6-K 1 k00552e6vk.txt ITO-YOKADO CO., LTD. Commission File No. 2-61271 and 2-72713 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 6-K REPORT OF FOREIGN ISSUER Pursuant to Rule 13a-16 or 15d-16 of the Securities Exchange Act of 1934 Report on Disclosure of Information of ITO-YOKADO CO., LTD. ITO-YOKADO CO., LTD. (Translation of registrant's name into English) 1-4, SHIBAKOEN 4-CHOME, MINATO-KU, TOKYO 105-8571, JAPAN (Address of principal executive offices) [Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.] Form 20-F x Form 40-F ----- ----- [Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2 (b) under the Securities Exchange Act of 1934.] Yes No x ----- ----- [If "Yes" is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2 (b). 82- ] -------- Semiannual Report 2004 For the six months ended August 31, 2003 FINANCIAL HIGHLIGHTS ITO-YOKADO CO., LTD. AND SUBSIDIARIES For the six-month periods ended August 31, 2003, 2002 and 2001 (Unaudited)

* U.S. dollar amounts in this report are translated from yen, for convenience only, at the rate of Yen117=US$1, the approximate rate of exchange on August 29, 2003. TO OUR SHAREHOLDERS Business Environment In the six months ended August 31, 2003, there were some positive economic signs in Japan, such as indications of recovery in corporate performances and private-sector capital investment. Nonetheless, employment conditions remained severe, and consumer spending continued to be weak. Overseas, the future course of the global economy remained uncertain, due to mixed business conditions in Europe and the United States, an uncertain international situation related to the crisis in the Middle East, and the influence of SARS (severe acute respiratory syndrome). In this environment, in the retail industry consumer purchasing behavior remained cautious due to continued declines in sales prices accompanying deflation and continued low levels of employment and income, as well as concerns about the future stemming from issues regarding Japan's social security system, such as a change in the system for social insurance payments. In addition, unseasonable weather conditions, marked by low temperatures from early spring and the coolest summer in 10 years, resulted in weak demand overall. Consolidated Results In Ito-Yokado's consolidated results for the interim period, revenues from operations increased 2.6%, to 1,686.2 billion yen; operating income was down 15.7%, to 86.5 billion yen; income from continuing operations before income taxes ("income before income taxes") was down 13.8%, to 81.2 billion yen; and net income increased 162.9%, to 17.8 billion yen. Basic earnings per share for the interim period were 42.85 yen, compared with 16.22 yen in the preceding interim period. Interim dividends were set at 16.00 yen per share. The increase in revenues from operations was attributable to growth in revenues from convenience store operations and other operations. The declines in operating income and income before income taxes were mainly due to the adverse effect of sluggish superstore and restaurant operations. The principal reason for the rise in net income was the 21.0 billion yen loss from discontinued operations recorded in the previous interim period, which included losses associated with the sale of shares of a subsidiary stemming from the transfer of the operations of discount store Daikuma. Segment Performance In our superstore segment, revenues declined 1.1% from the same period in the previous year, to 743.2 billion yen. An operating loss of 4.1 billion yen was recorded, compared with operating income of 13.7 billion yen in the previous interim period. The decline in revenues was principally attributable to sluggish sales of apparel and household goods due to unseasonably low temperatures from early spring and a cool summer, which offset a strong performance in food products. The operating loss resulted from a decrease in the gross profit margin accompanying lower sales and from higher selling, general and administrative expenses, which included costs associated with an increase in impaired assets and aggressive sales promotion activities. In convenience store operations, revenues rose 5.3%, to 868.4 billion yen, and operating income increased 2.2%, to 95.9 billion yen. Domestically, Seven-Eleven Japan Co., Ltd., recorded increases in both revenues and profits as a result of its aggressive store expansion strategy and superior product development capabilities. Seven-Eleven Japan had reached 10,000 stores in Japan as of the end of August 2003, thereby becoming the first domestic retailer to reach this milestone. In the United States, subsidiary 7-Eleven, Inc., achieved steady results in the first half. The yen-dollar exchange rate used in the consolidation of 7-Eleven, Inc.'s accounts for the interim period was 118.71 yen, compared with the rate of 129.71 yen used in the previous interim period. In restaurant operations, revenues decreased 2.0%, to 64.8 billion yen, and operating income was down 64.5%, to 1.5 billion yen. These declines were attributable to continued sluggish consumer spending and to reduced customer visits stemming from unseasonable weather, such as a cool summer and a long rainy season. In others, revenues were up 79.4%, to 22.8 billion yen. An operating loss of 6.8 billion yen was recorded, compared with a loss of 9.2 billion yen in the previous interim period. The increase in revenues was primarily attributable to growth in revenues at both IYBank Co., Ltd., and IY Card Service Co., Ltd., as a result of higher customer recognition and expanded lines of business. The significant improvement in the operating loss was a result of better profitability at IYBank. Outlook As we begin the second half of the fiscal year, there are signs of improvement in business conditions, such as an increase in the government's GDP forecast for the year and strong growth in stock markets. However, the future course of consumption is expected to remain uncertain, and the IY Group's operating environment does not lend itself to optimism. Guided by its principle of "responding to change and strengthening fundamentals," the Ito-Yokado Group will not limit itself to past ways of doing things. The Group will continue working to further increase the precision of its merchandising and marketing and to provide products and services that accurately meet changing customer needs. In the retail industry, we will move ahead with the development of original products that are only available from the IY Group and work to differentiate Ito-Yokado from its competitors. We will emphasize service in our sales efforts, striving to enhance the level of service that we provide to our customers. In addition, we will thoroughly analyze efficiency and profitability on a store-by-store basis and endeavor to create stores that meet the needs of the regions they serve. Also, in financial services, which are recording steady improvement in revenues and profitability, we will conduct aggressive investment to achieve the continued expansion of our operational base. We will also enhance customer convenience while pursuing synergies with our core retail operations. Through the ongoing implementation of these initiatives, we will strive to achieve a level of performance that meets the expectations of our shareholders. In closing, we would like to ask for your continued support in the years ahead. November 2003 Toshifumi Suzuki Chairman and Chief Executive Officer Sakae Isaka President and Chief Operating Officer Consolidated Balance Sheets Ito-Yokado Co., Ltd. and Subsidiaries August 31, 2003 and 2002 (Unaudited)

