Don Quijote

Transcription

Don Quijote

Don Quijote
Annual Report
2006
Everybody’s
PROFILE
Don Quijote was born when we added our own, original essence to the attraction of the traditional discount store model, which offers a
rich variety of products at low prices. Not only do we offer an unusually diverse product assortment, but our late-night store operation
invites shoppers to come and browse casually in their free time. Perhaps most distinctively, our store displays are stuffed with an overwhelming abundance and variety (“compression displays”) of items. The joy, amusement and convenience we provide, akin to a jungle
treasure hunt, has gained great support from customers.
Since the first store opened in 1989, we have expanded our business based on our corporate principle “The Customer Comes First.”
Building on this core commitment, we will continue to grow, taking advantage of our unique business concept: “CV+D+A*.”
Following this concept, Don Quijote pursues “greater convenience,” “greater discounts,” and “greater amusement.”
*CV: convenience, D: discount, and A: amusement.
CONTENTS
FINANCIAL HIGHLIGHTS . . . . . . . . . . . . . . . . .
DEAR FELLOW SHAREHOLDERS AND INVESTORS
THE CORE OF OUR ESSENCE . . . . . . . . . . . . . . . .
MANAGEMENT STRATEGIES . . . . . . . . . . . .
MERCHANDISE STRATEGIES . . . . . . . . . . . .
STORE STRATEGIES . . . . . . . . . . . . . . . . . . .
FINANCIAL SECTION . . . . . . . . . . . . . . . . . . . .
CORPORATE DATA . . . . . . . . . . . . . . . . . . . . . .
SHARE INFORMATION . . . . . . . . . . . . . . . . . . .
..
.
..
..
..
..
..
..
..
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
2
4
7
8
10
12
14
33
35
Don Quijote’s key characteristics
Our unique “consumable time” business model
Our proprietary “consumable time” business model lets customers get completely absorbed in shopping without paying attention to time. At the
heart of this business model are the “compression displays,” which through their overwhelming variety of items makes the shopping experience
akin to a treasure hunt in a jungle, where the customer can always discover something new.
Attractive products at heavily discounted prices
A standard Don Quijote store handles about 50,000 merchandise items. Our assortments feature a wide variety of products, ranging from luxury brand
goods to daily necessities and food, all at heavily discounted prices. Other Don Quijote attractions are the time- and volume-limited spot products. We focus
on creating an amusement-filled store by taking maximum advantage of our exclusive procurement know-how and enormous product data.
New business formats complement our three standard formats
Our Don Quijote stores have a standard sales floor space of 1,000 square meters, while our PAW late-night shopping malls and small-scale Picasso stores
have 300–500 square meters of sales floor space. We have been opening stores with these three formats in accordance with local market
characteristics and locations, and will continue to do so flexibly in the future. In addition, we are aiming at establishing a new, next-generation
convenience store format that combines sales of goods with “home meal replacements,” such as delicatessen dishes and take-out box lunches.
Store
Don Quijote Co., Ltd. Annual Report 2006
1
Financial Highlights
Millions of
U.S. dollars
Millions of yen
For the fiscal year (ended June 30)
Net sales
2006
2005
2006
¥260,779
¥232,778
$2,263
Operating income
11,854
10,814
103
Net income
10,725
7,163
93
Free cash flow
15,709
11,176
136
¥167,534
¥150,048
$1,454
Shareholders’ equity
72,741
52,128
631
Interest-bearing debt
46,148
48,208
400
At year-end
Total assets
Per share data
(*1)
Basic earnings
Diluted earnings
Cash dividends
Yen
¥474.93
¥ 336.74
$ 4.12
421.98
288.29
3.66
3,055.29
2,398.50
26.51
50.00
40.00
0.43
Key ratios
%
Operating income to net sales
4.5
4.6
Net income to net sales
4.1
3.1
ROE
17.2
15.3
ROA
7.5
7.8
43.4
34.7
Equity ratio
Number of stores
2
U.S. dollars
( 2)
126 *
107
Net sales
Operating income
Net income
Free cash flow
(Millions of yen)
(Millions of yen)
(Millions of yen)
(Millions of yen)
300,000
11,854
12,000
260,779
232,778
250,000
10,611 10,814
10,000
15,709
16,000
12,000
10,725
14,000
10,000
9,166
12,000
192,840
200,000
8,000
158,619
150,000
8,000
6,917
6,000
6,000
4,000
4,000
115,429
100,000
6,846 7,163
11,176
9,969
10,000
5,642
7,954
8,000
4,027
6,000
5,817
4,000
50,000
2,000
2,000
0
0
0
02
03
04
05
06
02
03
04
05
2,000
0
02
06
03
04
05
Net income
per share (basic) (*1)
per share (*1)
Cash dividends
per share (*1)
(Yen)
(Yen)
(Yen)
600
3,500
557.02
474.93
400
401.20
3,000
2,629.60
05
150
120
107
2,398.50
2,003.60
06
( 2)
126 *
40
40
2,000
04
3,055.29
2,500
348.83 336.74
03
Number of stores
50
50
3,178.94
02
06
30
30
93
90
70
1,500
60
20
15
200
1,000
53
15
30
10
500
0
0
02
03
04
05
06
0
0
02
03
04
05
06
02
03
04
05
06
02
03
04
05
06
(*1) The per share data has not been restated to reflect the retroactive effects of stock splits in August 2003 and July 2006.
(*2) This includes the four stores in Hawaii, U.S.A., which were acquired during the fiscal year ended June 30, 2006.
3
Dear Fellow Shareholders and Investors
Chairman and CEO
President and COO
Takao Yasuda
Junji Narusawa
Increases of both in sales and
profit for 16 consecutive years
During the fiscal year ended June 30, 2006, the Japanese economy began to recover, with both
domestic and overseas demand posting steady gains. Firm corporate business results led to
increases in both employee numbers and wages. Despite positive factors such as an extremely hot
summer and a severe winter, which encouraged consumption, the business environment of the
retail industry remained challenging overall as unfavorable weather continued, marked by low
temperatures and heavy rain from spring onwards.
Given this situation, to accurately meet increasingly diversified customer needs and help
customers discover the pleasure of shopping, the Don Quijote Group worked during the year under
review to ensure continued sales of its best-selling products and further strengthen its ability to
evaluate and adjust to demand for other products.
We also moved flexibly and efficiently to open stores in order to let more and more customers
experience the amusement and services offered only by Don Quijote and have excitement and
emotion with the shopping experience. In addition, we undertake actions to strengthen and expand
our internal structures to support our business concept.
We opened eight stores in the Kanto region, two in the Tohoku region, three in the Chubu
region and three in the Kansai region. Of these, the openings in Miyagi, Nagano and Wakayama
prefectures were our first stores in those prefectures. We also closed one store. As a result, the
total number of stores in our network increased from 107 at the end of the previous fiscal year to
126 at the end of this fiscal year. This figure consists of 122 stores in 25 prefectures across
Japan and four stores in Hawaii.
4
As a result of these initiatives, consolidated business results during the term under review
posted increases both in sales and profits. Net sales increased by 12.0% to ¥260.8 billion year on
year, recurring income increased by 12.1% to ¥14.4 billion, and net income surged by 49.7% to
¥10.7 billion. We achieved the highest sales and profits for 10 consecutive years on a consolidated
basis since June 1996. On a non-consolidated basis, it was the highest for the 16 consecutive
years since opening its first store in March 1989.
Undertaking far-reaching measures to reinforce the Company's
financial structure and marketing
In September 2005, we launched a new management structure in which the founder and President
Takao Yasuda became Chairman and Chief Executive Officer (CEO), and Junji Narusawa, who had
led the Company at the frontline of sales since the first store, became President and Chief
Operating Officer (COO). The fiscal year ended June 30, 2006 was the first year under the new
management system.
We continued to aggressively expand our store network. It also undertook a wide range of
measures to boost sales at comparable stores, including active renewal of the stores. First of all, in
order to adapt to the commercial environment in each region, we introduced an organizational
structure that would rapidly complete appropriate countermeasures in each area. At the same time,
we sought to maintain extremely low prices for products
“In 2006, we are undertaking many
further strategic activities that are
fundamental to future profitability.”
whose appeal is primarily based on price while boosting
sales of product solutions and niche products, which feature high product prices and outstanding profitability. In
addition, we integrated the former dual sales-headquarter
structure in February 2005. The results were concrete:
buying power, know-how of administrative methods and operating efficiency all improved. The
growth rate of comparable stores exceeded the forecast at the beginning of the fiscal year, posting
year-on-year growth of 2.9%.
Side by side with the aggressive measures carried out in our main business, in 2006 we
are further undertaking many strategic activities that are fundamental to future profitability.
Chief among these were the acquisition of four stores in Hawaii through the acquisition of the
stock of a subsidiary of The Daiei, Inc., a takeover bid (TOB) for the stock of ORIGIN TOSHU Co.,
Ltd. and the response to the takeover bid offered later by AEON Co., Ltd., and our launch of the
development of next-generation convenience stores.
Besides taking steps to optimize our internal and financial structures, aside from making
the transition to the new management system, we carried out other far-reaching measures.
Among these were steps to enhance the liquidity of fixed assets (the store real estate of four
stores) to achieve better asset efficiency, the conclusion of a chattel evaluation business
contract (inventories, etc. and merchandise), the conclusion of a commitment line agreement to
ensure efficient procurement of capital, and the issuance of Zero Coupon Convertible Bonds
due in 2013 (July 2006).
5
Stepping up development of next-generation convenience stores and
launching full-scale sales at four stores in Hawaii
The fiscal year ending June 30, 2007 will be the final year of our “7532 Plan,” a three-year medium-term management plan that was launched in the fiscal year ended June 30, 2005. In order to set the stage for achieving
the goals of this medium-term management plan, the Company plans to undertake even more far-reaching
measures in the coming year.
Regarding marketing measures, we are examining once again the fair price of regularly stocked products,
which account for about 70% of all products, and reviewing product mixes to boost the ratio of categories with
high gross margins. We also intend to expand introductions of spot products, eliminate waste in store operations and enhance productivity.
In the area of new business, we are launching the full-scale development of a new store format, following
“We are launching the full-scale development
of a new store format, following Don Quijote,
Picasso and PAW.”
Don Quijote, Picasso and PAW. In June
2006, we concluded an alliance with DELI
SYSTEM PLANNING Co., LTD. (DSP), a
consulting company specializing in “home
meal replacements,” such as delicatessen
dishes and take-out box lunches. In August, we opened our “Power–CVS Johnetsu–Kuhkan,” in Shibuya-ku in
central Tokyo. This next-generation model convenience store combines the experience and results we have
accumulated in goods sales with DSP's deli business know-how, which is expressed in our handmade delicatessen dishes and piping hot box lunches. In the future, we intend to firmly establish this new store format by
opening more stores and verifying the concept by monitoring their performance.
In the same vein, the four stores in Hawaii, U.S.A., which mark the first overseas market entry by the Don
Quijote Group, will undergo renewal during the fiscal year ending June 30, 2007 and start full-scale sales under
the name of Don Quijote. This step, which brings future global development into our field of view, marks the
beginning of business efforts in Hawaii and lays the foundation for other store operations overseas.
We recognize that returning profits to the shareholders is one of our top priorities. As part of this program,
we have increased the full year dividend, which was raised from ¥15 to ¥30 two fiscal years ago and to ¥40 in
the previous fiscal year, to ¥50 per share in the year under review. In addition, we carried out a three-for-one
stock split as of July 1, 2006. By reducing the amount of investment required per unit, we put in place an
environment that enhances the liquidity of our stocks and facilitates making investments.
In the future as in the past, the Don Quijote Group will aim at further strengthening and expanding its marketing competence and management structure, based on its motto “Expanding Corporate Value” and in keeping
with its principle of “The Customer Comes First.” We look forward to receiving the support of shareholders and
investors as we grow into the future.
6
Chairman and CEO
President and COO
Takao Yasuda
Junji Narusawa
The core of our essence
Through original business strategies,
we continue to evolve the most competitive business model in the retail industry,
one with both outstanding growth potential and profitability.
Since its establishment, the Group has continued to develop
business activities under the corporate principle of “The
Customer Comes First.” The Group is also promoting active
management strategies that balance growth and profitability.
We are developing merchandise and store strategies to
maximize the business concept “CV+D+A” that confers on the
Group a special and unique identity. At the same time, the
Group is providing customers with higher satisfaction as it
aims to establish itself as the most competitive business in
the retail industry.
7
Management Strategies
Reforming the retail business throu
Since its foundation, Don Quijote has followed the principle “The Customer Comes First.”
In fact, the success of the Company today is the result of having listened carefully to the
needs expressed by customers, learning from these needs and meeting them one by one.
In addition, the Company follows its CV+D+A concept of “greater convenience” (CV:
convenience), “greater discounts” (D: discount), and “greater amusement” (A: amusement). Our hallmarks are late-night sales, which overturn the conventional wisdom of the
retail industry, a broad assortment of inexpensive goods that no one but a comprehensive
discount store can offer and our “compression displays,” which let customers enjoy
something like a jungle treasure hunt by placing a large amount of goods within the customer’s sight. All of these concepts are the result of sensing customer needs through trial
and error in line with the “The Customer Comes First.” ethos. Through these, we have
achieved sustained growth by establishing unprecedented new business formats, led by
our Don Quijote store format.
We transfer a great deal of authority to the staff in the workplace in order to sense and
meet the fast-changing needs of customers in real time, and to respond quickly to customer opinions—this is something that only on-site staff members can do. Doing so
