Financial Data

(1) Results of operations and Financial Condition

In the first three quarters of the fiscal year, signs began to emerge of a slow recovery in consumption following the impact of the Great East Japan Earthquake on the Japanese economy. However, the economic outlook remains uncertain because of slowing economic growth overseas, the yen’s strength and other issues.
In this difficult business climate, the GEO Group continued to open many stores during the fiscal year’s first three quarters. As a result, the number of stores increased by 89 to 1,444 at the end of the third quarter.

The GEO Group switched to a holding company structure on November 1, 2011 to create a more powerful corporate governance framework for the purpose of building a stronger administrative framework. Using this structure clearly defines the positioning of departments engaged in business operations and in group management activities. Actions to strengthen management systems continue with the goal of establishing an organizational framework with effective controls and oversight. In addition, the group is dedicated to making further improvements in operating efficiency by realigning and optimizing its organization. The objectives are to reinforce compliance programs and make business operations more profitable.

With GEO HOLDINGS supervising the GEO Group’s activities, the group will continue to work on “strengthening administrative systems” and “enlarging the store network.” The entire group has a firm commitment to using these measures to become even more profitable and establish a more powerful foundation for management.

With regard to sales, in the core retail business segment, the group continues to open many more GEO Shops. Furthermore, Jumble Stores, which target Japan’s growing market for used apparel, have been posting strong sales. As a result, net sales in the first three quarters increased 5,009 million yen (2.7%) from one year earlier to 191,546 million yen.
With regard to earnings, the group used measures to optimize its organization and boost efficiency to offset the growth in expenses resulting from aggressive store network expansion and higher personnel expenses to strengthen the group’s operating framework. The result was growth of 4,970 million yen (55.6%) in operating income to 13,903 million yen and 4,556 million yen (48.9%) in ordinary income to 13,868 million yen.
Due in part to an extraordinary loss in the previous fiscal year for an adjustment for changes to the accounting standard for asset retirement obligations, net income increased 872 million yen (14.7%) to 6,786 million yen.

 

(2) Analysis of financial condition

(Assets)
Total assets were 135,185 million yen at the end of the third quarter, 9,742 million yen more than at the end of the previous fiscal year. Current assets increased 9,792 million yen to 65,189 million yen. This was attributable mainly to increases of 3,189 million yen in cash and deposits and 5,095 million yen in merchandise. Noncurrent assets decreased 50 million yen to 69,995 million yen mainly because of a 53 million yen decrease in lease and guarantee deposits.

 

(Liabilities)
Total liabilities increased 4,395 million yen from the end of the previous fiscal year to 81,800 million yen. Current liabilities increased 12,299 million yen to 48,758 million yen. This was primarily the net result of increases of 10,147 million yen in notes and accounts payable-trade and 4,147 million yen in income taxes payable and decreases of 1,344 million yen in the current portion of long-term loans payable and 518 million yen in the provision. Noncurrent liabilities decreased 7,904 million yen to 33,041 million yen mainly because of decreases of 622 million yen in bonds payable and 6,866 million yen in long-term loans payable.

 

(Net assets)
Net assets increased 5,346 million yen to 53,384 million yen mainly because of net income of 6,786 million yen in the first three quarters and a deduction for dividends of 1,577 million yen paid from retained earnings. This resulted in an equity ratio of 37.2% compared with 35.9% at the end of the previous fiscal year.

 

(3) Outlook for the fiscal year ending March 31, 2012
There are no changes to the fiscal year forecast for consolidated sales and earnings that was announced on October 27, 2011.