The accompanying notes are an integral part of these statements.

CONSOLIDATED STATEMENTS OF INCOME Ito-Yokado Co., Ltd. and Subsidiaries for the six-month periods ended August 31, 2003, 2002 and 2001 (Unaudited)

The accompanying notes are an integral part of these statements. CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY Ito-Yokado Co., Ltd. and Subsidiaries for the six-month periods ended August 31, 2003, 2002 and 2001 (Unaudited)

The accompanying notes are an integral part of these statements. Consolidated Statements of Cash Flows Ito-Yokado Co., Ltd. and Subsidiaries for the six-month periods ended August 31, 2003, 2002 and 2001 (Unaudited)

Note: The amounts of cash and cash equivalents related to Daikuma Co., Ltd. ("Daikuma") were reclassified to "Assets held for sale" from "Cash and cash equivalents" on the consolidated balance sheets. The difference in the amounts of cash and cash equivalents at each of the period ends between the consolidated balance sheets and the consolidated statements of cash flows are as follows:

The accompanying notes are an integral part of these statements. NOTES TO THE SEMIANNUAL FINANCIAL STATEMENTS ITO-YOKADO CO., LTD. AND SUBSIDIARIES For the six-month periods ended August 31, 2003, 2002 and 2001 (Unaudited) A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 1. Principles of Consolidation: The consolidated financial statements include the accounts of Ito-Yokado Co., Ltd. and its subsidiaries ("the Company"). The accounting records of the domestic companies are maintained in accordance with accounting practices prevailing in Japan. The consolidated financial statements reflect adjustments necessary for presentation in conformity with generally accepted accounting principles applicable in the United States of America. Such adjustments principally include accounting for leases and provision for impairment of long-lived assets, goodwill and other intangible assets. The fiscal year-end of 7-Eleven, Inc. and its subsidiaries ("7-Eleven, Inc."), U.S. consolidated subsidiaries, is December 31. To facilitate the reporting of consolidated accounts, the accounts of 7-Eleven, Inc. as of and for the six-month period ended June 30 have been consolidated with the accounts of the Company as of and for the six-month period ended August 31. All material transactions occurring during the period from July 1 to August 31 have been accounted for as part of the consolidation process. Investments in affiliates are accounted for by the equity method. All material intercompany transactions have been eliminated. 2. Accounting Principles: In January 2003, the FASB issued FASB Interpretation ("FIN") No. 46, "Consolidation of Variable Interest Entities--an Interpretation of ARB No. 51". FIN No. 46 addresses consolidation by a primary beneficiary of a variable interest entity. The Company will adopt FIN No. 46 beginning September 1, 2003. The cumulative effect of adjustment upon adopting FIN No. 46, net of income taxes and minority interest, will result in a decrease of net income by approximately 674 million yen and will be recorded as a cumulative effect of an accounting change. B. UNITED STATES DOLLAR AMOUNTS The accounts of the consolidated financial statements presented herein are expressed in Japanese yen and, solely for the convenience of the reader, have been translated into U.S. dollars at the rate of 117 yen=US$1, the approximate rate of exchange prevailing at August 29, 2003. The inclusion of such amounts is not intended to imply that Japanese yen and assets and liabilities originating in Japanese yen have been or could be readily converted, realized or settled in U.S. dollars at 117 yen=US$1 or at any other rate. C. RECLASSIFICATION OF ACCOUNTS Prior-period amounts have been reclassified to conform with the current-period presentation. D. SEGMENT INFORMATION The operating segments reported in the following tables are defined as components of an enterprise for which separate financial information is available and regularly reviewed by the Company's senior management. The Company's senior management utilizes various measurements to assess segment performance and allocate resources to segments. The superstore operations, which mainly comprise 176 Ito-Yokado superstores in Japan, primarily sell apparel, household goods and food. The convenience store operations mainly comprise 10,002 7-Eleven franchised and Company-operated stores in Japan and 5,841 such stores in North America and Hawaii. The restaurant operations are mainly composed of the Denny's Japan restaurant chain, aggregating 570 restaurants in Japan. The other operations are mainly composed of finance, various kinds of services and electronic commerce operations. Assets and long-lived assets are those assets that are used exclusively in the operations of each business segment or geographic area as of August 31, 2003, 2002 and 2001. Capital expenditures include capitalized lease assets. The following tables show revenues from operations and other financial information by business segment, products and services and geographic area for the six-month periods ended August 31, 2003, 2002 and 2001.

