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Trias Company Memo 2009-06-22 (Securities Code: 2220 / TSE2) Kameda Seika Co., Ltd. Summaries of Business Results Meeting for the Fiscal Year ended March 31, 2009, Follow-Up Company Visit On May 28, the Business Results Meeting for the fiscal year ended March 31, 2009 was held for Kameda Seika Co., Ltd. (hereinafter Kameda or the Company.) The following is a summary of the meeting:

[Attendees of the Results Meeting] Messrs. Michiyasu Tanaka, President; Sanji Matsuzawa, Director Executive Officer, General Manager of the Administration Department; and Yoshio Kodera, Deputy General Manager of the Corporate Planning Department. 【Summary of Consolidated Business Results for FY3/09】 While the rice snacks market grew by 2.7% in 2008, Kameda’s consolidated net sales surpassed that by increasing 3.8% year-on-year. In terms of market competitiveness, the Company lost market share in the 1st half after implementing price hikes in April and June 2008, but succeeded in regaining share in the 2nd half, with its share of the supermarket market rising 0.6% yoy (according to internal estimates). During this time, Kameda focused on brand centered marketing activities and, unlike its leading competitors, refrained from engaging in a price war over key products. As a result, a price gap between the Company’s products and its competition grew pronounced. At present, Kameda estimates its products retail 30-40 yen higher than that of the competition. In fiscal 2008, moreover, the Company was hit by a series of unforeseen external issues, from escalating costs of raw materials and difficulties procuring peanuts from China, to the first price hikes in 18 years and a rice scandal resulted in procurement difficulties and price increases. Consequently, Kameda’s posted operating and ordinary income declines of 6.3% and 5.5% respectively. Although posting a loss of JPY 35 million on the valuation of investment securities, net income rose by 3.1% yoy, due to a smaller extraordinary loss and tax burden versus the previous fiscal year. As for the plus/minus factors contributing to consolidated operating income, the higher cost of raw materials took a JPY 2 billion toll on operating income. The ratio of raw materials to production output was 34.2% in April 2008, but it rose to 37.7% in August 2008, then falling back to 34.3% in April 2009. The price of rice, however, remains at a higher level. Other major changes in the Company’s financials is the increased cash flows, from JPY 1,278 million in fiscal 2007 to JPY 1,528 million in fiscal 2008.

This memo is strictly for reference purposes only and does not solicit for investment. The contents contained in this memo are prepared based on public and reliable information, however the company does not guarantee their complete accuracy. Any opinions or information contained within the memo are relevant as of the day of the results meeting and/or of the company visit, however it may be altered without prior announcement in the future. Final investment decisions shall be made by investors themselves based on their own judgment and responsibility. Copyright © Trias Corporation All Rights Reserved.

2 Consolidated Business Results by Segment

(JPY million)

FY3/08 FY3/09 Operating Operating Net Sales Margin Net Sales Margin Income Income

YoY Change Net Sales Operating Income Value Ratio Value Ratio

71,517

3,082

4.3%

73,999

2,802

3.8%

2,482

3.5%

△ 280

-9.1%

Cargo Transport & Warehouse

6,991

195

2.8%

7,153

236

3.3%

162

2.3%

41

21.0%

Others

1,828

60

3.3%

2,063

89

4.3%

235

12.9%

29

48.3%

△ 5,601

n.a.

n.a.

△ 5,675

n.a.

n.a.

n.a.

n.a.

n.a.

n.a.

74,735

3,338

4.5%

77,541

3,128

4.0%

2,806

3.8%

△ 210

-6.3%

Rice Cracker Product

Corporate & Eliminations

Total

【Mid-Term Management Plan for the Period of FY3/10 to FY3/12】 Announced in conjunction with the business results of fiscal 2008, the Mid-Term Management Plan (hereinafter Mid-Term Plan) features two core initiatives being driven by Kameda’s brand strength: to transition from a domestic enterprise to a global one, and to expand its field of business as a rice snack maker to one encompassing rice snacks as well as related businesses. To support its brand strength, the Company aims to shift its sales approach from one oriented on price to a non-price orientation, and push forward product development prioritizing customer wants. Kameda also elaborated on the following initiatives: z

Growth through Top 8 brands and related products: Kameda’s target is 7% sales growth per annum, based on current annual sales of JPY 33.6 billion. In order to achieve the goal, the Company will aggressively replace products sold under its Top 8 brands and push forward profitability on a per-product basis.

z

Reinforcing the sales force: Kameda will concentrate its marketing activities primarily on 230 national retail chains (or 10,500 individual outlets) out of the estimated 1,500 retail chains. The Company will shift from a marketing strategy emphasizing rebates and other price-related approaches to one prioritizing planning and development, thereby improving its shelf turnover ratio. It will also reinforce its sales activities in the Tokyo, Nagoya and Osaka areas.

z

Upgrading production efficiency: Kameda has traditionally improved productivity through task-oriented upgrades based on expertise and innovation.