improves their motivation, and encourages them to apply independent thinking and initiative as a driving force behind their actions. Improving the capabilities of the on-site staff
enhances the attraction power of the store itself. This, in turn, produces a virtuous circle,
in which improvements in store appeal increase customer satisfaction and the customers’
high regard for the staff further motivates our personnel.
Of course, the Company’s social responsibilities increase in step with its corporate
scale. In fact, we grow in step with all of our stakeholders, including customers, partner companies, local communities, shareholders and employees. We are working
steadily, day after day, to fulfill our social responsibilities through our business activities. This is our social mission.
Our medium-term management plan, the
“7532 Plan”
In 2005, we formulated our medium-term management plan, the “7532 Plan.” At present, we are
promoting a variety of activities to achieve the goals set out in this plan.
The “7532 Plan”: fiscal year ended June 30, 2005–fiscal year ending June 30, 2007
7=recurring income margin over 7%
5=EPS (net income per share) over ¥500
3=net sales over ¥300 billion
2=double-digit growth, target is 20%
With the similar-sounding “753 Plan,” which set the stage for growth in the fiscal year ended June
30, 2001, we aimed at net sales of ¥70 billion, a recurring income of ¥5 billion and a 30-store
structure. While the number “7532” is connected with this, it is also the securities code of the
Company's listing on the TSE.
8
gh new business formats
Reforming the internal structure for further
growth
After the full-scale expansion of our store network, we are endeavoring to strengthen the internal
structure in response to further growth. Before that time, as the company did not have any serious
rivals, due to its unique business format, the two sales headquarter structure helped to drive rapid
growth through friendly rivalry. However, in February 2005, by consolidating these into one unit with
the aim of expanding scale merit, we gained a number of benefits, including enhanced buying power,
a merchandise strategy that reflects local characteristics and cost reductions in back office sections.
Implementing the liquidity of store real
estate
We are undertaking measures to assure the liquidity of store real estate in order to boost the
efficiency of our assets and strengthen our financial structure.
We have already implemented the liquidity of our store real estate in three cases. In the fiscal
year ended June 30, 2006, we accomplished the securitization of four stores: the PAW
Empowering store staff, not just managers, with
product selection and display responsibilities, maximizing the attraction of stores.
Nishinomiya store, the PAW Ishikiri store, the PAW Kashiwa store and the Don Quijote Atsugi
store. The measures were promoted on the initiative of the Group, which is the originator (the
property owner) with the objectives of optimizing costs through securitization, selecting schemes
with better conditions and formulating standards for possible future operations. This was a joint
arrangement between D-ONE Co., Ltd. (a wholly owned Company subsidiary) and STAR MICA
Co., Ltd.
We have enabled more flexible and efficient financing for future store development and
making investments by diversifying the ways that we procure funds.
Leveraging our exclusive know-how in the
chattel evaluation business
Since opening the first Don Quijote store in 1989, we have built up a great deal of know-how in
developing stores and procuring products. Our greatest strength lies in applying this know-how in
our main business of operating stores; however, in recent years we have increasingly turned to
developing new business formats.
One example is our alliance contract in April 2006 with Resona Bank, Limited. This is a tie-up
to evaluate third-party merchandise inventories involved in chattel mortgage financing. In this
scheme, a financial institution provides financing using collateral consisting of the movable property of a corporation, such as its merchandise inventory. In this business alliance, we will
undertake to estimate circulation prices and purchase prices by taking advantage of the
know-how and product data that we have accumulated in 2.5 million cases regarding the stocking
of spot products. This tie-up business is based on the Company’s business model of maximizing
utilization of its management resources.
At the same time, this new business will enable financial institutions, through increased business transactions, to bring greater vitality to small- and medium-sized businesses, which is likely
to result in significant real and intangible benefits to society.
9
Merchandise Strategies
A distinctive and proven concept
A richer variety of products at further
discounted prices
We offer a rich variety and a vast abundance of goods, ranging from leading overseas brands of
handbags, watches and the latest digital home appliances to others, as well as daily necessities
such as tissue and detergent, food products and pet food. Moreover, customers can experience the
joy of spotting lucky finds while walking amidst the host of miscellaneous goods and party goods
that we stock within stores. Still, the greatest appeal of Don Quijote is the huge variety of products
available at reasonable prices.
Customers say: “When I go to Don Quijote, I end up buying a whole bunch of things.” This
is the kind of reputation that we have won among customers. The reason is the consistently
fresh, new selection that they encounter, which is so original with Don Quijote. We give customers the emotional experience and excitement of encountering unexpected products. This we
achieve by always delivering “Something New,” a fresh surprise, every time they visit the store.
The secret is our product mix, of which 30% consists of number- and time-limited spot goods.
We also have always responded sensitively and faster than others, to stock the products that
customers want at that moment. Recently, we set up our “Kosupure-kan” which offers one of the
largest domestic collections of game and animation character costume products.
In every case, we make all-out efforts to retain customer confidence in the area of stocking
and price setting and in the service area where we have introduced the “Donki Low Price
Guarantee” system. Under this system, we guarantee to reimburse the customer for the price
difference if the customer finds a target product purchased in one of our stores at another store at
a lower price, even if the difference is only one yen. This clear stance leads to customer confidence in our moderate pricing.
Friendly, handwritten price tags draw attention to key
product features along with our extremely low prices.
We are working everyday to embody our stores’
catchphrase, “Palace of Extreme Low Price.”
10
for excitement and emotion
Combining customer attraction with
strengthened profitability
The main factors behind our customer attraction are the regularly stocked national-brand products
at thoroughly appealing prices—we take pride in our catchphrase: “Palace of Extreme Low
Prices.” These regularly stocked national-brand products enhance our competitive strengths by
fully leveraging our advantages of scale, thanks to the increase in the number of stores and the
integration of the sales headquarters.
In contrast, what drive our profitability are spot products with high unit prices and spot products with high gross margins. These spot products are indispensable in giving customers the
pleasure of discovering rare, unusual products. We carefully meet the needs of customers by giving merchandising authority to staff members with youth sensibilities.
The combination of these regularly stocked national brand products and spot products
allows the Company to provide product assortments that please customers and feature outstanding profitability.
11
Store Strategies
Efficient store openings, area domi
Enriching our store network by expanding
into new regions with area saturation
We regard area saturation as the basic strategy behind our store-opening policy because it offers
numerous advantages including distribution efficiency and enhanced awareness in heavily populated urban areas. In the Tokyo metropolitan area, we have already opened stores in the vicinity of
terminus railway stations such as Shinjuku, Shibuya, Ikebukuro and Ueno, and we are augmenting
our store network in Yokohama area.
On the other hand, we want more local customers to experience the fun offered by Don
Quijote, so we are stepping up the pace of store-openings in other areas. In the fiscal year ended
June 30, 2006, we broadened our store network to embrace 25 prefectures, as a result of opening
our first stores in Miyagi, Nagano and Wakayama prefectures.
To carry out a speedy expansion of the store network, it is crucial to both obtain better site
information and respond faster than others. We have accomplished this by matching three
different store formats—Don Quijote, PAW and Picasso—to the characteristics of sites and
commercial areas. Starting in the year under review, we launched a convenience-store prototype
for a new format, “Power–CVS Johnetsu–Kuhkan,” thereby further enhancing the flexibility of
our store development operations.
Just as important as opening new stores, is the strategy for boosting the competitiveness of
comparable stores. Now that 17 years have passed since the opening of our first store, we focus
on renewals of existing stores with promising sales growth potential. As part of this program, we
re-opened our Fuchu store, which was Don Quijote's first store, in June 2006, featuring great
expansions in terms of size and contents.
Actualizing further growth by developing
new business formats
The Company has regularly achieved growth by breaking down existing concepts and creating new
business formats based on the Don Quijote concept. From 2006, we have been moving ahead with
the development of additional business formats.
We are engaged in the development of a next-generation convenience store “Power–CVS
Johnetsu–Kuhkan,” which integrates sales of goods with a delicatessen kitchen. In June 2006, we
signed a business alliance with DELI SYSTEM PLANNING Co., LTD., a consulting company
specializing in deli business. Making use of our partner's know-how, we will supply hot prepared
lunches made in our own store kitchens. At the same time, we will demonstrate our experience and
product procurement capabilities on the goods retailing side by offering a richer product
assortment at better prices—thus drawing a clear distinction between our stores and conventional
convenience stores.
The first “Power–CVS Johnetsu–Kuhkan” store opened and attracted wide attention in
Shibuya-ku in central Tokyo in August 2006. We aim to establish a new business format: an
accessible, considerate and convenient store that customers feel like visiting every day. To
accomplish this goal, we will repeatedly set up and verify hypotheses based on customer
requirements.
12
nance and geographic expansion
First steps overseas
In February 2006, the Company acquired all the stock of THE DAI’EI (USA), INC., which operates
GMS stores in Hawaii. The new acquisition was made a fully owned consolidated subsidiary under
the name “Don Quijote (USA) Co., Ltd.” We then re-launched the operation of four stores on the
Island of Oahu, Hawaii, which marked our first advance overseas. We also began the successive
renewal of these four stores in October 2006. Based on the strengths in the market for oriental
products, this renewal envisions the reinforcement of the stores’ sales appeal, including publicity
of Don Quijote’s concept of adding something extra, strengthening freshness and delicatessen
offerings and drastic reforms of the in-store non-food sales area. In addition, we envision streamlining our head office functions and increasing efficiency as well as restructuring the stores’ management, including reductions of loss rates by strengthening store control levels. Of course, we
are not forgetting our signature amusement features. Our goal is stores that are well loved by
The Kaheka store in Hawaii, which was renovated in
October 2006, has an excellent location about 10
minutes drive from Waikiki.
everyone from the local people to tourists.
Regarding future development, we are looking first to Hawaii. Naturally, our objective is to
steadily accumulate experience in operating stores overseas.
Hokkaido area
Store network
(as of June 30, 2006)
Tohoku area
Kansai area
Kyushu area
Kanto area
Chubu area
Chugoku/Shikoku area
Oahu, Hawaii
13
FINANCIAL SECTION
Five-year Summary (Consolidated data)
Years ended June 30
Millions of
U.S. dollars
Millions of yen
2002
2003
2004
2005
2006
2006
For the fiscal year
¥115,429
¥158,619
¥192,840
¥232,778
¥260,779
$2,263
89,388
122,308
148,543
179,330
200,425
1,739
19,124
27,146
33,686
42,634
48,500
421
Operating income
6,917
9,166
10,611
10,814
11,854
103
Income before income taxes
7,151
10,096
12,368
12,690
17,808
155
Net income
4,027
5,642
6,846
7,163
10,725
93
¥ 72,486
¥ 93,411
¥126,774
¥150,048
¥167,534
$1,454
26,562
32,233
41,738
52,128
72,741
631
Net sales
Cost of goods sold
Selling, general and
administrative expenses
At year-end
Total assets
Per share
Yen
¥ 401.20
¥ 557.02
¥ 348.83
¥ 336.74
¥ 474.93
$ 4.12
Diluted earnings
391.04
513.89
308.68
288.29
421.98
3.66
Cash dividends
15.00
15.00
30.00
40.00
50.00
0.43
Basic earnings
Key ratios
%
ROA
11.3
10.8
9.6
7.8
7.5
ROE
16.6
19.2
18.5
15.3
17.2
*The per share data has not been restated to reflect the retroactive effects of the stock splits in August 2003 and July 2006.
CONTENTS
Five-year Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Management Discussion and Analysis
. . . . . . . . . . . . . 15
Independent Auditors’ Report
. . . . . . . . . . . . . . . . . . . . 19
Consolidated Balance Sheets
. . . . . . . . . . . . . . . . . . . . 20
Consolidated Statements of Income . . . . . . . . . . . . . . . 22
Consolidated Statements of Shareholders’ Equity
Consolidated Statements of Cash Flows
. . . . 23
. . . . . . . . . . . . 24
Notes to Consolidated Financial Statements . . . . . . . . . 25
14
U.S. dollars
Management Discussion and Analysis
Consolidated Business Results
In the fiscal year ended June 30, 2006 (July 1, 2005 to June 30, 2006) Don Quijote Co., Ltd. and its
consolidated subsidiaries achieved increases in revenues and profits for the tenth consecutive year
since adopting consolidated accounting, posting net sales of ¥260.8 billion, operating income of
¥11.9 billion and net income of ¥10.7 billion (year-on-year increases of 12.0%, 9.6% and 49.7%,
respectively). Moreover, the Company achieved higher revenues and profits on a non-consolidated
basis for the 16th consecutive year.
The increase in net sales is attributable to the opening of 16 new stores in the year under review
and the contribution from comparable-store sales that exceeded the forecast at the beginning of the
current fiscal year. In the fiscal year under review, the Company has increased its pursuit, beyond the
previous fiscal year’s level, of initiatives to strengthen its marketing competence and reap steady benefits. Moreover, the integration of the two sales headquarter structure carried out in the previous fiscal