Gain on subsidiary's common stock contribution to employee retirement benefit trust, which is not included in the segment information, is attributed solely to the superstore operations in 2001. Gain (loss) on sale and write-down of security investments is mainly attributed to the superstore operations in 2003 and 2001, and mainly attributed to the convenience store operations in 2002. Foreign currency exchange gains (losses) are mainly attributed to the convenience store operations. Minority interest in earnings of consolidated subsidiaries is mainly attributed to the convenience store operations. Equity in earnings of affiliates is mainly attributed to the superstore operations. Loss from discontinued operations is mainly attributed to the convenience store operations in 2003, and mainly attributed to the superstore operations in 2002 and 2001. Cumulative effects of changes in accounting principles are solely attributed to the convenience store operations in 2002 and 2001. The Company does not have significant noncash items other than depreciation and amortization in reported profit. Income taxes are not allocated to the segments in the financial information report available and regularly reviewed by the Company's senior management.

Revenues from operations which are attributed to countries based on location of customers and long-lived assets for the six-month periods ended August 31, 2003, 2002 and 2001, are as follows:

Transfers between reportable business segments or geographic areas are made at arm's-length prices. There has been no revenue from operations with a single major external customer for the six-month periods ended August 31, 2003, 2002 and 2001. E. SUBSEQUENT EVENT On October 9, 2003, the Company's Board of Directors declared an interim cash dividend of 6,631 million yen ($56,675 thousand) to be payable on November 14, 2003, to shareholders of record on August 31, 2003. INVESTOR INFORMATION (As of August 31, 2003) STOCK LISTINGS: Tokyo Stock Exchange Euronext Paris COMMON STOCK ISSUED: 418,717,685 shares NUMBER OF SHAREHOLDERS: 9,317 TRANSFER AGENT AND REGISTRAR: The Chuo Mitsui Trust & Banking Co., Ltd. Securities Service Section 33-1, Shiba 3-chome,Minato-ku, Tokyo 105-8574, Japan

ANNUAL MEETING OF SHAREHOLDERS The annual meeting of shareholders of the Company is normally held in May each year in Tokyo, Japan. In addition, the Company may hold a special meeting of shareholders whenever necessary by giving at least two weeks' advance notice to shareholders. STOCK PRICE RANGE (On the Tokyo Stock Exchange)

* Up to October 31 CORPORATE DATA (As of August 31, 2003) EXECUTIVE OFFICE Ito-Yokado Co., Ltd. 1-4, Shibakoen 4-chome, Minato-ku, Tokyo 105-8571, Japan TEL: (03) 3459-2111 FAX: (03) 3459-6873 URL: http://www.itoyokado.iyg.co.jp/ MAJOR CONSOLIDATED SUBSIDIARIES Seven-Eleven Japan Co., Ltd. 7-Eleven, Inc. Denny's Japan Co., Ltd. York Mart Co., Ltd. IYBank Co., Ltd. IY Card Service Co., Ltd. MAJOR AFFILIATE York-Benimaru Co., Ltd. Store Totals ------------------------------------------------------------ Ito-Yokado 176 Seven-Eleven Japan 10,056 *1 7-Eleven, Inc. *2 5,787 Denny's Japan 570 York Mart 53 York-Benimaru 105 Number of ATMs ------------------------------------------------------------ IYBank *3 6,469 Number of Cardholders ------------------------------------------------------------ IY Card Service *3 approx. 2,370,000 ------------------------------------------------------------

Notes: *1. Including 54 stores in Hawaii *2. As of June 30, 2003 *3. As of September 30, 2003 Forward-Looking Statements This document contains certain statements based on Ito-Yokado's current plans, estimates, strategies, and beliefs; all statements that are not historical fact are forward-looking statements. These statements represent the judgments and hypotheses of the Company's management based on currently available information. It is possible that the Company's future performance will differ significantly from the contents of these forward-looking statements. Accordingly, there is no assurance that the forward-looking statements in this document will prove to be accurate. SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. ITO-YOKADO CO., LTD. (Registrant) November 26, 2003 By: /s/ Noritoshi Murata --------------------------- Senior Managing Director and Chief Financial Officer

ITO YOKADO CO LTD 6-K