trees for Regional Benefit received the Grand Prize from the Minister for Agriculture, Forestry and Fisheries in the Ecological Services Section at the 28 Eco Products Awards. March 28 evian 29 February Oi Ocha celebrated its 2th birthday. March All departments across the Company, including sales offices, received ISO 141 certification. ITO EN Corporate Book 29 55

58 Investor Information Stock Market Thousands of shares April Total number of outstanding shares (Common Stock) 45,66 * 91,212 91,212 91,212 91,212 (Class-A Preferred Stock) 35,246 35,246 Treasury stocks (Common Stock) 93 * 2,143 2,62 2,21 2,19 (Class-A Preferred Stock) * On March 1, 26, the Company implemented a two-for-one stock split. Capitalization Millions of yen April Capitalization 12,655 12,655 12,655 19,912 19,912 Stockholders and Stock Breakdown by Holders April Hundreds Hundreds [Common Stock] Stockholders of shares Stockholders of shares Private investments and others 65, , , , Financial institutions , , Securities firms , ,786.3 Domestic companies , , Foreign companies, etc , , Total 66, , , , April Hundreds Hundreds [Class-A Preferred Stock] Stockholders of shares Stockholders of shares Private investments and others 27, , , , Financial institutions , , Securities firms , , Domestic companies , , Foreign companies, etc , , Total 27, , , , Note: Treasury stock is included in the Private investments and others group. ( ) 4, Common Stock Class-A Preferred Stock ITO EN Stock Price ITO EN Stock Price ITO EN Stock Turnover ITO EN Stock Turnover 3, 2, (Thousands of shares) 3, 1, 15, /1 8/ /1 56 ITO EN Corporate Book 29 Note: 1: Trading volumes include both floor trading and off-floor trading. 2: On March 1, 26, the Company implemented a two-for-one stock split. Share price and trading volume figures have been adjusted retroactively to reflect the stock split. 3: On September 3, 27, the Company made a gratis issue of preferred stock (.3 preferred stock to one common stock). The share price has been adjusted retroactively to reflect the gratis issue.

59 Corporate Data Board of Directors and Corporate Auditors (As of July 29, 29) COMPANY NAME ITO EN, LTD. HEAD OFFICE 47-1, Honmachi 3-chome, Shibuya-ku, Tokyo , Japan DATE OF ESTABLISHMENT August 22, 1966 PAID-IN CAPITAL 19,912,3, (As of April 3, 29) NUMBER OF SHARES ISSUED Common Stock 91,212,38 AND OUTSTANDING Class-A Preferred Stock 35,246,962 (As of April 3, 29) NUMBER OF STOCKHOLDERS Common Stock 79,85 Class-A Preferred Stock 66,74 (As of April 3, 29) STOCK TRADING MARKET Tokyo Stock Exchange, First Section Common Stock (Code: 2593) Class-A Preferred Stock (Code: 25935) CERTIFIED PUBLIC KPMG AZSA & Co. ACCOUNTANTS MAIN FINANCING BANKS Resona Bank, Ltd. Mizuho Corporate Bank, Ltd. The Bank of Tokyo-Mitsubishi UFJ, Ltd. Sumitomo Mitsui Banking Corporation MAIN SECURITIES COMPANIES NOMURA SECURITIES CO., LTD. Nikko Citigroup Limited Mitsubishi UFJ Securities Co., Ltd. Daiwa Securities SMBC Co., Ltd. Mizuho Securities Co., Ltd. TRANSFER AGENT The Chuo Mitsui Trust and Banking Company, Limited CHAIRMAN *REPRESENTATIVE DIRECTOR PRESIDENT *REPRESENTATIVE DIRECTOR EXECUTIVE VICE-CHAIRMAN EXECUTIVE VICE-PRESIDENTS EXECUTIVE MANAGING DIRECTORS MANAGING DIRECTORS DIRECTORS CORPORATE AUDITORS STATUTORY AUDITORS Hachiro Honjo Daisuke Honjo Kizuku Ogita Yoshito Ejima Shunji Hashimoto Minoru Watanabe Kiyoshi Shimoda Hiroshi Ito Shoichi Saito Shusuke Honjo Yoshihisa Kimura Yoshio Kobayashi Mitsuo Yashiro Akira Hirose Kan Taguchi Kaoru Mikuni Tadaharu Tsujita Yosuke Honjo Satoshi Ando Masahiro Kasahara Yoshichika Yamamoto Koichi Miyazaki Isao Hayasaka Yoshiaki Takazawa Toshihiro Sato Masayuki Takase INVESTOR RELATIONS OFFICE TEL: (3) FAX: (3) INTERNET HOMEPAGE CAUTIONARY STATEMENTS WITH RESPECT TO FORWARD-LOOKING STATEMENTS This corporate book contains forward-looking statements concerning ITO EN s current plans, projection, strategies and performance. These forward-looking statements are not historical fact, rather they represent the assumptions and beliefs of ITO EN management based on information currently available. They should therefore not be relied upon as the sole basis for evaluating ITO EN. ITO EN also wishes to caution readers that actual results may differ materially from expectations. Forward-looking statements are subject to a number of risks and uncertainties. These include, without limitation: climate, particularly cool summers; product accidents, including contamination; economic conditions, particularly consumer trends; and ITO EN s ability to win acceptance of its products and services in a highly competitive market characterized by rapidly changing consumer preferences and other factors. This annual report has been prepared to promote greater understanding of ITO EN and its activities. As such, readers are cautioned not to make investment decisions based solely on this publication. ITO EN Corporate Book 29 57

60 47-1, Honmachi 3-chome, Shibuya-ku, Tokyo , Japan Printed in Japan