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TSE Filings 2000
On the Disposal of Inefficient and Under-Performing Assets
According to the Plan, "Restructuring for Success in the 21st Century,"
Announced on October 13, 1999
April 28, 2000
ITOCHU Corporation has taken bold measures to dispose of inefficient and under-performing assets in construction and real estate in the fiscal year ended March 2000, as part of the plan, "Restructuring for Success in the 21st Century," announced on October 13, 1999. Most of these were executed in the six months ended September 1999. Figures for the fiscal year ended March 2000 are as follows.
1. Details of Extraordinary Losses
(1) Losses incurred from the Management Restructuring Strategy implemented in November 1997
| Change in Assets | Losses due to Disposal etc. | Remaining Assets (Net) (Projection for March 2000) |
|||||
|---|---|---|---|---|---|---|---|
| Plan | Projected Results | Change | Plan | Projected Results | Change | ||
| Disposal of Real Estate Inventory | (40.0) | (44.8) | (4.8) | (37.0) | (36.8) | 0.2 | 24.6 |
| Disposal of Provisions for Receivables | (9.0) | (10.7) | (1.7) | (9.0) | (10.3) | (1.3) | 7.1 |
| Disposal of Overseas Real Estate | (9.0) | (13.7) | (4.7) | (6.0) | (6.0) | - | 3.3 |
| Total | (58.0) | (69.2) | (11.2) | (52.0) | (53.1) | (1.1) | 35.0 |
Losses due to the disposal of provisions for receivables have increased as a result of reviewing the year-end situation of the debtors.
(2) Disposal of inefficient and under-performing assets related to construction and real estate
1. Real estate inventory with long-term development plans
| Losses due to Disposal etc. | Remaining Assets (Net) (Projection for March 2000) |
|||
|---|---|---|---|---|
| Plan | Projected Result |
Change | ||
| Real Estate Inventory | (41.0) | (41.5) | (0.5) | 6.3 |
2. Investments and loans for golf course managing companies
| Losses due to Disposal etc. | Net Exposure (Projection for March 2000) |
|||
|---|---|---|---|---|
| Plan | Projected Result |
Change | ||
| Investments and Loans | (76.0) | (75.9) | 0.1 | 41.5 |
3. Provisions for project finance transactions in construction and real estate
| Losses due to Disposal etc. | Net Credit (Projection for March 2000) |
|||
|---|---|---|---|---|
| Plan | Projected Result |
Change | ||
| Loans | (14.0) | (13.9) | 0.1 | 29.0 |
(3) Restructuring of affiliates and the disposal of inefficient investments into non-affiliated companies
1. Restructuring of affiliates
| Losses due to Disposal etc. | |||
|---|---|---|---|
| Plan | Projected Result | Change | |
| Restructuring of Affiliates | (80.0) | (97.9) | (17.9) |
(Reference) Number of Consolidated Affiliates
| March 31, 1999 | September 30, 1999 | March 31, 2000 |
|---|---|---|
| 1,027 | 982 | 852 |
| Number of Affiliates Restructured |
(48) (compared to March 1999) |
(162) (compared to March 1999) |
Increase in losses was due to bringing forward and executing in the fiscal year ended March 2000 those affiliates originally planned to be restructured in the fiscal year ending March 2001.
2. Investments into non-affiliated companies
| Losses due to Disposal etc. | Breakdown of Projected Losses | |||||
|---|---|---|---|---|---|---|
| Plan | Projected Result |
Change | Domestically Listed Co.'s |
5 Asian Countries |
Others | |
| Domestic and Overseas Investments |
(36.0) | (52.8) | (16.8) | (2.4) | (23.0) | (27.4) |
Increase in losses was due to the decline in listed share prices and disposing other inefficient and under-performing unlisted shares.
(4) Dealing with the anticipated introduction of new accounting standards from the fiscal year ending March 2001 onward
1. Office buildings for rent and land and other properties held for sale
| Losses due to Disposal etc. | Remaining Assets (Net) (Projection for March 2000) | |||
|---|---|---|---|---|
| Plan | Projected Result |
Change | ||
| Office Buildings for Rent and Land and Other Properties Held for Sale | (70.0) | (75.9) | (5.9) | 13.9 |
Increase in losses was due to the securitization and sales of office buildings for rent.
2. Asian and Russian receivables
| Losses due to Disposal etc. | Net Credit (Projection for March 2000) | |||
|---|---|---|---|---|
| Plan | Projected Results |
Change | ||
| Asian Receivables | (11.0) | (26.5) | (15.5) | 34.0 |
| Russian Receivables | (10.0) | (9.7) | 0.3 | 0.2 |
| Total | (21.0) | (36.2) | (15.2) | 34.2 |
Increase in losses from Asian receivables came as a result
of increasing allowances after reviewing the year-end financial
situation of customers.
A large portion of Russian receivables were sold off in
the latter half of the fiscal year ended March 2000.
3. Retirement pension costs
With the revision of the retirement pension plan in October 1999, which included the lowering of the discount rate and the rate of return on assets, the unfunded accumulated benefit obligations was to be amortized in five years starting in the second half of the fiscal year ended March 2000. Past service liabilities of the pension plan which was planned at 5 billion yen for the latter half of the fiscal year ended March 2000 is expected to be 5.7 billion yen.
2. Special gains
Gains from selling investments and fixed assets were planned at 43 billion yen. However, gains from selling investments, which includes the already announced 96.5 billion yen gain from selling investments into ITOCHU TECHNO-SCIENCE Corporation, were 118.8 billion yen. Gains from selling fixed assets were 8.3 billion yen.
(Reference) Summary of extraordinary losses in the fiscal year ended March 2000
| Fiscal year ended March 2000 | ||||
|---|---|---|---|---|
| Projected Losses due to Disposal etc. |
Plan Announced on October 13, 1999 |
|||
| Extraordinary Losses | Consol- idated |
Non- Consolidated |
Consol- idated |
Non- Consolidated |
| 1.Construction and Real Estate Related | (123.3) | (184.3) | (124.0) | (183.0) |
| Management Restructuring Strategy | (12.0) | (53.1) | (13.0) | (52.0) |
| Long-term Development Plans | (38.8) | (41.5) | (38.0) | (41.0) |
| Golf Course Managing Companies | (58.6) | (75.9) | (59.0) | (76.0) |
| Loans | (13.9) | (13.9) | (14.0) | (14.0) |
| 2.Inefficient Investments | (118.7) | (150.7) | (87.0) | (116.0) |
| Restructuring of Affiliates | (65.9) | (97.9) | (51.0) | (80.0) |
| Investments into Non-Affiliated Companies | (52.8) | (52.8) | (36.0) | (36.0) |
| 3.Dealing with the Introduction of New Accounting Standards, etc. | (61.8) | (117.8) | (42.0) | (96.0) |
| Office Buildings for Rent and Land and Other Properties Held for Sale | (30.4) | (75.9) | (26.0) | (70.0) |
| Asian and Russian Receivables | (25.7) | (36.2) | (11.0) | (21.0) |
| Retirement Pension Costs | (5.7) | (5.7) | (5.0) | (5.0) |
| Total | (303.8) | (452.8) | (253.0) | (395.0) |
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