year started to generate full-scale effects, especially with regard to enhanced buying power and
increasing scale merits, and therefore contributed to raise the marketing competence of the Company.
As a result of these initiatives, the actual comparable-store sales continued to increase year on year, up
2.9% in the year under review, compared to the previous fiscal year’s increase of 2.0%. The number of
customers decreased by 0.4%, but spending per customer increased by 3.3% year on year.
The Company newly opened a total of 16 stores; 12 Don Quijote stores, two Picasso stores and
two PAW malls, while one store was closed during the current fiscal year. The total number of stores
as of the current fiscal year-end rose to 122 (or 126, if four stores in Hawaii, U.S.A. operated by the
subsidiary acquired in February 2006 are included), from 107 in the previous fiscal year.
By product category, although sales of products for outdoor activities such as sporting goods
and leisure equipment were impacted by unstable weather, daily commodities maintained steady
growth, moreover watches and fashion merchandise put in a brisk performance, increasing 14.0%
year on year. As a result, the sales of electrical goods increased by 7.4% to ¥51.5 billion over the previous year; daily commodities increased by 12.9% to ¥57.2 billion; foods increased by 9.2% to ¥49.3
billion; watches and fashion merchandise increased by 14.0% to ¥70.9 billion; sporting goods and
Sales by product category
Composition of sales
(%)
260,779
(Millions of yen)
13,567
232,778
9,779
192,840
89,231
7,798
79,270
5,179
Watches and 115,429
fashion merchandise /
4,120
Sporting goods and
37,200
leisure equipment
Daily commodities /
Foods
65,362
52,734
106,450
95,753
80,477
67,235
48,239
Electrical goods
02
03
04
51,531
47,976
39,203
33,471
25,870
05
Electrical
goods
19.8%
7.0%
158,619
Others
Others 5.2%
Sporting goods and
leisure equipment
06
4.3%
Watches and 7.3%
20.6%
fashion
merchandise
05 21.7%
27.2%
26.7%
Daily
commodities
19.4%
21.9%
Foods
18.9%
06
15
leisure equipment increased by 7.2% to ¥18.3 billion, and other services decreased by 7.4% to ¥4.7
billion. The total sales of two overseas subsidiaries, which are consolidated from the current fiscal
year, amounted to ¥2.8 billion
In addition to merchandise sales, rent revenue from tenants increase by 18.9% to ¥5.5 billion
from the previous fiscal year, due to a firm development in 27 PAW shopping malls performance.
The gross profit margin edged up by 0.1 point to 23.1% from the previous fiscal year, in spite of
inventory removals mainly due to unstable weather. Selling, general and administrative expenses
increased by 13.8% to ¥48.5 billion, compared with the previous fiscal year, and the ratio of selling,
general and administrative expenses to sales also showed a slight rise of 0.2 point to 18.6%. As a
result, operating income was ¥11.9 billion, which was 9.6% higher than the previous fiscal year, and
operating income margin marked 4.5%.
Other income and expenses jumped to ¥6.0 billion, with a sizable increase of 317.4% year on
year, although there were increases in interest expenses on bonds, losses on closure of stores and
¥1.2 billion in impairment losses on fixed assets. Major income factors include a ¥0.5 billion amortization of negative goodwill and a ¥4.6 billion gain on sales of shares of ORIGIN TOSHU Co., Ltd.
As a result, income before income taxes and minority interests increased by 40.3% to ¥17.8 billion over the previous fiscal year, and net income increased by 49.7% to ¥10.7 billion.
The fiscal year ending June 30, 2007 is the final fiscal year for the “7532 Plan,” a three-year
medium-term management plan launched in the fiscal year ended June 30, 2005, and therefore the
Company will implement any and all measures to achieve the goals set forth in the Plan. Based on the
assumptions that around 15 new stores will be opened (increasing sales floor space by approximately
20,000 square meters) and a 0.5% increase of comparable-store sales, the Company projects consolidated net sales of ¥300.0 billion (a year-on-year increase of 15.0%), ¥14.7 billion operating income
(24.0% increase) and ¥10.5 billion net income (2.1% decrease).
Gross profit (Millions of yen)
Gross profit margin (%)
22.6
22.9
23.0
23.0
Number of stores
Total sales floor space
23.1
(m2)
25
70,000
200,000
( )
187,803 *
60,000
53,448
150
150,000
50,000
135,770
15
44,297
40,000
30,000
116,516
( )
126 *
36,312
10
26,041
100,000
79,588
56,629
20,000
5
50,000
0
02
03
04
05
0
0
06
* Includes four stores in Hawaii, acquired during the fiscal year ended June 30, 2006.
( )
100
107
93
70
50
53
10,000
16
200
60,354 20
0
02
03
04
05
06
Financial Position
Total assets at the end of the fiscal year under review (June 30, 2006) increased by ¥17.5 billion from
the previous fiscal year to ¥167.5 billion.
Current assets increased by ¥18.5 billion to ¥79.7 billion over the previous fiscal year. This
increase is largely attributable to a ¥12.7 billion increase in cash and time deposits, mainly due to
sales of affiliates’ securities, as well as a ¥5.0 billion increase in inventories accompanied by new
store openings. Property and equipment decreased by ¥4.2 billion to ¥58.8 billion. While assets were
added in connection with new store openings in fiscal 2006 and fiscal 2007, asset liquidation taken
against four stores the Company owned, as a part of measures to reinforce and enrich the Company’s
financial structure, contributed to this reduction. On the other hand, the total of investments and
advances and other assets increased by ¥3.1 billion to ¥26.6 billion, mainly due to a ¥1.3 billion
increase in other investment securities and a ¥1.6 billion increase in fixed leasehold deposits.
Total liabilities as of the end of the fiscal year under review decreased by ¥3.1 billion to ¥94.8 billion, compared with the previous fiscal year end. Current liabilities rose by ¥6.2 billion to ¥46.4 billion,
mainly due to an increase in accounts payable-trade of ¥3.5 billion, caused by an increase in the
purchasing amount of inventories accompanying the expansion of corporate scale. Long-term liabilities, on the other hand, decreased by ¥9.3 billion to ¥48.3 billion. Although ¥1.6 billion of negative
goodwill was posted, there were even larger decreases, such as a decrease of ¥8.9 billion in convertible bonds due to conversion. Other than these liabilities, the Company concluded a commitment line
agreement for ¥10.0 billion with a group of 12 banks, in order to prepare for future capital needs.
Interest-bearing debt as of the end of the fiscal year under review, excluding Zero Coupon
Convertible Bonds, decreased by ¥2.1 billion to ¥46.1 billion, largely attributable to conversion of convertible bonds. The ratio of interest-bearing debt to total assets decreased to 27.5% from 32.1% of the
previous fiscal year along with the debt-to-equity ratio, which fell to 63.4% from 92.5%. Total shareholders’ equity as of June 30, 2006 amounted to ¥72.7 billion, recording a large increase of ¥20.6 billion compared with the previous fiscal year end. The major contributing factors include a ¥9.8 billion
increase in retained earnings due to an increase in net income, increases of ¥4.7 billion in common
stock and additional paid-in capital, respectively, and conversion of convertible bonds and execution of
stock options. The shareholders’ equity ratio sharply improved to 43.4% from the previous year’s
34.7%, and return on equity (ROE) rose as well to 17.2% from 15.3%.
Total shareholders’ equity
Return on equity (%)
Total assets (Millions of yen)
Return on assets (%)
20
200,000
20
100,000
17.2
19.2
167,534
150,048
150,000
11.3
10.8
15
18.5
15.3
16.6
72,741 15
126,774
60,000
9.6
100,000
80,000
(Millions of yen)
93,411
7.8
52,128
10
7.5
10
41,738
72,486
40,000
32,233
26,562
5
5
50,000
20,000
0
0
02
03
04
05
06
0
0
02
03
04
05
06
17
Cash Flows
Net cash generated by operating activities during the fiscal year ended June 30, 2006 amounted to
¥10.4 billion, an increase of ¥2.0 billion compared with the previous fiscal year. Major factors include a
¥5.1 billion increase in income before income taxes, which absorbed an increase in inventories and
income taxes paid.
Net cash of ¥2.1 billion was provided by investing activities, in contrast to the previous fiscal year,
where ¥15.0 billion was used. The main reasons for this reversal were a contribution from the liquidation of store real estate and equipment, and profits from sales of affiliates' securities although there was
capital investment for new store openings.
Net cash provided by financing activities sharply decreased by ¥12.4 billion to ¥0.2 billion from
the previous fiscal year, the reasons being that cash flows from operating activities improved, and that
the Company did not conduct active capital procurement, since cash flows from investing activities
provided sufficient revenue.
As a result of these cash flows, cash and cash equivalent as of the fiscal year end under review
increased by ¥12.7 billion over the previous fiscal year to ¥27.8 billion.
Capital Investment
In the fiscal year ended June 30, 2006, capital investment decreased by ¥4.3 billion over the previous
fiscal year to ¥13.3 billion. On the other hand, free cash flows (net income for the year + depreciation
and amortization + extraordinary gains and losses – cash dividends) improved by ¥4.5 billion to ¥15.7
billion. The Company plans to open around 15 new stores and to spend approximately ¥17.0 billion in
capital investment for the fiscal year ending June 30, 2007 and will endeavor to generate enough free
cash flows to cover this capital investment.
Free cash flow
(Millions of yen)
20,000
Capital expenditure
(Millions of yen)
25,000
22,437
15,709
20,000
15,000
17,573
17,507
11,176
15,000
13,297
9,969
10,000
11,505
7,954
10,000
5,817
5,000
5,000
0
0
02
18
03
04
05
06
02
03
04
05
06
Independent Auditors’ Report
To the Shareholders and the Board of Directors
of Don Quijote Co., Ltd.
We have audited the accompanying consolidated balance sheets of Don Quijote Co.,Ltd. and its subsidiaries as of June 30, 2005 and 2006, and the related consolidated statements of income, shareholders’ equity, and cash flows for each of the two years through the period ended June 30, 2006, all
expressed in yen. These consolidated financial statements are the responsibility of the Company’s
management. Our responsibility is to express an opinion on the consolidated financial statements
based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in Japan. Those
standards require that we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes examining on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our audits provide a reasonable
basis for our opinion.
In our opinion, the consolidated financial statements referred to above, expressed in yen, present fairly, in all material respects, the consolidated financial position of Don Quijote Co.,Ltd. and subsidiaries
at June 30, 2005 and 2006, and the consolidated results of their operations and their cash flows for
each of the two years through the period ended June 30, 2006, in conformity with generally accepted
accounting principles in Japan.
Subsequent Events
(1) As discussed in Note 22 to the consolidated financial statements, the Company conducted a threefor-one stock split of the Company’s common stock.
(2) As discussed in Note 22 to the consolidated financial statements, the Company issued Zero
Coupon Convertible Bonds due 2013.
(3) As discussed in Note 22 to the consolidated financial statements, the Company entered into assets
purchase agreements for tangible assets, leasehold deposits and inventories.
And also, in our opinion, the accompanying consolidated financial statements expressed in yen have
been translated into U.S. dollars on the basis set forth in Note 2.
BA Tokyo & Co
MEMBER OF MAZARS
Certified Public Accountants
Tokyo, Japan
September 28, 2006
STATEMENT ON ACCOUNTING PRINCIPLES AND AUDITING STANDARDS
This statement is to remind users that accounting principles and auditing standards and their application in practice may vary
among nations and therefore could affect, possibly materially, the reported financial position and results of operations. The
accompanying financial statements are prepared based on accounting principles generally accepted in Japan, and the auditing
standards and their application in practice are those generally accepted in Japan. Accordingly, the accompanying financial
statements and the auditors’ report presented above are for users familiar with Japanese accounting principles, auditing standards and their application in practice.
19
Consolidated Balance Sheets
Don Quijote Co., Ltd. and Subsidiaries
As of June 30, 2006 and 2005
Millions of
U.S. dollars (Note 2)
Millions of yen (Note 2)
ASSETS
2006
2005
2006
¥ 27,792
¥ 15,055
$ 241
2,617
2,311
23
Current assets:
Cash and time deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accounts receivable-trade . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less: Allowance for doubtful accounts (Note 3) . . . . . . . . . . . . . . . . . . .
Inventories (Notes 3 and 5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred tax assets (Notes 3 and 15) . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(6)
(4)
(0)
44,400
39,447
385
1,282
1,002
11
1,576
1,169
14
2,081
2,213
18
79,742
61,193
692
Investments and advances:
Investments in and advances to affiliates (Notes 3 and 7) . . . . . . . . . . .
Investment securities (Notes 3 and 7) . . . . . . . . . . . . . . . . . . . . . . . . . . .
Advance payment for fixed leasehold deposits . . . . . . . . . . . . . . . . . . . .
Long-term loans receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
169
190
1
7,125
5,854
62
169
387
1
870
876
8
Less: Allowance for doubtful accounts (Note 3) . . . . . . . . . . . . . . . . . . .
Total investments and advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
8,280
7,302
72
Property and equipment, at cost (Notes 3 and 14):
Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(53)
(5)
(0)
20,367
24,316
176
Buildings and structures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Vehicles and delivery equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
46,338
40,312
402
83
54
1
Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Construction in progress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
13,943
9,479
121
12
1,063
Less: Impairment loss
Less: Accumulated depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net property and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Intangibles (Note 3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(505)
–
0
(4)
(21,471)
(12,245)
(186)
58,767
62,979
510
2,460
2,421
21
14,713
13,121
128
1,429
1,183
12
Other assets:
Fixed leasehold deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred tax assets (Notes 3 and 15) . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other non-current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
248
82
2
1,895
1,767
17
Total other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
18,285
16,153
159
¥167,534
¥150,048
$1,454
The accompanying notes are an integral part of the statements.
20
Millions of
2006
2005
2006
Accounts payable-trade . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Short-term loans payable (Notes 8 and 14) . . . . . . . . . . . . . . . . . . . . . . .
¥ 26,197
¥ 22,671
$ 227
743
125
6