The Company, however, is now

committed to enact sweeping reforms of its production processes by investing JPY 16 billion over the next three years and JPY 22 billion over the next five. Through this initiative, Kameda plans to decrease its present non-consolidated cost of sales ratio of 58.9% by approx. 5% in the next five years. z

Expanding its overseas presence: Sales of equity method affiliate TH FOODS, INC. (hereinafter TH FOODS) grew by 15% yoy in January-March 2009, with net sales for fiscal 2009 expected to reach JPY 8 billion or more and generate net income of JPY 600-700 million. In the U.S., Kameda plans to reinforce operations through KAMEDA USA, INC. (hereinafter KMD USA). In addition, the Company

This memo is strictly for reference purposes only and does not solicit for investment. The contents contained in this memo are prepared based on public and reliable information, however the company does not guarantee their complete accuracy. Any opinions or information contained within the memo are relevant as of the day of the results meeting and/or of the company visit, however it may be altered without prior announcement in the future. Final investment decisions shall be made by investors themselves based on their own judgment and responsibility. Copyright © Trias Corporation All Rights Reserved.

3 plans to increase its capacity to supply products to Europe and the U.S. through SMTC Co., Ltd. (hereinafter SMTC), which it acquired in Thailand in April 2009. Through these initiatives, Kameda intends to become the fifth largest company in the global food snack market within the next five years, rising five places from its current position. 【Earnings Forecast for FY3/10】 The Company’s earnings forecast for fiscal 2009 projects growth in net sales and incomes, based on price stability of raw materials, which should bottom out in cost (the ratio of raw materials to production output is estimated to 33.6% in fiscal 2009 versus 34.9% in fiscal 2008), and a higher gross profit margin from an improved capacity operating rate. At the same time, having forgone television advertising for several years, Kameda will reinforce its brand strength by resuming TV ads. In addition, the Company will spend JPY 5 billion as capital investment to improve the production efficiency of its factories. With the stabilization of the cost of raw materials, price reductions are being sought from retailers. However, Kameda will not lower prices as a general principle, aiming instead to step up investment to enhance and ensure the safety and security of its products. One step toward this end is that the Company has begun contracting rice growers in Niigata and Akita prefectures under strict regimen. Also, Kameda will no longer be procuring peanuts exclusively from China, but diversify suppliers to include those from the U.S. and Argentina as well, raising the ratio of non-China peanut procurement to 10% of its total consumption. In addition, the Company will further clarify the roles and functions of each company with the domestic group. Kameda’s primary targets will be supermarket chains and convenience store channels; AJICUL CO., LTD. (hereinafter AJICUL) will focus on low-price outlets, including discount drugstores and mega-discount stores; NISSHINSEIKA CO., LTD. (hereinafter NISSHIN) will develop new brands that cater to high-end supermarkets; and TOYOSU CO., LTD. (hereinafter TOYOSU) will concentrate on department store brands. The goal is to establish a group framework that offers an array of brands to cover the entire market. AJICUL, meanwhile, will aggressively step up transactions with the Company’s subsidiaries in Thailand and China. 【Q&A】 Q1: Which foreign markets are being targeted under Kameda’s global strategy? A1: Kameda has subsidiaries in China, Thailand and the U.S., with the most emphasis being placed on developing the American market, which keeps the highest selling prices of the three. In way of comparison, the price per gram in the U.S. is 2.4 yen versus 1.6 yen in Japan; it stands at a mere 0.6 yen in China. The center of our U.S. operations is now being conducted by our equity method affiliate, TH FOODS, which projects net sales growth of 20% in fiscal 2009. We see the U.S. market as being very responsive to quality products. As for KMD USA, which we established in May 2008, it has begun doing business with WHOLE FOODS and other high-end supermarkets. Because This memo is strictly for reference purposes only and does not solicit for investment. The contents contained in this memo are prepared based on public and reliable information, however the company does not guarantee their complete accuracy. Any opinions or information contained within the memo are relevant as of the day of the results meeting and/or of the company visit, however it may be altered without prior announcement in the future. Final investment decisions shall be made by investors themselves based on their own judgment and responsibility. Copyright © Trias Corporation All Rights Reserved.

