Home >> News Releases
News Releases
February 23, 2006
Notification of posting of extraordinary loss, and impact on projected business performance for fiscal 2005
As detailed below, at a meeting of the Board of Directors of FamilyMart held this day (February 23, 2006), the directors took the decision to recognize an extraordinary loss for the current fiscal 2005 business term, from March 1, 2005 to February 28, 2006. In line with this, our forecasts for the Company's full-term business performance, released on January 6, 2006 together with our report on business performance for the first three quarters of fiscal 2005, have been revised downward as set forth below.
1. Recognition of extraordinary losses (on a consolidated accounts basis), and the resultant impact on consolidated business performance forecasts for fiscal 2005
- Recognition of extraordinary losses (consolidated basis)
We have decided to introduce a "third-generation" store management system, employing an optical fiber network to connect the POS registers and multimedia kiosks at our stores. Introduction of the new system will begin in September of this year, and will generate an extraordinary loss of ¥5.1 billion. Looking toward the fullscale establishment of a global network of 20,000 stores, the directors of the Company consider that the loss involved in replacing existing systems with the new equipment is well worth it. We could have waited until the next term to make the provision for this new system, but will instead authorize a provision to reserves to cover the loss in the current term.
- Business performance forecasts for fiscal 2005
As a result of the above-described decision, the only element of the Company's business performance to be affected is net income, the forecast for which has been revised downward as shown in the table below.
(On a consolidated basis; ¥ million)
| | Total operating revenue | Operating income | Recurring profit | Net income |
| Previous forecast(A) | 276,600 | 33,600 | 34,700 | 16,500 |
| Revised forecast(B) | 276,600 | 33,600 | 34,700 | 13,500 |
| Decrease(B-A) | - | - | - | 3,000 |
| Decrease(%) | - | - | - | 18.2% |
| Reference Previous term ended Feb. 2005 | 252,900 | 30,868 | 31,736 | 12,623 |
2. Recognition of extraordinary losses (on a non-consolidated accounts basis), and the impact of this on non-consolidated business performance forecasts for fiscal 2005
- Recognition of extraordinary losses (non-consolidated basis)
In addition to the decision to make provisions in the current term for the “third-generation” store management system, we also recognized the need to make provisions to reserves to cover losses on investments in our area franchiser in Thailand — Siam FamilyMart Co., Ltd. — and our credit card subsidiary Famima Credit Corporation, estimated in the amounts of ¥3.6 billion and ¥1.6 billion, respectively, for a total loss of around ¥5.2 billion. Both companies are expected to achieve a recovery in business performance over the near term, but in view of some emerging disparities between planned figures and actual results, we have decided to adopt a conservative stance on the accounting front. The additional provision to reserves on a non-consolidated basis, however, has already been accounted for in the consolidated balance sheet. Accordingly, the action, thus, has no impact on the said consolidated accounts.
- Business performance forecasts for fiscal 2005
As a result of the above-described decision to register extraordinary losses, the only element of the Company’s non-consolidated business performance to be affected is net income, the forecast for which has been revised downward as shown in the table below.
(on a non-consolidated basis; ¥ million)
| | Total operating revenues
[Total net sales of FamilyMart stores] | Operating income | Recurring profit | Net income |
| Previous forecast(A) | 186,000
[1,039,000] | 30,600 | 31,700 | 15,800 |
| Revised forecast(B) | 186,000
[1,039,000] | 30,600 | 31,700 | 10,100 |
| Decrease(B-A) | -
[ - ] | - | - | 5,700 |
| Decrease(%) | -
[ - ] | - | - | 36.1% |
| Reference Previous term ended Feb. 2005 | 173,370
[998,491] | 28,646 | 29,883 | 12,961 |
Note: As announced in the previous forecasts released in January, the term-end per share dividend payment will be ¥21.50. Together with the interim dividend, this brings the total annual dividend per share to ¥43.00.
Attention regarding forward-looking statements
The reader is advised that this report contains forward-looking statements. As opposed to statements of historical fact, these constitute estimates or projections based on facts known to the Company's management as of the time of writing, and actual results may therefore differ substantially from such statements.