Current maturities of long-term debt (Notes 8 and 14) . . . . . . . . . . . . . .
Accrued income taxes (Note 15) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9,557
9,098
83
2,649
3,295
23
Accrued expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2,764
1,688
24
4,536
3,408
40
Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
46,446
40,285
403
Long-term debt (Notes 8 and 14) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Allowance for retirement benefits for directors (Note 3) . . . . . . . . . . . . .
44,984
55,985
390
186
155
2
Negative goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other non-current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,557
–
14
1,620
1,495
14
Total long-term liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
48,347
57,635
420
94,793
97,920
823
2006 — 23,779,408 shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Additional paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
14,360
9,654
125
15,672
10,968
136
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net unrealized gains on investment securities . . . . . . . . . . . . . . . . . . . . .
42,175
32,346
366
498
675
4
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Long-term liabilities:
Shareholders’ equity (Notes 3, 12 and 19):
Common stock
Authorized:
2005 — 78,000,000 shares
2006 — 78,000,000 shares
Issued and outstanding:
2005 — 22,011,163 shares
Foreign exchange adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total
Minority interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
13
–
0
72,718
53,643
631
166
–
1
Less: Treasury stock, at cost
2005 — 277,464 shares
2006 — 25,650 shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total shareholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
72,741
52,128
631
Total liabilities, minority interests and shareholders’ equity . . . . . . . . . . . .
¥167,534
¥150,048
$1,454
(143)
(1,515)
(1)
21
Consolidated Statements of Income
For the years ended June 30, 2006 and 2005
Net sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cost of goods sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Selling, general and administrative expenses (Note 16) . . . . . . . . . . . . . . .
Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Millions of
2006
2005
2006
¥260,779
200,425
60,354
48,500
11,854
¥232,778
179,330
53,448
42,634
10,814
$2,263
1,739
524
421
103
Other income (expenses):
Interest and dividend income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Stock issuance cost (Note 3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Bond issuance cost (Note 3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gain on sale of affiliates’ securities (Note 20) . . . . . . . . . . . . . . . . . . . . .
Other income, net (Note 13) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Extraordinary item—losses due to fire (Note 20) . . . . . . . . . . . . . . . . . .
Income before income taxes and minority interests . . . . . . . . . . . . . . . . . .
375
(518)
(53)
(13)
4,592
1,571
–
17,808
244
(403)
(19)
(163)
–
2,483
(266)
12,690
3
(4)
(0)
(0)
40
13
–
155
Income taxes (Notes 3 and 15):
Current . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income before minority interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Minority interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
8,677
(1,594)
10,725
–
¥ 10,725
¥
5,742
(188)
7,136
(27)
7,163
76
(14)
93
–
$ 93
¥ 11,854
¥ 10,814
Recurring income:
According to accounting principles and practices generally accepted in Japan, recurring income is shown below:
Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other income (expenses):
Interest and dividend income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Stock issuance cost (Note 3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Bond issuance cost (Note 3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other income, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Recurring income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other and extraordinary income (expenses):
Gain on sale of affiliates’ securities (Note 20) . . . . . . . . . . . . . . . . . . . . .
Other income and expenses, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Extraordinary item—losses due to fire (Note 20) . . . . . . . . . . . . . . . . . .
Income before income taxes and minority interests . . . . . . . . . . . . . . . . . .
375
(518)
(53)
(13)
2,751
14,396
244
(403)
(19)
(163)
2,368
12,841
3
(4)
(0)
(0)
23
125
4,592
(1,180)
–
¥ 17,808
–
115
(266)
¥ 12,690
40
(10)
–
$ 155
Amount per share of common stock:
Basic earnings (Notes 3 and 19) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted earnings (Notes 3 and 19) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash dividends applicable to the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥ 474.93
421.98
50.00
$ 103
Yen
¥ 336.74
288.29
40.00
$ 4.12
3.66
0.43
On July 1, 2006, the Company has effected a three-for-one stock split of common stock to stockholders of record on June 30. Per share amount in the accompanying financial statements
have been not adjusted for the split.
22
Consolidated Statements of Shareholders’ Equity
Millions of
2006
2005
2006
¥9,654
¥7,134
Common stock:
Balance at beginning of the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 84
Issuance of new shares:
Exercise of stock options (Note 12) . . . . . . . . . . . . . . . . . . . . . . . . . .
Conversion of convertible bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . .
312
259
3
4,394
2,261
38
Balance at end of the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
14,360
9,654
125
10,968
8,449
95
312
259
3
Additional paid-in capital:
Issuance of new shares:
Exercise of stock options (Note 12) . . . . . . . . . . . . . . . . . . . . . . . . . .
Conversion of convertible bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4,392
2,260
38
15,672
10,968
136
32,346
25,808
281
10,725
7,163
93
Retained earnings:
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loss on sale of treasury stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(869)
(27)
(625)
–
(8)
(0)
42,175
32,346
366
Net unrealized losses on investment securities:
675
360
6
(177)
315
(2)
498
675
4
Increase (decrease) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign exchange adjustments:
–
–
–
13
–
0
13
–
0
Minority interests:
–
–
–
166
–
1
166
–
1
(13)
(13)
Treasury stock, at cost:
(1,515)
¥(143)
1,372
(1,502)
¥ (1,515)
12
$(1)
23
Consolidated Statements of Cash Flows
2006
2005
Cash flows from operating activities:
Income before income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Depreciation and amortization, including prepaid expense . . . . . . . . . . . . . . . . . . . . . . . .
Impairment loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amortization of negative goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Increase for doubtful accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Provision for retirement benefits for directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest and dividend income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loss on investment by the equity method . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gain from funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign exchange gain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gain from changes in equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gain on sale of investment securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loss on derivatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gain on sale of affiliated companies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gain from surrender of insurance policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loss on fire disaster . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loss on disposal of property and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loss on close of shops . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Offset rent from deposit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Increase in trade receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Increase in inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Increase (decrease) in other current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Increase in trade payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Increase in other current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Increase in other non-current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other-net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash generated from operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Received interest and dividend income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income tax paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net cash provided by operating activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥17,808
4,740
1,194
(452)
51
31
(375)
94
(301)
571
–
(194)
(250)
–
(4,592)
(49)
–
13
195
686
(306)
(3,693)
144
2,213
2,392
214
17
20,151
293
(570)
(9,447)
10,427
¥12,690
4,441
–
–
3
12
(244)
–
(290)
454
(0)
(63)
(229)
42
–
(358)
97
115
66
566
(294)
(4,333)
(1,124)
2,307
275
188
–
14,321
47
(381)
(5,556)
8,431
$155
41
10
(4)
0
0
(3)
1
(3)
5
–
(2)
(2)
–
(40)
(0)
–
0
2
6
(3)
(32)
1
19
21
2
0
174
3
(5)
(82)
90
Cash flows from investing activities:
Payments for purchase of property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from sale of property and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Payments for purchase of intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Collection of loan receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Payments for leasehold deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from termination of leasehold deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Advance payments for fixed leasehold deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Payments for cash surrender value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from cash surrender value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Payments for purchase of investments securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from sales of investments securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Payments for purchase of subsidiaries’ securities(Notes 21) . . . . . . . . . . . . . . . . . . . . . .
Payments for purchase of securities of an affiliated company accounted for by the equity method . . .
Payments for purchase of affiliates’ securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from sales of affiliates’ securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Payments to funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other-net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net cash used in investing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(6,760)
8,942
(440)
–
(4,305)
3,365
–
–
–
(1,422)
750
(5,328)
(14,903)
–
24,374
(440)
99
(1,862)
2,070
(11,685)
8
(1,053)
296
(3,598)
2,118
(1,097)
(271)
623
(1,291)
1,213
–
–
(105)
–
–
–
(108)
(14,950)
(59)
78
(4)
–
(37)
29
–
–
–
(12)
7
(46)
(129)
–
211
(4)
1
(17)
18
Cash flows from financing activities:
Borrowing of short-term bank loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Repayment of short-term bank loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Increase of short-term bank loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from issuance of commercial paper . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Payments for redemption of commercial paper . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Borrowing of long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Repayment of long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from issuance of bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Payments for redemption of bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Repayment of lease liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Issuance of common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Payments for purchase of treasury stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from sales of treasury stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Payments of cash dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net cash provided by financing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Effect of exchange rate changes on cash and cash equivalents . . . . . . . . . . . . . . . . . . . . .
Net increase in cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash and cash equivalents at beginning of the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash and cash equivalents at end of the year (Notes 3 and 21) . . . . . . . . . . . . . . . . . . . . .
–
–
743
–
–
5,000
(6,971)
2,500
(2,456)
(48)
983
(9)
1,354
(869)
227
13
12,737
15,055
¥27,792
15,124
(15,848)
–
30,000
(40,000)
9,000
(6,282)
23,000
(760)
(46)
608
(1,502)
–
(625)
12,669
1
6,151
8,904
¥15,055
–
–
6
–
–
43
(61)
22
(21)
(0)
9
(0)
12
(8)
2
0
110
131
$241
24
Millions of
2006
Notes to Consolidated Financial Statements
Risk information
6. Future capital requirements
Listed below are the main risks that could affect the business of Don Quijote Co., Ltd.
(the “Company”). We make every effort to avoid and mitigate these risks after recognizing a possibility of these risks in the future.
The following risks include the future matters, which are described based on our
judgment and consideration from management point of view as of the date of filing
the financial reports to MOF, September 28, 2006.
The Company has to secure enough finance through the use of the various financial
instruments (including bonds) for its further expansion. To the extent that such
funding is not available to the Company in the future or is only available at very high
cost, the Company's business, financial condition and results of operations are likely to be adversely affected.
7. Quarterly reports
1. Store expansion and human resources
To keep its planned store expansion, the Company must ensure the continuing adequacy of its existing systems, controls and procedures, including distribution facilities, store management, financial controls and information systems. Especially the
adequate labor resources are essential. There is no assurance that the Company will
be able to achieve its planned expansion, that new stores will be effectively integrated
into the Company's existing operations or that such stores will be profitable.
2. Import and distribution
The Company is importing an increasing portion of its merchandise from sources outside Japan. As an importer, the Company's business is subject to the risks generally
associated with doing business abroad, such as foreign governmental regulations, economic disruptions, delays in shipments, increases of freight cost and changes in political or economic conditions in countries in which the Company purchases products.
Two distribution centers in Saitama and Osaka are operated by a third party
contractor on behalf of the Company. Any significant interruption in the operation of
these facilities, failure by the contractor to properly and successfully coordinate the
operations of these facilities or any financial difficulties on the contractor would
have a material adverse effect on the Company's business, financial condition and
results of operations.
3. Merchandising