4 Japanese mega-retailers such as Aeon and 7-11 preparing to expand their penetration of China moreover, we are approaching these and other Japanese companies through Qingdao Kameda Foods Co., Ltd. (hereinafter Qingdao Kameda).

Q2: The food business being heavily influenced by the region it operates, what are the marketing strategies that you employ overseas? A2: In the U.S., for example, there is a growing consumer segment that perceives rice snacks as a low-calorie health food. Rice is hypoallergenic; in comparison, wheat flour contains one hundred times the amount of irritating substances. At the same time, the widespread acceptance of soy sauce, sushi and other Japanese dishes in other countries have softened earlier resistance to Japanese food abroad. We intend capitalize on this international trend, focusing our marketing and sales effort emphasizing Japan and its culinary culture.

Q3: Outline Kameda’s bid to establish agricultural corporations in Japan. A3: Given the myriad regulatory hurdles, including the government’s policy of reducing rice acreage, it remains difficult for companies to exploit agriculture as a viable business in Japan. The reason Kameda is looking at agricultural corporations is because the government is expected to introduce sweeping deregulatory reforms to agricultural policy, and we are lobbying for a business-friendly framework in which to operate.

Q4: Can Kameda continue to procure peanuts on a stable basis? A4: Kameda currently processes 10,000 tons of peanuts annually. Japan, however, only harvests approx. 20,000 tons a year—meaning we must look elsewhere for our needs. For fiscal 2009, we are planning to buy 9,000 tons from China and 1,000 tons from the U.S. and Argentina. For your information, of the 10,000 tons we procured in fiscal 2008, 50 to 100 tons were harvested at our own farms. That figure is expected to rise to 500 tons in fiscal 2009. We believe that some 30% of our total needs will eventually be procured through suppliers other than China.

Concludes Memo on FY03/09 Business Results Meeting

Following the Business Results Meeting, we visited Kameda’s head office on June 8 to discuss its initiatives in great detail. The following is a summary of our visit:

[Improving Production Processes] At the time when the business results were announced, we expected to allocate JPY 3.92 billion for capital investment (or a non-consolidated investment of JPY 2.95 billion), but increased the figure by This memo is strictly for reference purposes only and does not solicit for investment. The contents contained in this memo are prepared based on public and reliable information, however the company does not guarantee their complete accuracy. Any opinions or information contained within the memo are relevant as of the day of the results meeting and/or of the company visit, however it may be altered without prior announcement in the future. Final investment decisions shall be made by investors themselves based on their own judgment and responsibility. Copyright © Trias Corporation All Rights Reserved.

5 another JPY 1 billion to some JPY 5 billion for fiscal 2009 in order to increase production of certain product lineups. A major portion of the additional JPY 1 billion will be spent on special equipment to increase production of such top-selling brands as Happy Turn and Teshioya, resulting in a 40-50% increase in sales of products from the upgraded production facilities. One dividend from funding for our rationalization initiative adopted under the Mid-Term Plan was some 90 production personnel had been trimmed, yielding an annual savings of several hundreds of million yen (or an estimated 0.5% of non-consolidated net sales). Because capital investment over the next five years will be weighted more in the first three years, the restructuring effects to reduce our non-consolidated cost of goods ratio by 5% should emerge in the second half of that five-year period. In addition, the number of parent company employees who are retiring within two to three years will increase, although some will be rehired on a temporary basis. The combined impact of a reduction in production personnel and improvements to production efficiency will likely contribute to a lower cost of sales ratio on a mid-term basis.