The Company’s success depends in part upon the ability of its marketing staff, particularly those in their twenties and thirties, who anticipate customer trends and
provide merchandise that appeals to customers. The failure to maintain and improve
the quality of those staff members and to keep managing the Company’s organizational systems could lead to the decline of the Company’s business results.
4. Consumer demand, weather and seasonality
Sales at the Company's stores are subject to consumer demand, weather and seasonal variations. The peak sales periods for the Company are the months of August
and December. Consequently, if the Company fails to realize sufficient sales during
its peak points, this could have a material adverse effect on the Company's business, financial condition and results of operation.
5. Regulatory environment
The Company is subject to Japanese laws and regulations. The Large Scale Retail
Store Location Law became effective from June 2000. The purpose of the law is to
give local governments the power to regulate the development of large stores with a
sales floor space of more than 1,000 square meters and to maintain lively environment in the areas surrounding such stores.
The Company has to take measures to build soundproofing fences around store
parking lots so as to resolve problems regarding car-parking noise. Thus, it is
expected that the cost of building the fences will, somewhat, affect the Company’s
financial performance. If the local communities have special regulations for stores
with a sales floor space of less than 1,000 square meters, in particular, the
Company’s financial performance and expansion plans may be also adversely affected if stores are forced to reduce their operations.
1. NATURE OF OPERATIONS
The Don Quijote Group (the “Group”) is composed of Don Quijote Co., Ltd. (the
“Company”), six consolidated subsidiaries (Paw Creation Co., Ltd., Donki Johokan
Co., Ltd., D-ONE Co., Ltd., Donkicom Co., Ltd., Don Quijote (USA) Co.,Ltd. and
Oriental Seafoods, Inc.) and one associated company by the equity method and five
non-consolidated subsidiaries. The Group has three operations: discount store
operations, leasing space management business and other businesses.
Don Quijote Co., Ltd., Don Quijote (USA) Co., Ltd. and Oriental Seafoods, Inc.
engage in discount store operations and whole sales operations. There are 122
discount retail stores in Japan and 4stores in Hawaii, U.S.A., principally selling
electrical goods, household goods, food products, cosmetics, toiletries, sports
goods and etc.
Paw Creation Co., Ltd. rents part of floor space in Don Quijote stores to tenants
for leasing space management business.
Donki Johokan Co., Ltd. operates as an agent who sells cellular phones and
call plans.
As it has not been regulated by law or regulation in Japan that quarterly reports
must be filed, it is not appropriate that quarterly reports are equally compared to
semi-annual financial results and annual financial results.
8. Outsourcing of bookkeeping of accounts payable
The Company entrusts daily procedures in relation to the Company’s accounting
payables to a third party contractor. Any significant interruption in the procedures,
failure by the contractor to properly coordinate the procedures successfully or any
financial difficulties on the contractor would have a material adverse effect on the
Company's accounting and payment process.
9. Security of client data
The Company handles client data with precise care. Any data leak would have a
material adverse effect on the Company’s business, financial condition and results
of operations that could lead to legal matters.
10. Impairment of fixed assets
The Group has promptly adopted the new accounting standard for impairment of
fixed assets (“ Opinion Concerning Establishment of Accounting Standard for
Impairment of Fixed Assets” issued by the Business Accounting Deliberation
Council on August 9, 2002) and the implementation guidance for the accounting
standard for impairment of fixed assets (the Financial Accounting Standards
Implementation Guidance No.6 issued by the Accounting Standards Board of Japan
on October 31, 2003) since the year ended June 30, 2004. Impairment loss of fixed
assets as of June 30, 2006 is amounted for ¥1,194 million ($10 million).
The Group tests fixed assets for impairment by comparing the fair value of each
unit, using discounted cash flows to the caring value to determine if there is an indication that potential impairment may exist. Potential impairment would have material adverse effect on the company’s business, financial condition and results of operations.
11. Legal Proceedings
On March 9, 2005, the Company received an advisory report about the
Antimonopoly Act from the Fair Trade Commission of Japan (JFTC) regarding
partial charge of sales promotion expenses on its suppliers and enforcing them
labor service at the times of inventory count and reengagement. The Company,
however, notified JFTC of denial of the report, and therefore the case has been
pending.
The Company has requested proper fact investigation and application of the Act
as the case proceeds.
12. Price drop of subsidiary and affiliated company shares
Share of subsidiary are valued at cost. To the extent that the operation of subsidiary become loss continually, by applying the Financial Accounting Standards
Impairment Guidance No.6, the potential impairment would have material
adverse effect on the Company’s business, financial condition and results of
operations.
D-ONE Co., Ltd. was established to operate real estate business and develop the
Group stores in September 2004.
Donkicom Co., Ltd. was established to offer mobile, web, finance, and marketing business in January 2005.
2. BASIS OF PRESENTING CONSOLIDATED
FINANCIAL STATEMENTS
The consolidated financial statements are prepared in accordance with accounting
principles and practices generally accepted in Japan under the requirements of the
Japanese Corporate Law and other applicable rules and regulations for domestic
purpose and are filed with the local finance bureau of the Ministry of Finance
(MOF) as required by the Securities and Exchange Law and its related laws, rules
and regulations. In preparing these financial statements, certain reclassifications
and rearrangements have been made to the original financial statements issued
domestically in Japan, for the conveniences of readers outside Japan. The consolidated financial statements are not intended to present the financial positions, results
25
of operations and cash flows in accordance with accounting principles and practices
generally accepted in countries and jurisdictions other than Japan.
The Don Quijote (USA) Co., Ltd. and Oriental Seafoods, Inc. are prepared in
accordance with accounting principles and generally accepted in U.S.A
In addition, the accompanying notes include information, which is not required
under generally accepted accounting principles and practices in Japan, but is presented herein as additional information.
All yen figures are rounded off to the nearest million yen. The U.S. dollar amounts
presented in the accompanying financial statements are converted solely for convenience at the rate of ¥115.24 to U.S. $1.00, which was the approximate exchange rate
prevailing on June 30, 2006. The convenient translations should not be construed as
representations that the Japanese yen amounts have been, could have been, or could
in the future be, converted into U.S. dollars at this or any other rate of exchange.
Certain reclassifications have been made in the 2005 financial statements to
conform to the presentation for 2006.
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Consolidation
In the accompanying consolidated financial statements, the Company accounts for
its subsidiaries on a consolidated basis. As of June 30, 2006, the Parent has eleven
subsidiaries including six consolidated subsidiaries as set out in the following table.
Group interest
of capital
PAW Creation Co., Ltd.
100%
Donki Johokan Co., Ltd.
51%
D-ONE Co., Ltd.
100%
Donkicom Co., Ltd. (*1)
Don Quijote (USA) Co., Ltd.
Oriental Seafoods, Inc.(*2)
20%
(*2)
100%
100%
Activity
Operation of multiple tenant shopping malls
including leasing of real property
Operation of cellular phones sales business
as an agency of Don Quijote.
Operation of development of the Group
companies, and real estate business
Operation of mobile, web, finance, and
marketing businesses
Operation of discount retail shops.
Mainly whole sales to Don Quijote (USA)
Co., Ltd.
(*1) Although the percentage of its voting rights held by the Company is less than 50%, Donkicom Co.,
Ltd. has been consolidated because it is substantially controlled by the Company.
(*2) Don Quijote (USA) Co., Ltd.(Previous name:THE DAI’EI(USA),INC.) and Oriental Seafoods, Inc. was
acquired by stock purchase for 2006.
Investments in affiliates are accounted for by the equity method.
All material intercompany transactions and account balances have been eliminated.
Cash flow equivalents
In preparing the cash flow statements for the years ended June 30, 2006 and 2005,
cash is considered to be “cash and cash equivalents” which include cash on hand,
readily available deposits and highly liquid investments with original maturities not
exceeding three months.
Exchange of foreign currency accounts
All assets and liabilities denominated in foreign currencies are translated at the foreign
exchange rates prevailing at the respective balance sheet dates. Foreign exchange gains
or losses are credited or charged to current income when incurred.
All assets and liabilities of foreign consolidated subsidiaries are translated at the
foreign exchange rates prevailing at the respective balance sheet date.
Foreign currency translation adjustments of foreign consolidated subsidiaries are
presented as a separate component of “Shareholders’ equity”.
Use of estimates
The preparation of financial statements requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the dates of the financial statements
and revenues and expenses during the reporting periods. Actual results could differ
from those estimates.
Marketable securities and investment securities
Securities available-for-sale are carried at fair value with corresponding unrealized
gains (losses) recorded directly in a separate component of stockholders’ equity.
Realized gains and losses, which are determined by the moving-average cost
method, are reflected in the statements of income when realized. Securities available-for-sale for which fair value is not readily determinable are carried at moving
average cost or amortized cost determined by the moving average method.
Investment in affiliates, in which the Group has a 20%-50% interest or otherwise exercises significant influence are carried at cost, adjusted for the Company’s
proportionate share of their undistributed earnings or losses.
Inventories
The Company and foreign subsidiary adopt the principle that inventories are valued
at cost determined by the retail method.
26
Impairment loss on inventories of ¥427 million ($4 million) and ¥895 million as
of June 30, 2006 and 2005 were recorded in “Cost of goods sold” respectively.
Property and equipment
Property and equipment are carried at cost. Significant renewals and additions are capitalized: maintenance repairs, minor renewals and improvements, are charged to
income as incurred, interest costs relating to construction of property and equipment
are not capitalized.
For the Company and domestic subsidiaries, depreciation of property and equipment is computed principally by the declining balance method except the buildings,
which is depreciated on the straight-line method. These are according to the rules
based on the Japanese Corporation Tax Law. Property and equipment by lease contracts is computed by the straight-line method.
For the foreign subsidiary, the depreciation of property and equipment is computed
by the straight-line method.
The useful lives of property and equipment for computing depreciation, which are
identical with the useful lives stipulated under the Japanese Corporate Tax regulations,
are as shown below:
Years
Buildings and structures . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Equipment and vehicles . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3 to 45
2 to 20
In general, when assets are sold or otherwise disposed of, the profits or losses
thereon, computed on the basis of the difference between depreciated costs and
proceeds, are credited or charged to income in the year of sale or disposal, and
costs and accumulated depreciation are removed from the accounts.
Long-lived assets are reviewed for impairment and written down to fair value
whenever events or changes in circumstances indicate that the carrying amount of
an asset may not be recoverable and an impairment loss must be recognized. If the
sum of the expected future cash flows is less than the carrying amount of the
assets, an impairment loss is recognized.
Intangible assets
In accordance with the provisional rule of the JICPA’s Accounting Committee Report
No.12 “Practical Guidance for Accounting for Research and Development Costs,
etc.” (the “Report”), the Company accounts for software which was included in
intangible assets in the same manner in 2006 as in 2005 and depreciated it using
the straight-line method over the estimated useful lives (five years).
Identifiable intangibles are reviewed for impairment and written down to fair
value whenever events or changes in circumstances indicate that the carrying
amount of an asset may not be recoverable and an impairment loss must be recognized. If the sum of the expected future cash flows is less than the carrying amount
of the assets, an impairment loss is recognized.
Negative goodwill is amortized using the straight-line method over their estimated useful lives.
Impairment of fixed assets
The Group adopted early the new accounting standard for impairment of fixed
assets (“Opinion Concerning Establishment of Accounting Standard for Impairment
of Fixed Assets” issued by the Business Accounting Deliberation Council on August
9, 2002) and the implementation guidance for the accounting standard for impairment of fixed assets (the Financial Accounting Standards Implementation Guidance
No.6 issued by the Accounting Standards Board of Japan on October 31, 2003).
This standard also applies to non-capitalized finance leases.
Leased transactions
Non-cancelable lease transactions that transfer substantially all risks and rewards
associated with the ownership of assets are accounted for as finance leases. All
other lease transactions are accounted for as operating leases and relating payments are charged to income.
Common stock issuance costs
Common stock issuance costs are directly charged to income as incurred. The
Japanese Corporate Law prohibits charging such stock issuance costs to capital
accounts.
Bond issuance costs
Bond issuance costs are directly charged to income as incurred.
Allowance for doubtful accounts
The allowance for doubtful receivables is provided in amounts sufficient to cover possible losses on collection. The allowances for doubtful accounts has been provided for
at the aggregate amount of estimated credit loss based on the individual financial
approach for doubtful or troubled receivables and a general reserve for other receivables calculated based on the historical loss experience for a certain time period.