[Strategic Group-Wide Initiatives] When the operating margins of subsidiaries in the Rice Cracker Production Business segment for fiscal 2008 are examined, it shows that the Kameda parent company posted an operating margin of slightly less than 4%, while AJICUL recorded more than 3% and the rest had margins of 0-2% range. While investment to upgrade the parent company’s productivity has been set in motion, initiatives to bolster sales growth and margin improvement for the group’s subsidiaries are a key priority over the mid-term future. Based on the fiscal 2009 forecast, for example, our consolidated subsidiaries in the Rice Cracker Production Business segment is expected to contribute 20-25% to consolidated net sales; the subsidiaries’ share of consolidated capital investment, however, will remain at a mere 7% or less. We asked for Kameda’s thoughts on this point and the direction management will develop for these subsidiaries in the future. TOYOSU, which specializes in developing brands catering to the department store market, currently operates 52 outlets. As sales of the large traditional higher-end retailers have fallen, so too have TOYOSU sales’, and, in addition, its cost of sales has been rising, pushed upward because it has had to handle a very broad product lineup. In the future, TOYOSU aims to improve the profitability of its outlets and develop new brands that appeal to a wider range of consumers, especially women. In line with improving outlet profitability, TOYOSU is currently examining the possibility of entering a new market: specialty goods retailers. Meanwhile, a review of unprofitable outlets is also underway. NISSHIN, which conducts a large volume of business through wholesalers, is now looking to develop and expand sales other than through wholesale channels as a key initiative for future growth. One step towards this end is to begin marketing its products to high-end supermarkets and specialty stores, while expanding OEM production. In doing so, NISSHIN will be able to clearly differentiate its business from the Kameda parent company, as the two are now saddled with considerable duplication in sales channels. This memo is strictly for reference purposes only and does not solicit for investment. The contents contained in this memo are prepared based on public and reliable information, however the company does not guarantee their complete accuracy. Any opinions or information contained within the memo are relevant as of the day of the results meeting and/or of the company visit, however it may be altered without prior announcement in the future. Final investment decisions shall be made by investors themselves based on their own judgment and responsibility. Copyright © Trias Corporation All Rights Reserved.

6 AJICUL, which produces private brands and non-brand OEM products, is in charge of the lower-end market for discount drugstores and mega-discount stores. Because AJICUL must further enhance its price competitiveness, it plans to increase procurement from our group of companies overseas, from SMTC in Thailand and Qingdao Kameda in China. Under this backdrop, the foreign subsidiary that will undergo the most dramatic business model transformation is Qingdao Kameda. While the firm served as a cost control center for rice crackers rolled in dried laver for the Japanese market in the past, Qingdao Kameda is planning to expand its activities to include direct sales operations in China, thereby raising the competitiveness of the Kameda Group as a whole. Concludes Memo on Follow-Up Company Visit

【References】 (2220) Kameda Seika Co., Ltd. Key Financial Data and Business Results (Consolidated)

Key Financial Data (Consolidated)

Key Stock Indicators (Consolidated) No. of Shares Issued No. of Treasury Stock Market Value (\million) BPS (\) ROE (%) ※1 ROA (%) ※2 PER (times） PCFR (times) ※3 PBR (times) Share Price (\)

Mar. 09 Mar. 09 Jun. 19, 2009 Mar. 09 Mar. 09 Mar. 09 FY3/10 est. Mar. 09 Mar. 09 Jun. 19, 2009

22,318,650 258,006 31,938 1,222.4 7.2 3.9 15.0 7.0 1.2 1,431

Total Assets (\million) Shareholders' Equity (\million) Interest-Bearing Debt (\million) Equity Ratio (%) Ratio of Interest-Bearing Debt (%) ※4 Free Cash Flows (\million) ※5

Mar. Mar. Mar. Mar. Mar. Mar.

09 09 09 09 09 09

49,546 27,396 2,782 54.4 10.2 1,528

※1 ROE=Current Net Income÷Averaged Shareholders' Equity of beginning of term and term end ※2 ROA=Cureent Net Income÷Averaged Total Assets of beginning of term and term end ※3 PCFR=Maket Value÷(Current Net Income+Depreciation) ※4 Ratio=Interest-Bearing Debts÷Shareholders' Equity ※5 Free Cash Flows=Operating CF+Investment CF

Consolidated (\million） FY3/06 FY3/07 FY3/08 FY3/09 FY3/10 1HF est. FY3/10 est.

Net Sales 71,313 72,449 74,735 77,541 38,000 80,000

Operating Income

Ordinary Income

2,992 3,240 3,338 3,128 800 3,500 Note: FY3/10 est. is

Net Income

3,132 3,330 3,506 3,314 900 3,700 the Company's

EPS (\)

Dividend per Share (\)

1,483 63.1 13.00 1,931 86.5 22.00 1,868 83.7 20.00 1,925 86.5 20.00 400 18.1 10.00 2,100 95.2 20.00 forecast announced on May 11, 2009.

This memo is strictly for reference purposes only and does not solicit for investment. The contents contained in this memo are prepared based on public and reliable information, however the company does not guarantee their complete accuracy. Any opinions or information contained within the memo are relevant as of the day of the results meeting and/or of the company visit, however it may be altered without prior announcement in the future. Final investment decisions shall be made by investors themselves based on their own judgment and responsibility. Copyright © Trias Corporation All Rights Reserved.