Allowance for sales discount
Allowance for sales discount is calculated based on the aggregated amount of the historical sales discount incentive on sales.
Allowance for retirement benefits for directors
The Company adopted a retirement benefit plan for directors and statutory auditors.
Directors and statutory auditors are entitled to be paid a lump-sum retirement benefit determined on the basis of the Company rules.
Revenues recognition
The Company, Don Quijote (USA) Co., Ltd. and Oriental Seafoods, Inc. recognize
revenue as “Net sales” at the time sales are made to customers. Paw Creation Co.,
Ltd. recognized revenue as rental fees from tenant, as it becomes receivable according to the provision of lease agreement. These fees are determined on the basis of
the sale of each tenant.
Income taxes
Income taxes are determined by using the liability method, where deferred tax
assets and liabilities are recognized for temporary differences between tax basis of
assets and liabilities and their reported amounts in the financial statements.
Derivatives financial instruments
The Group uses derivative finance instruments for the purpose of hedging against the
risk of fluctuation in interests on loan payable. The carrying amounts of interest swap
agreements are stated at market value at balance sheet date.
Dividends
Dividends are declared by the Board of Directors and approved by the shareholders
at meetings held subsequent to the fiscal year to which the dividends are applicable,
and shareholders of record as at the end of such fiscal year are entitled to the subsequently declared dividends. Dividends charged to retained earnings represent dividends approved by the shareholders and paid during the respective years. Semiannual interim dividends may also be paid upon resolution of the Board of Directors,
subject to certain limitations imposed by the Japanese Corporate Law.
Bonuses to directors and statutory auditors
Bonuses to directors and statutory auditors, which are subject to shareholders’
approval at the annual shareholders’ meeting under the Japanese Corporate Law,
are charged to income as incurred.
The Company applies its method of accounting for bonuses to directors and
statutory auditors to charge them to income as incurred (Practical Issues Task
Force No.13, “Accounting Treatment for Bonuses to Directors and Corporate
Auditors,” issued by the Accounting Standards Board of Japan on March 9, 2004).
5. INVENTORIES
Inventories at June 30, 2006, and 2005 are as follows:
Millions of yen
(Note 2)
2006
2005
Electrical goods . . . . . . . . . . . . . . . . . . .
Daily commodities . . . . . . . . . . . . . . . .
Foods . . . . . . . . . . . . . . . . . . . . . . . . . .
Watches, fashion goods . . . . . . . . . . . .
Sports, leisure goods . . . . . . . . . . . . . .
Others . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . .
Changes in the number of shares issued and outstanding during the years ended
June 30, 2006 and 2005 are as follows:
Common stock outstanding:
Balance at beginning of the year . . . . . . . . . . . . .
Conversion of convertible bonds . . . . . . . . . . . . .
Exercise of stock options . . . . . . . . . . . . . . . . . . .
Balance at end of the year . . . . . . . . . . . . . . . . . . .
2006
22,011,163
1,655,445
112,800
23,779,408
¥ 9,570
5,979
1,778
19,360
2,261
499
¥39,447
$ 91
57
18
182
21
16
$385
6. LEASE TRANSACTIONS
(1) Lease transactions derived from Special Purpose Company (SPC)
(a) Assumed acquisition cost:
Millions of yen
(Note 2)
2006
2005
Land . . . . . . . . . . . . . . . . . . . . . . . . . .
Buildings . . . . . . . . . . . . . . . . . . . . . . . .
Structures . . . . . . . . . . . . . . . . . . . . . . .
¥11,567
7,024
132
¥8,279
2,736
62
Millions of
U.S. dollars
(Note 2)
2006
$100
61
1
(b) Lease payments:
Millions of yen
(Note 2)
2006
2005
Lease payments . . . . . . . . . . . . . . . . . .
¥2,238
Millions of
U.S. dollars
(Note 2)
2006
¥1,434
$19
(c) Maximum guarantees for SPC; ¥2,005 million ($17 million)
(2) Operating lease
Future minimum lease payments subsequent to on June 30, 2006 and 2005 for
operating leases were summarized as follows:
Accounting for consumption taxes
The Japanese consumption taxes withheld and consumption taxes paid are not
included in the accompanying consolidated statements of income.
¥10,470
6,560
2,101
20,992
2,429
1,848
¥44,400
Millions of
U.S. dollars
(Note 2)
2006
Millions of yen
(Note 2)
2006
2005
Due within one year . . . . . . . . . . . . . . .
Due after one year . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . .
¥ 2,312
13,508
¥15,820
¥ 642
4,605
¥5,247
Millions of
U.S. dollars
(Note 2)
2006
$ 20
117
$137
2005
20,833,929
1,070,834
106,400
22,011,163
7. MARKETABLE SECURITIES AND INVESTMENT SECURITIES
The Group invests in equity securities and classifies its investments in equity securities as available-for-sale.
Investments securities consist of equity securities, debt securities and others.
Changes in the number of treasury stocks during the years ended June 30, 2006
and 2005 are as follows:
(1) Information regarding available-for-sale securities and investment
securities as of June 30, 2006 and 2005 are as follows:
Treasury stock outstanding:
The following table sets forth acquisition cost, fair market value and unrealized
gains (losses) as of June 30, 2006.
Balance at beginning of the year . . . . . . . . . . . . . .
Increase by the purchase
of treasury stock . . . . . . . . . . . . . . . . . . . . . . . .
Exercise of stock options . . . . . . . . . . . . . . . . . . .
Balance at end of the year . . . . . . . . . . . . . . . . . . .
2006
2005
277,464
2,307
986
252,800
25,650
275,157
–
277,464
Per share data
Basic net income per common share is calculated by dividing net income by the
weighted-average number of shares outstanding during the reported period excepted for Note of Statements of Income. The calculation of diluted net income per common share is similar to the calculation of basic net income per share, except that the
weighted-average number of shares outstanding includes the additional dilution
from potential common stock equivalents such as convertible bonds and dilutive
equity securities.
4. SUPPLEMENTAL INFORMATION
2006
Net unrealized
Acquisition cost Fair market value gains (losses)
Fair market value exceeds acquisition cost:
Equity securities . . . . . . . . . . . . . . . . . . ¥ 66
Debt securities . . . . . . . . . . . . . . . . . . .
–
Others . . . . . . . . . . . . . . . . . . . . . . . . . .
1,601
Subtotal . . . . . . . . . . . . . . . . . . . . . . . . .
1,667
Fair market value does not exceed acquisition cost:
Equity securities . . . . . . . . . . . . . . . . . .
2
Debt securities:
Corporate bonds . . . . . . . . . . . . . . . .
1,007
Others . . . . . . . . . . . . . . . . . . . . . . . . . .
1,339
Subtotal . . . . . . . . . . . . . . . . . . . . . . . .
2,348
Total . . . . . . . . . . . . . . . . . . . . . . . . . . ¥4,015
¥ 546
–
2,058
2,604
¥480
–
457
937
2
(0)
974
1,273
2,249
¥4,853
(33)
(66)
(99)
¥838
Allowance for sales discount
For 2006, the Company changed their method of accounting to reflect the periodic
loss. The effect of change was to decrease ¥45 million of the operating income,
recurring income and income before income taxes and minority interests.
27
gains (losses) in U.S. dollars as of June 30, 2006.
Millions of U.S. dollars (Note 2)
2006
Net unrealized
Debt securities . . . . . . . . . . . . . . . . . . .
Others . . . . . . . . . . . . . . . . . . . . . . . . . .
Subtotal . . . . . . . . . . . . . . . . . . . . . . . . .
$ 1
–
14
15
0
Debt securities:
Corporate bonds . . . . . . . . . . . . . . . .
8
Others . . . . . . . . . . . . . . . . . . . . . . . . . .
12
Subtotal . . . . . . . . . . . . . . . . . . . . . . . .
20
Total . . . . . . . . . . . . . . . . . . . . . . . . . .
$35
$ 5
–
18
23
$ 4
–
4
8
0
(0)
8
11
19
$42
(0)
(1)
(1)
$ 7
gains (losses) in U.S. dollars as of June 30, 2006.
2005
Net unrealized
Debt securities . . . . . . . . . . . . . . . . . . .
Others . . . . . . . . . . . . . . . . . . . . . . . . . .
Subtotal . . . . . . . . . . . . . . . . . . . . . . . . .
¥
49
–
1,644
1,693
2
Debt securities:
Corporate bonds . . . . . . . . . . . . . . . .
1,007
Others . . . . . . . . . . . . . . . . . . . . . . . . . .
450
Subtotal . . . . . . . . . . . . . . . . . . . . . . . .
1,459
Total . . . . . . . . . . . . . . . . . . . . . . . . . .
¥3,152
¥ 887
–
2,018
2,905
¥ 838
–
374
1,212
2
(0)
1,003
380
1,385
¥4,290
(4)
(70)
(74)
¥1,138
ent and future indebtedness to the banks concerned.
Long-term debt at June 30, 2006, consisted of the following:
Millions of yen
(Note 2)
Borrowings from banks and insurance companies at
interest ranging from 0.6% to 1.2% . . . . . . . . . . . .
0.25% unsecured convertible bonds due 2007
(convertible at ¥4,221 ($37) for one common share,
redeemable before due date)(*) . . . . . . . . . . . . . . . .
0.00% unsecured convertible bonds due 2011
(convertible at ¥5,463 ($47) for one common share,
redeemable before due date)(*) . . . . . . . . . . . . . . . .
0.70% unsecured straight bonds due 2007 . . . . . . . .
Subtotal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Capital finance lease liabilities . . . . . . . . . . . . . . . . . . .
Less: Current portion of long-term debt . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Millions of yen
(Note 2)
2006
2005
¥ 169
307
1,958
¥ 190
248
1,316
Millions of
U.S. dollars
(Note 2)
2006
$ 1
3
17
The Group’s investment of the “GALAXY RAILWAYS STORY Ⅱ Production
Partnership” fund was carried at equity. This fund was the only application of the
equity method and included in investments securities.
(3) Redemption timing for held-to-maturity securities and bonds
2006
Due in one year
Debt securities
Corporate bonds
Subtotal . . . . . . .
¥ –
¥ –
Due after one year Due after five years
and within five years and within ten years
¥974
¥974
¥ –
¥ –
Due after ten years
¥ –
¥ –
2005
Due in one year
Debt securities
Corporate bonds
Subtotal . . . . . . .
¥ –
¥ –
Due after one year Due after five years
and within five years and within ten years
¥1,003
¥1,003
105
1
9,090
3,000
3,000
1,000
300
600
520
1,600
800
800
800
664
800
1,000
1,500
15,000
54,495
68
9,579
¥44,984
79
26
26
8
3
5
5
14
7
7
7
6
8
8
13
130
473
0
83
$390
Exercisable period
March
22, 2002
April 1, 2002
to
June 15, 2007
¥ –
¥ –
Yen
Dollars
Issued on
Exercisable during
January
26, 2004
February 9, 2004
to
¥5,463* $47
January 11, 2011
¥4,221 $37
Exercise price
Yen
Dollars
Total number of Outstanding Number of shares
SARs to be issued balance of outstanding balance
3,400
1,818
1,663,920
*The company changed the exercise price from ¥6,750 to ¥5,463 from February 7, 2005.
Convertible bonds are treated solely as bonds and no value inherent in their conversion feature is recognized in accordance with accounting principles generally
accepted in Japan. The total amount of the convertible bonds has been included in
long-term debt.
Long-term loans are principally comprised of bank loans. The annual average of
interest rates applicable to such loan was 1.2% as of June 30, 2006.
The aggregate annual maturities of the long-term debts subsequent to June 30,
2006 are as follows:
Millions of yen
(Note 2)
Fiscal year ending June 30,
2007 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2011 and thereafter . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥ 9,603
27,658
4,207
2,988
10,107
¥54,563
Millions of
U.S. dollars
(Note 2)
$ 83
240
36
26
88
$473
Due after ten years
¥ –
¥ –
Short-term loans are principally of bank loans. (Average interest rate is 0.6%).
As is customary in Japan, substantially all loans from banks (including shortterm loans) are made under general agreements which provide that, at the request
of the banks, the borrower is required to provide collateral or guarantors (or additional collateral or guarantors, as appropriate) with respect to such loans, and that
all assets pledged as collateral under such agreements will be applicable to all pres-
$121
Convertible price
Issued on
9. UNUSED FINANCING COMMITMENTS
The Company had 10,000 million yen of unused line of credit with 12 banks to be
draw upon as needed to finance.
Millions of yen
(Note 2)
2006
2005
8. SHORT-TERM LOAN AND LONG-TERM DEBT
28
¥13,916
(*) A summary of the stock acquisition rights (SARs) as of June 30, 2006 is as follows:
(2) Unlisted equity securities as of June 30, 2006 and 2005 are as follows:
Subsidiaries and affiliates . . . . . . . . . . .
Unlisted equity securities . . . . . . . . . . .
Investment in Special Purpose Company
Millions of
U.S. dollars
(Note 2)
Millions of
U.S. dollars
(Note 2)
2006
Gross amount of committed
line of loan payable . . . . . . . . . . . . . .
Bank loan committed . . . . . . . . . . . . . .
¥ 10,000
–
¥10,000
–
$87
–
Unused financing commitments
at June 30, 2006 . . . . . . . . . . . . . . . .
¥ 10,000
¥ 10,000
$87
10. DERIVATIVES
12. STOCK INCENTIVE PLAN
For fiscal 2006
1. Outline of derivative transactions
(1) Nature of derivative transactions
The Company utilizes currency swaps for the derivative financial instrument.
The shareholders of the Company approved a stock incentive plan on September 26,
2000. The options may be exercised during the period from October 2, 2002 until
October 1, 2006, and the exercise price was ¥5,974 ($52). The terms of options are subject to adjustment if there are stock splits, consolidation of shares or additional shares
issued at price less than the market price per share. The unexercised and outstanding
balance of SAR (Stock Acquisition Rights), as of June 30, 2006, was 41,000 shares.
The shareholders of the Company approved a stock incentive plan on
September 26, 2001. The options may be exercised during the period from October
2, 2003 until October 1, 2007, and the exercise price was ¥4,290 ($37). The terms
of options are subject to adjustment if there are stock splits, consolidation of shares
or additional shares issued at price less than the market price per share. The unexercised and outstanding balance of SAR, as of June 30, 2006, was 19,600 shares.
The shareholders of the Company approved a stock incentive plan on September
29, 2005. The options may be exercised during the period from October 2, 2007 until
October 1, 2017, and the exercise price was ¥9,400 ($82). The terms of options are subject to adjustment if there are stock splits, consolidation of shares or additional shares
issued at price less than the market price per share. The unexercised and outstanding
balance of SAR, as of June 30, 2006, was 643,400 shares.
September 28, 2006. The plan provides for the issuance of up to 2,000,000 shares
in the form of options to management and employees. The options may be exercised during the period from October 2, 2008 until October 1, 2018, and the exercise price is almost equal to the fair market value on the date of grant. The terms of
options are subject to adjustment if there are stock splits, consolidation of shares or
additional shares issued at price less than the market price per share.
(2) Policy for derivative transactions
Derivative transactions are for evading exposure to fluctuations in foreign currencies
and interest rates. The Company does not utilize derivatives for trading purposes.
(3) Purpose of derivative transactions
The Company utilizes derivative transactions for avoiding future foreign currency fluctuations caused by a rise of interest rates.
(4) Risks of derivative transactions
The Company is exposed to risks related to interest rate fluctuations, but any such risk
would not be expected to be material because the Company enters into derivative
transactions only with financial institutions with high credit ratings.
(5) Transaction control
Derivative transactions are appropriately pre-approved by the financial decision maker
of the accounting department. The Company approves derivative transactions as
appropriate, and in accordance with policies, which regulate the authorization and
credit limit amount.
(6) Additional explanation regarding transaction value
The notional amounts of the derivative financial instruments do not necessarily represent the amounts exchanged by the parties and, therefore, are not a direct measure of
the Company’s risk exposure in connection with derivatives.
2. The Company had the following derivatives contracts outstanding
at June 30, 2006.
Interest rate swap contracts . . . . .
Contract amount
Millions of yen
Fair value
¥4,480
¥4,483
Unrealized gain
¥3
For fiscal 2005
The Company had the following derivatives contracts outstanding at
June 30, 2005.
Interest rate swap contracts . . . . .
Contract amount
Millions of yen
Fair value
Unrealized loss
¥5,800
¥5,758
¥42
11. USE OF A SPECIAL PURPOSE COMPANY (THE “SPC”) FOR
PROPERTY OWNERSHIP
The Company has used a sales and lease back structure to securitize real estate
assets pursuant to which an SPC acquires real estate from the Company and leases
it back to the Company. The scheme was used to refinance the Shinjuku Higashiguchi store. This particular SPC structure is required to be reviewed after five years
and, if it is determined at that time not to continue with the structure, the real estate
will either be repurchased by the Company or sold by the SPC to a third party. In the
latter case, where the market value of the real estate has fallen to less than 75 % of
the initial purchase price, the Company is required to pay the shortfall up to 75 % of
the initial purchase price.
In order to obtain financing, in February 2002 the Company used the SPC structure in respect of real estate which it owned in Roppongi district of Tokyo. Under
this scheme, the Company entrusted the real estate to a trustee and received beneficial rights/interests. The trustee, who leases the real estate to the Company, will
receive rent from the Company and will pay dividends under the trust to the SPC.
The term of the trust agreement is 6 years and the term of the lease agreement is 15
years. At the end of the trust agreement, the real estate will either be repurchased by
the Company, sold to a third party by tender or assigned by the trustee to the SPC.
In order to obtain financing, in September 2002, the Company used the SPC
structure in respect of real estate for PAW Kawasaki. The Company entrusted the
real estate to a trustee and sold beneficial rights/interests to improve the financial
structure of the Company by reducing interest-bearing debt.
In order to obtain financing, in August 2005, the Company used the SPC structure in respect of real estate for PAW Nishinomiya, PAW Ishikiri, PAW Kashiwa, and
Atsugi. The Company entrusted the real estate to a trustee and sold beneficial
rights/interests to improve the financial structure of the Company by reducing interest-bearing debt.
13. OTHER INCOME, NET
Other income, net for the years ended June 30, 2006 and 2005 consisted of other
income and other expense. Other income and other expense are as follows.
Millions of yen
(Note 2)
2006
2005
Other income:
Rental fee for computer system . . . . . .
Amortization of negative goodwill . . . .
Gain on sale of investments securities
Gain on fund . . . . . . . . . . . . . . . . . . . . .
Gain from surrender of insurance policy
Gain from changes in equity . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . .
Other income total . . . . . . . . . . . . . . . .
Other expense:
Impairment loss . . . . . . . . . . . . . . . . . .
Loss on close of shops . . . . . . . . . . . .
Loss on sale of investment securities . .
Loss on disposal of fixed assets . . . . . .
Loss on equity method . . . . . . . . . . . . .
Tax expenses . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . .
Other expenses total . . . . . . . . . . . . . . .
Other income, net . . . . . . . . . . . . . . . . .
Millions of
U.S. dollars
(Note 2)
2006
¥1,320
490
305
301
49
194
616
3,275
¥1,252
–
233
290
358
63
705
2,901
$11
4
3
3
0
2
5
28
1,194
195
56
88
94
–
77
1,704
¥1,571
–
66
4
115
–
125
108
418
¥2,483
10
2
0
1
1
–
1
15
$13
29
14. PLEDGED ASSETS
16. SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
The assets pledged as collateral for the Company’s liabilities at June 30, 2006 and
Major elements of selling, general and administrative expenses for fiscal 2006 and
2005 were summarized as follows:
Millions of yen
(Note 2)
2006
2005
Land . . . . . . . . . . . . . . . . . . . . . . . . . .
Buildings and structures . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . .
¥2,619
333
¥2,952
¥2,619
357
¥2,976
Millions of
U.S. dollars
(Note 2)
2006
$23
3
$26
Liabilities related with the assets pledged at June 30, 2006 and 2005 were as follows:
Millions of yen
(Note 2)
2006
2005
Short-term loans . . . . . . . . . . . . . . . . . .
Current maturities of long-term debt . .
Long-term debt . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . .
¥ 743
1,786
3,780
¥6,309
¥
–
1,844
2,900
¥4,744
Millions of
U.S. dollars
(Note 2)
2006
$ 6
16
33
$55
Millions of yen
(Note 2)
2006
2005
Employees’ compensation and benefit .
Occupancy and rental . . . . . . . . . . . . . .
Commission . . . . . . . . . . . . . . . . . . . . .
Depreciation and amortization . . . . . . .
Provision for retirement
benefits for directors . . . . . . . . . . . . .
Amortization of consolidation
adjustment account . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . .
Millions of
U.S. dollars
(Note 2)
2006
¥16,352
8,061
6,794
4,366
¥14,893
6,714
5,736
4,066
$142
70
59
38
31
12
0
38
12,858
¥48,500
2
11,211
¥42,634
0
112
$421
17. RELATED PARTY TRANSACTIONS
Related party transactions for the years ended June 30, 2006 and 2005 were as follows:
Millions of yen (*5)
(Note 2)
15. INCOME TAX
The normal effective statutory tax rates in Japan arising from the aggregation of
corporate, enterprise and inhabitants taxes was approximately 40.5% for fiscal 2006
and 2005 respectively.
1. The significant components of deferred tax assets and liabilities for
the years ended June 30, 2006 and 2005 are as follows:
Millions of yen
(Note 2)
2006
2005
Deferred tax assets (current liabilities):
Provision for enterprise tax . . . . . . . . . .
Allowance for bonus . . . . . . . . . . . . . . .
Inventories . . . . . . . . . . . . . . . . . . . . . .
Others . . . . . . . . . . . . . . . . . . . . . . . . . .
Subtotal . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred tax assets (non-current liabilities):
Accrued retirement benefits for directors
Depreciation . . . . . . . . . . . . . . . . . . . . .
Valuation loss of investment securities
Net unrealized gains
on investment securities . . . . . . . . . .
Others . . . . . . . . . . . . . . . . . . . . . . . . . .
Subtotal . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . .
Millions of
U.S. dollars
(Note 2)
2006
¥ 281
45
882
368
1,576
¥ 251
28
757
133
1,169
$ 2
0
8
4
14
75
97
216
63
111
310
0
1
2
(339)
103
152
¥1,728
(476)
74
82
¥1,251
(3)
1
1
$15
2. A reconciliation of the difference between the statutory tax rate
and the effective income tax rate reflected in the accompanying
statements of operation for the years ended June 30, 2006 and
2006
Statutory tax rate . . . . . . . . . . . . . . . . .
Permanent difference . . . . . . . . . . . . .
Flat tax of inhabitant tax . . . . . . . . . . .
Effect of change in effective
statutory tax rates . . . . . . . . . . . . . . .
Others . . . . . . . . . . . . . . . . . . . . . . . . . .
Effective income tax rate . . . . . . . . . . .
2005
–
–
–
40.5%
0.2%
2.0%
–
–
–
–
1.1%
43.8%
Related party
Category
Description of the
Transaction
Anryu Shoji Ltd. Company in Rental real
(*2)
which the
estate (*1)
director owns
the majority
votes.
Takao Yasuda
Chairman
Loan to
Takao Yasuda
(*3)
Major
Interest
shareholder
Junya Yasuda
Related party Sales of
of the
investment
chairman
securities
(*4)
Millions of
U.S. dollars
(Note 2)
2006
2005
2006
¥4
¥4
$0
–
–
–
–
–
–
190
–
2
(*1) The contract for rental of real estate was signed on November 1, 2000.
(*2) Representative director of the Company, Takao Yasuda, essentially holds the 100% of voting stocks.
(*3) Takao Yasuda borrowed ¥2,328 million ($20 million) and repaid ¥2,328 million ($20 million) for several days.
(*4) The sales price of the investment securities was determined by equivalent to net assets of the company at the date of transaction.
(*5) Amount of transactions don’t include consumption tax.
18. IMPAIRMENT LOSS
The Company recorded impairment loss for the year ended June 30,2006 for the following asset group:
Geographic area
Purpose of
use
Kanto
Facility
Kanto
Chubu
Idle facility
Facility
Kansai
Facility
Millions of yen
(Note 2)
Millions of
U.S. dollars
(Note 2)
¥216
$2
650
6
127
1
201
2
Type of assets
Building, structure,
land
Other
equipment, other
equipment, other
19.EARNINGS PER SHARE
As the difference between statutory tax rate for fiscal 2006 and effective income tax
rate became under 5%, the Company omitted the description.
The following table sets forth the computation of basic and diluted earnings per share
showing the reconciliation of the numerators and denominators used for the computation.
Millions of yen
(Note 2)
2006
2005
Net income . . . . . . . . . . . . . . . . . . . . . .
Effect of diluted securities:
Interest expense for 0.25% convertible
bonds due 2007 . . . . . . . . . . . . . . . . .
Net income after adjustments of effects
of dilutive securities . . . . . . . . . . . . .
30
Millions of
U.S. dollars
(Note 2)
2006
¥10,725
¥7,163
$65
0
3
0
¥10,725
¥7,166
$93
Millions of yen
(Note 2)
2006
2005
Weighted average number of shares . . 22,582,955
Effective of diluted securities:
Stock options . . . . . . . . . . . . . . . . . .
165,439
0.25% convertible bonds due 2007 .
71,517
0.00% convertible bonds due 2011 . 2,597,305
Diluted weighted average
number of shares . . . . . . . . . . . . . . . 25,417,216
(1) Cash and cash equivalent information
Cash flow information as of June 30, 2006 and 2005 were summarized as follows:
21,270,727
Millions of yen
(Note 2)
2006
2005
94,359
766,095
2,723,376
Cash and deposits . . . . . . . . . . . . . . . .
Time deposits (over three months) . . .
Cash and cash equivalents . . . . . . . . . .
24,854,557
Yen
(Note 2)
Shareholder’s equity per share . . . . . . .
Basic earnings per share . . . . . . . . . . . .
Diluted earnings per share . . . . . . . . . .
21. CASH FLOW INFORMATION
2006
2005
¥3,055.29
474.93
421.98
¥2,398.50
336.74
288.29
U.S. dollars
(Note 2)
2006
$26.51
4.12
3.66
20. SUPPLEMENTARY PROFIT AND LOSS INFORMATION
Rental fees for computer system
Rental fees received for computer system are charged to suppliers for registration
of their information on the Company’s computer system and sales information on
inventories.
Gain from surrender of insurance policy
Gain from surrender of insurance policy is derived from surrender of life insurance
by the review of welfare program.
Major items included in “Gain on sales of fixed assets” are as follows:
Millions of yen
(Note 2)
2006
2005
Building and structures . . . . . . . . . . . . .
Vehicles . . . . . . . . . . . . . . . . . . . . . . . . .
Land . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . .
¥759
–
(684)
¥ 75
Millions of
U.S. dollars
(Note 2)
2006
¥–
–
–
¥–
$7
0
(6)
$1
Gain on sale of affiliates’ securities were derived from gain on sale of
Origin Toshu
¥27,792
–
¥27,792
Equipment . . . . . . . . . . . . . . . . . . . . . . .
Others . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . .
¥37
46
5
¥88
Millions of
U.S. dollars
(Note 2)
2006
¥ 27
88
0
¥115
$0
1
0
$1
$241
–
$241
(2) Significant non-cash investing and financing activities
1.Conversion of convertible bonds
Increase in common stock and capital surplus due to conversion of convertible
bonds for the years ended June 30, 2006 and 2005 are as follows:
Millions of yen
(Note 2)
2006
2005
Common stock . . . . . . . . . . . . . . . . . . .
Additional paid-in capital . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . .
¥4,394
4,392
¥8,786
¥2,260
2,260
¥4,520
Millions of
U.S. dollars
(Note 2)
2006
$38
38
$76
2.Acquisition of Don Quijote (USA) Co., Ltd. and its subsidiary
The summarized assets and liabilities of the Don Quijote (USA) Co., Ltd. (previous name: THE DAI’EI (USA), INC.) and Oriental Seafoods, Inc. are as follow:
Millions of yen
(Note 2)
Current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Negative goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Acquisition cost of Don Quijote (USA)
Co., Ltd. and Oriental Seafoods, Inc. . . . . . . . . . . . . . .
Cash and cash equivalents of Don Quijote (USA)
Co., Ltd. and Oriental Seafoods, Inc. . . . . . . . . . . . . . .
Payments for the acquisition . . . . . . . . . . . . . . . . . . . . . . .
Millions of
U.S. dollars
(Note 2)
¥3,154
3,637
(1,437)
(56)
(2,048)
$27
32
(12)
(1)
(18)
3,250
28
(1,481)
¥1,769
(13)
$15
3.Acquisition of all shares of Cervantes Co., Ltd.
The summarized assets and liabilities of the Cervantes Co., Ltd. are as follow:
Major items included in “Loss on disposal of fixed assets” are as
follows:
Millions of yen
(Note 2)
2006
2005
¥15,055
–
¥15,055
Millions of
U.S. dollars
(Note 2)
2006
Millions of yen
(Note 2)
Current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Acquisition cost of Cervantes Co., Ltd. . . . . . . . . . . . . . . . .
Cash and cash equivalents of Cervantes Co., Ltd. . . . . . . . .
Payments for the acquisition . . . . . . . . . . . . . . . . . . . . . . .
¥ 50
3,314
1,513
(0)
(1,269)
3,608
(49)
¥3,559
Millions of
U.S. dollars
(Note 2)
$ 0
29
13
(0)
(11)
31
(0)
$31
Major items included in “Loss on close of stores” are as follows:
Millions of yen
(Note 2)
2006
2005
Fixed leasehold deposits . . . . . . . . . . . .
Others . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . .
¥ 83
50
62
¥195
¥66
–
–
¥66
Millions of
U.S. dollars
(Note 2)
2006
$1
0
1
$2
4.Exclusion from consolidation due to the sale of all shares of Cervantes Co., Ltd.
Millions of yen
(Note 2)
Current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sales of all shares of Cervantes Co., Ltd. . . . . . . . . . . . . . .
Cash and cash equivalents of Cervantes Co., Ltd. . . . . . . . .
Collection for the sale . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥190
190
(9)
¥181
Millions of
U.S. dollars
(Note 2)
$2
2
(0)
$2
Major items included in “ Loss due to fire” are as follow:
Millions of yen
(Note 2)
2006
2005
Equipment . . . . . . . . . . . . . . . . . . . . . . .
Others . . . . . . . . . . . . . . . . . . . . . . . . . .
Loss due to fire . . . . . . . . . . . . . . . . . . .
Proceeds from fire insurance . . . . . . . .
Total net loss due to fire . . . . . . . . . . . .
¥–
–
–
–
–
¥–
¥ 66
31
291
388
122
¥266
Millions of
U.S. dollars
(Note 2)
2006
$–
–
–
–
–
$–
31
22. SUBSEQUENT EVENTS
1. Appropriation of retained earnings
Appropriation of retained earnings under the Corporate Law of Japan, a plan for appropriation of retained earnings proposed by the Board of Directors, must be approved at a
shareholders’ meeting to be held within three months after the end of the fiscal year.
The appropriation of retained earnings for the year ended June 30, 2006 was approved
by the shareholders’ meeting held on September 28, 2006 as follows:
Millions of yen
(Note 2)
Millions of
U.S. dollars
(Note 2)
¥1,188
$10
Cash dividends (¥50.00 ($0.43) per share)
2. Stock split
On May 9, 2006, the Board of Directors declared a three-for-one stock split of the
Company’s common stock.
(1) Method of stock split
All shareholders of record on June 30, 2006 will receive two additional shares of
common stock for each share. Information pertaining to shares and earnings per
share has not been restated in the accompanying consolidated financial statements
and notes to the consolidated financial statements to reflect this split. This information will be presented effective after the stock split is made.
The following data was computed on the assumption that the stock split has been
effective since the beginning of the fiscal year ended June 30, 2006.
yen
(Note 2)
2006
2005
¥1,018.43
158.31
140.66
¥799.50
112.25
96.10
U.S. dollars
(Note 2)
2006
$9
1
1
3. Issuance of convertible bonds
At the Board of Directors meeting on July 5, 2006, the Company adopted a resolution to issue Zero Coupon Convertible Bonds due 2013 (bonds with stock acquisition rights) in order to procure capital for store expansion and repayment of shortterm loans.
(1) Name
Zero Coupon Convertible Bonds due 2013
(2) Issue Date
July 24, 2006 (London)
(3) Amount
¥23,000,000,000 ($199,583,478)
(4) Interest Rate
No interest is added to the bonds
(5) Maturity
July 24, 2013 (London)
(6) Conversion Condition
1.Period of conversion request
August 7, 2006 to July 10, 2013 (London)
2.Conversion price
¥3,571 per share
3.Share type
The Company’s common stock
4. Acquisition of fifteen shops from NAKAI Co., Ltd.
On June 2, 2006, the Company entered into assets purchase agreements for tangible assets, leasehold deposits and inventories as follows.
(1) Purpose of the acquisition
The Group has three types of stores, Don Quijote, PAW and Picasso, and there are
122 stores in 25 prefectures in Japan. We plan to expand our business by opening
new stores in area where no Group store has been opened.
32
(2) General information of NAKAI Co., Ltd.
(1)
(2)
(3)
(4)
Company name
Business
Establishment date
Establishment
(5)
(6)
(7)
Representative director
Capital
Net sales
(8)
Relationship with the Company
NAKAI Co., Ltd.
General merchandise supermarket
January 1966
3-62, Okihamahigashi, Tokushima-shi,
Tokushima-ken
Shizuo Nakai
¥3,596 million
¥7,604 million
(The year ended March 2006)
None
(3) Business Results of the stores acquired
The following is the business result of the stores the Company acquired for the year
ended March 31, 2006.
Net sales
Operating loss
(2) Number of shares added
156,000,000 shares
Shareholder’s equity per share . . . . . .
Basic earnings per share . . . . . . . . . . . .
Diluted earnings per share . . . . . . . . . .
NAKAI Co., Ltd. decided to sell their fifteen stores to the Company in order to
target their business on Shikoku area in need of strengthened profitability.
Millions of yen
(Note 2)
2006
Millions of
U.S. dollars
(Note 2)
2006
¥4,123
229
$36
2
The figures of operating loss were not calculated fairly without charging the headquarter’ s administrative expense.
(4) Assets and liabilities of the stores acquired
Assets to be purchased are the stores’ property, plant and equipment, fixed leasehold deposits, and inventories. There is no purchase of the liabilities.
(5) Purchase amount and payment
1.Purchase amount
The planned amount is approximately ¥2,900 million.
2.Payment
The asset purchase agreements will be legally effective after the approval of
shareholders’ meeting of NAKAI Co., Ltd. on June 29, 2006. After the resolution
of shareholders’meeting, each shop is to be purchased accordingly and its
amount will be paid in cash on delivery.
On September 28, 2006 the company purchased Kurashiki shop, but other
shops have not been purchased under negotiation.
22. SEGMENT INFORMATION
Operating segment information
For the fiscal years of 2006 and 2005, net sales, operating income, and total assets
of the discount store business accounted for more than 90% of those of all the segments. Consequently, details of each business segment information are not given in
this report.
Geographic segment information
For the fiscal years of 2006 and 2005, net sales and assets in Japan accounted for
more than 90% of those of all the segments. Consequently, details of each geographic segment information are not presented.
Sales outside Japan
Sales outside of Japan amounted less than 10% of the consolidated net sales, and
therefore the information is not presented.
Investor Information
Corporate Data (as of June 30, 2006)
Store Network (as of June 30, 2006)
COMPANY NAME
TOKYO METROPOLITAN AREA
Don Quijote Co., Ltd.
Fuchu store
Shinjuku store
Kasai store
Kampachi Setagaya store
Kannana Umejima store
Keio Horinouchi store
Tohachi Mitaka store
Koganei Koen store
Shibuya store
Mejirodai store
Kannana Honancho store
Shinjuku Higashi-guchi store
Kodaira store
Roppongi store
Aoto store
Machida-ekimae store
BIG FUN Heiwajima store
Nakano-ekimae store
Kameido store
Nerima store
Ginza Honkan store
Takenotsuka store
Ueno store
Oume Shinmachi store
PAW Kitaikebukuro store
Akihabara store
Picasso Shinkoiwa store
Picasso Kokubunji store
Picasso Ikebukuro
Higashi-guchi store
Picasso Sangenjaya store
Picasso Kannana
Edogawa store
Picasso Nishiwaseda store
Picasso Kiyose
Kita-guchi store
SCOPE OF BUSINESS
Operation of discount stores, which sell home appliances, daily
sundries, foods, watches, fashion merchandise, sporting goods,
leisure equipment and other products
HEAD OFFICE
(as of September 28, 2006)
2-6-1, Nishi-shinjuku, Shinjuku-ku, Tokyo
163-0235, Japan
Tel: +81-3-5381-7532
Fax: +81-3-5381-7606
DATE OF ESTABLISHMENT
September 5, 1980
PAID-IN CAPITAL
¥14,359,590 thousand
NUMBER OF EMPLOYEES
1,966
NUMBER OF STORES
122
Board of Directors (as of September 28, 2006)
Chairman and CEO
Takao Yasuda
President and COO
Junji Narusawa
Senior Managing Director and CFO
Mitsuo Takahashi
Directors
Kouji Oohara
Kiyoshi Kubota
Director and CCO
Sumio Inamura
Standing Statutory Auditor
Junzo Tabuchi
Statutory Auditors
Hitoshi Ehara
Masaru Ueno
Makoto Iwade
2-6-3, Midori-cho, Fuchu
1-12-6, Okubo, Shinjuku-ku
4-14-1, Kitakasai, Edogawa-ku
3-39, Hachimanyama, Setagaya-ku
5-5-14, Chuohoncho, Adachi-ku
34-11, Matsugi, Hachioji
1-24, Nozaki, Mitaka
5-3-12, Shin-machi, Nishitokyo
2-25-8, Dogenzaka, Shibuya-ku
586-22, Kunugida-machi, Hachioji
1-28-3, Honan, Suginami-ku
1-16-5, Kabuki-cho, Shinjuku-ku
1-5-23, Ogawahigashi-cho, Kodaira
3-14-10, Roppongi, Minato-ku
3-1-1, Aoto, Katsushika-ku
4-2-3, Haramachida, Machida
1-1-1, Heiwajima, Ota-ku
5-68-5, Nakano, Nakano-ku
1-40-2, Kameido, Koto-ku
2-19-1, Nishiki, Nerima-ku
Ginza Nine No. 3, 8-10, Ginza, Chuo-ku
6-11-10, Takenotsuka, Adachi-ku
3-38-10, Yushima, Bunkyo-ku
9-1-1, Shinmachi, Oume
2-7-5, Ikebukuro-honcho, Toshima-ku
4-3-3, Sotokanda, Chiyoda-ku
1-30-2, Shinkoiwa, Katsushika-ku
2-2-8, Hon-cho, Kokubunji
1-2-9, Higashiikebukuro, Toshima-ku
2-12-12, Sangenjaya, Setagaya-ku
3-10-1, Osugi, Edogawa-ku
3-1-5, Nishiwaseda, Shinjuku-ku
1-8-25, Motomachi, Kiyose
KANAGAWA PREFECTURE
Tomei Kawasaki store
Shin-Yokohama store
Minato Yamashita store
Tomei Sagamihara store
Yokosuka store
Tomei Yokohama Inter store
Totsuka Harajuku store
Atsugi store
Hinodecho store
Yokohoma Nishi-guchi store
PAW Kawasaki store
PAW Hiratsuka store
Picasso Isezakicho store
Picasso Tsurumi-ekimae
store
Picasso Konandai store
1645, Maginu, Miyamae-ku, Kawasaki
7-9-25, Kikuna, Kohoku-ku, Yokohama
1-2-8, Shinyamashita, Naka-ku, Yokohama
9-47-30, Kamitsurumahonmachi, Sagamihara
1-22-7, Otsu-cho, Yokosuka
5-1-8, Kirigaoka, Midori-ku, Yokohama
4-5-11, Harajuku, Totsuka-ku, Yokohama
2-8-12, Tsumadaminami, Atsugi
3-74-1, Miyagawa-cho, Naka-ku, Yokohama
2-15-5, Minamisaiwai, Nishi-ku, Yokohama
1-44-1, Shinmei-cho, Saiwai-ku, Kawasaki
2-7-31, Tamura, Hiratsuka
1-5, Akebono-cho, Naka-ku, Yokohama
7-12, Toyooka-cho, Tsurumi-ku,
Yokohama
3-22, Konandai, Konan-ku, Yokohama
Note: Ginza Brand-kan store and Keihin Kamata store were closed on July 31, 2006
and September 11, 2006, respectively.
33
Store Network (as of June 30, 2006)
SAITAMA PREFECTURE
AICHI PREFECTURE
Omiya store
Omiya Owada store
Kawaguchi Araijuku store
Handa store
PAW Nakagawasanno store
Rakuichigaido Nagoya store
PAW Shin-anjo store
Warabi store
Niiza Nobidome store
Wako store
Higashi-tokorozawa store
Picasso Ageo store
Picasso Kuki store
2-685, Higashionari-cho, Kita-ku, Saitama
1-219-6, Owada-cho, Minuma-ku, Saitama
81-1, Aza-Minamihara, Oaza-Nishiaraijuku,
Kawaguchi
1-11-11, Nishiki-cho, Warabi
4-1-77, Nobidome, Niiza
3-11-22, Shirako, Wako
1237-24, Aza-Barahara, Oaza-Kamiyasumatsu,
Tokorozawa
1-7-23, Naka-cho, Ageo
1152-2, Aza-Oura, Oaza-Kukishin, Kuki
CHIBA PREFECTURE
Kisarazu store
Makuhari store
Ichihara store
Baraki Nishifunabashi store
Chiba Chuo store
Narita store
Gyotoku-ekimae store
PAW Kashiwa store
Picasso Motoyawata store
Picasso Funabashikeibajo
store
Kimitsu store
2-2-1, Jozai, Kisarazu
1-7782-1, Makuhari-cho, Hanamigawa-ku,
Chiba
893, Murata-cho, Chuo-ku, Chiba
474-1, Hongo-cho, Funabashi
3-10-6, Yuko, Chuo-ku, Chiba
11-10, Iinaka, Narita
2-3-159, Gyotoku-ekimae, Ichikawa
3-3-2, Tomisato, Kashiwa
4-7-2, Minamiyawata, Ichikawa
9-1-1, Miyamoto, Funabashi
1-7-1, Higashisakada, Kimitsu
Teine store
Hiraoka store
Sapporo store
Asahikawa store
Atsubetsu store
11-7-10, Maeda gojo, Teine-ku, Sapporo
1-1-35, Hiraoka yojo, Kiyota-ku, Sapporo
3-6, Minami nijo nishi, Chuo-ku, Sapporo
4-1-3, Nagayama sanjo, Asahikawa
2-9-1, Atsubetsu nishiyojo, Atsubetsu-ku,
Sapporo
MIYAGI PREFECTURE
Sendai Dainohara store
PAW Sendai-minami store
1-7-40, Dainohara, Aoba-ku, Sendai
6-33-1, Nakada, Taihaku-ku, Sendai
IBARAKI PREFECTURE
PAW Tsuchiura-kita store
3993, Higashiwakamatsu-cho, Tsuchiura
TOCHIGI PREFECTURE
Utsunomiya store
1590-6, Azaicchoda, Yanaze-cho,
Utsunomiya
GUNMA PREFECTURE
PAW Takasaki store
PAW Isesaki store
2-4-17, Tonyamachi-nishi, Takasaki
73-3, Kamiizumi-cho, Isesaki
ISHIKAWA PREFECTURE
PAW Kanazawa store
OSAKA PREFECTURE
Minoh store
Hirakata store
Sayama store
Uchikan Fukae store
Habikino store
Juso store
Izumi store
Yao store
Sakuranomiya store
Shinkanaoka store
PAW Suminoe Koen store
PAW Uehonmachi store
PAW Ishikiri store
Dotombori store
16-1, Minamishimbo-machi-ni, Kanazawa
Kyoto-minami Inter store
1-1-1, Minamisasaguchi, Niigata
YAMANASHI PREFECTURE
PAW Isawa store
1745, Yokkaichiba, Isawa-cho, Fuefuki
PAW Kawanakajima store
981, Mikuriya, Kawanakajima-machi, Nagano
SHIZUOKA PREFECTURE
Shizuoka Ryogaecho store
Numazu store
PAW SBS-dori store
34
12-1, Konya-machi, Aoi-ku, Shizuoka
1560-1, Ooka, Numazu
2-1-11, Fujimidai, Suruga-ku, Shizuoka
480-1, Kashiwagi-cho, Nara
WAKAYAMA PREFECTURE
Burakuricho store
1-25, Motodera-machi, Wakayama
HYOGO PREFECTURE
Itami store
Himeji-minami store
Sannomiya store
Kakogawa store
PAW Nishinomiya store
7-62-1, Ojika, Itami
2-51, Kamae, Shikama-ku, Himeji
2-12-3, Shimoyamatedori, Chuo-ku, Kobe
129-62, Aza-Osaragi, Noguchi, Noguchi-cho,
Kakogawa
1-13, Rokutanji-cho, Nishinomiya
HIROSHIMA PREFECTURE
PAW Hiroshima Gion store
9-15-23, Nishihara, Asaminami-ku, Hiroshima
KAGAWA PREFECTURE
PAW Takamatsu store
536, Aza-Nakanotsubo, Kamitenjin-cho,
Takamatsu
FUKUOKA PREFECTURE
Rakuichigaido Hakozaki
store
Nishijin store
Rakuichirakuza Kurume
store
Kurosaki store
5-1-8, Hakozaki, Higashi-ku, Fukuoka
3-4-2, Nishijin, Sawara-ku, Fukuoka
2-2-1, Higashiaikawa, Kurume
1-3, Sakuragaoka-machi,
Yahatanishi-ku, Kitakyushu
KUMAMOTO PREFECTURE
PAW Kamikumamoto store
3-3-20, Kamikumamoto, Kumamoto
OITA PREFECTURE
D . Plaza Oita store
NAGANO PREFECTURE
1-2, Kamitobakitahanana-cho, Minami-ku,
Kyoto
NARA PREFECTURE
NIIGATA PREFECTURE
Niigata-ekinan store
4-1-30, Makiochi, Minoh
2-30-10, Ikenomiya, Hirakata
2-950-2, Higashikuminoki, Osakasayama
1-13, Fukaekita Higashinari-ku, Osaka
68-2, Kashiyama, Habikino
1-6-1, Jusohommachi, Yodogawa-ku, Osaka
65, Tomiaki-cho, Izumi
2-11, Minami Uematsu-cho, Yao
1-1, Nakano-cho, Miyakojima-ku, Osaka
5-1-6, Shinkanaoka-cho, Kita-ku, Sakai
1-1-2, Shinkitajima, Suminoe-ku, Osaka
1-24, Uenomiya-cho, Tennoji-ku, Osaka
7-3-46, Nishiishikiri-cho, Higashiosaka
7-13, Soemon-cho, Chuo-ku, Osaka
KYOTO PREFECTURE
Nara store
HOKKAIDO
3-36-1, Asahi-machi, Handa
4-5-5, Sanno, Nakagawa-ku, Nagoya
45-1, Nakanogoshinmei, Kitanagoya
3-1-12, Toei-cho, Anjo
1137, Oaza-Seike, Oita
Share Information (as of June 30, 2006)
SHARES OF COMMON STOCK
Authorized :
78,000,000
Issued :
23,779,408
Treasury stock :
25,650
NUMBER OF SHAREHOLDERS
5,825
PRINCIPAL SHAREHOLDERS
Number of
shares held
Percentage of
total shares in issue
(%)
Takao Yasuda (*1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
La Mancha . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4,144,000
17.43
3,000,000
12.62
....................................................
1,280,000
5.38
1,145,800
4.82
Ltd. (*1)
Anryu Shoji
Japan Trustee Services Bank, Ltd. (*2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
UBS AG Hong Kong . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
766,200
3.22
The Master Trust Bank of Japan, Ltd.(*2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
660,700
2.78
Yasuda Scholarship Foundation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Morgan Stanley & Company, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
600,000
2.52
513,900
2.16
The Chase Manhattan Bank, N.A. London . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Goldman Sachs International Ltd. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
462,200
1.94
441,500
1.86
(*1) Shares on loan to third parties are excluded.
(*2) The shares held by these institutions include shares in trust.
SHARE OWNERSHIP BY CATEGORY
Number of
shares held
Percentage of
total shares in issue
(%)
54
3,449,478
14.50
28
296,965
1.25
Number of
shareholders
Financial Institutions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Securities Companies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other Japanese Corporations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign Corporations and Individuals . . . . . . . . . . . . . . . . . . . . . . . .
90
1,958,226
8.23
171
12,321,557
51.82
Japanese Individuals and Others . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5,482
5,753,182
24.20
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5,825
23,779,408
100.00
TRANSFER AGENT
Mitsubishi UFJ Trust and Banking Corporation
1-4-5, Marunouchi, Chiyoda-ku, Tokyo 100-8212, Japan
STOCK LISTINGS
Tokyo Stock Exchange, First Section
35
Head Office Address:
Shinjuku Sumitomo Bldg.35F, 2-6-1, Nishi-shinjuku,
Shinjuku-ku, Tokyo 163-0235, Japan
Tel: +81-3-5381-7532 Fax: +81-3-5381-7606
http://www.donki.com
Printed in Japan

Don Quijote

Transcription

Similar documents

AVS24 2.4 GHZ Wireless Audio/Video Sender

No trophy could ever fully express our

A golden opportunity to A golden opportunity to

Annual Select 2015

Pookoo Industrial Co., Ltd.

Annual Report 2002

Annual Report 2005

Exhibitors in Alphabetical Order

Esperus Systems Ltd

Final New Corporate overview - PRINTING.