Evolving as a leading-edge
service company with a customer
base of 34 million people
Around 80% of Credit Saison’s operating
revenues are derived from the credit
service business. We will continue tostrengthen this core business segment,
as well as our involvement in financebusiness. The key to this strategy will
be our ability to leverage skills that wehave honed through our credit service
business, including our service skills andour innovative abilities.

Credit Service Segment• Credit Card Shopping Business• Cash Advance Business• Processing Agency Business• Servicing BusinessThis segment consists of the credit card-related and servicing (loancollection agency) businesses. We have two brands, SAISON andUC, and our combined customer base, including processing agency
service customers, reached 34 million as of March 31, 2009. The
number of active cardholders during the year was 18 million.

Finance Segment• Credit Guarantee Business• Lease & Rental Business• Loan Business

Activities in this segment include the credit guarantee business, the lease and rental business and the loan business. In thecredit guarantee business, we are working closely with partner
financial institutions to secure quality transactions. In fiscal
2008, we added rental services to our existing lease businessunder a tie-up with Yamada Denki, the biggest home applianceretailer in Japan.
CONTENTS
Business Portfolio

1

Corporate Governance

12

Card Tie-Ups

An Interview with the President

2

Fiscal 2008 Topics

7

Toward a Leading-Edge
Service Company

817

Corporate Social Responsibility

14

Financial Section

18

Board of Directors and Auditors

15

Corporate Information

51

Major Group Companies

16

Corporate History52

As a distribution sector credit card company, Credit Saison has continually improved its front-line marketing capabilities and its capacity to meet customer needs. Our ability to think flexibly and turn ideas into action has resulted innumerous service innovations, including cards with no annual fees, signature-less payments and permanent points.
While capitalizing on our unique strengths, we have also expanded our strategic alliances with leading companies, including the Mizuho Financial Group. Today, the customer base for our two card brands, SAISON Card and
UC Card, together with our processing agency business has grown to 34 million, making us one of Japan’s biggest
credit card companies.
We are witnessing radical changes in the environment for the credit card business, including not only economic
conditions, but also consumer spending trends and new regulatory requirements. The Credit Saison Group is
adapting to this new environment by enhancing the potential of its massive customer base, and by building new
business models based on further expansion of its links with partner companies. Our aim is to evolve intoa leading-edge service company.

Real Estate Segment• Real Estate Liquidation Business• Servicing Business• Real Estate Leasing BusinessOur main activities in this segment are real estate liquidation, servicing business and real estate leasing. In fiscal
2009, we are responding to dramatic changes in the business environment by implementing major restructuring of
the Atrium Group’s business.

Entertainment Segment• Amusement Business

Activities in this segment include the amusementbusiness. Our goals are to create healthy, safe andenjoyable amusement facilities that will be welcomed bycommunities, and to expand sales and income by
improving efficiency and cost-benefit performance.

Other Segment• Insurance• Others

Other activities include the insurance agency
business, information processing services and thenon-life insurance business.

Forward-looking Statements
This annual report contains discussions including management plans, projections, strategies and estimates that are not historical facts. Projections of
future performance are based on management extrapolations from current data, but actual future performance may differ materially from projections.
CREDIT SAISON 2009 1

An Interview with the President

Q1.

How would you assess business conditions, segment performance andoverall results in fiscal 2008, the year ended March 31 2009?

Conditions in fiscal 2008 were shaped by a widening financial crisis triggered by the subprime mortgage
problem in the United States. It was a year of major uncertainty that included the collapse or restructuring of major financial institutions. One of the most significant events was the collapse of Lehman Brothers,
the leading American securities firm. This severe situation also impacted on Japan, resulting in steep falls
in both share prices and real estate values. There were serious downturns in a number of areas, including
business earnings, consumer spending and employment.
Business conditions remained difficult for the Credit Saison Group’s non-bank financial businessand real estate business. In addition to a deteriorating real estate market, new and amended regulatory
requirements, such as the Money-Lending Business Control and Regulation Law, the Installment Sales
Law, also affected business conditions. The situation for our real estate business, especially our consolidated subsidiary Atrium Co., Ltd., was very serious. A severe credit squeeze in financial and capital
markets dramatically reduced the liquidity of major development projects. This caused Atrium’s financial
position to deteriorate, and we were forced to implement radical rescue measures, including financial
support and the acquisition of Atrium as a wholly owned subsidiary.
Despite a downturn in consumer spending, especially purchases of big-ticket items in department stores,
our core credit service business benefited from the expanding use of cards for regular payments, such as
public utility bills and mobile telephone charges. Meanwhile, use of cash advance services slowed becauseof deteriorating economic conditions and the impact of the amended Money-Lending Business Control andRegulation Law. As of March 31, 2009, Credit Saison had 27.57 million cardholders, a year-on-yearincrease of 6.0%. The card shopping transaction volume was 3.5% higher year on year at ¥3,891.0 billion,
but the cash advance transaction volume declined to ¥765.3 billion, or 91.5% of the level a year earlier.
In the finance segment, the number of partner financial institutions using our credit guarantee services
increased to 193, and there was also steady growth in our lease and rental business. Our amusementbusiness moved onto a profitable footing, thanks to efficiency improvements.
Our consolidated operating results for fiscal 2008 included operating revenues of ¥327.0 billion andordinary income of ¥30.9 billion. These figures are equivalent to 94.6% and 53.3%, respectively, of theprevious year’s figures. We also posted an extraordinary loss of ¥90.4 billion, due to a loss on the liquidation of our subsidiary Atrium Co., Ltd. as part of restructuring measures in the real estate segment. As
a result of the above, there was a net loss, our first in six years, of ¥55.5 billion, down from net income of¥26.7 billion in the previous year.
Financial Highlights
Consolidated:
Operating revenues (Note 1)
Selling, general and administrative expenses
Financial cost
Operating income
Net income (loss)
Total net assets (Note 2)
Total assets
Credit card business data (Non-consolidated):
Card transaction volume
Card shopping
Cash advances
Total cardholders (millions)
Active cardholders (millions)
New cardholders (millions)

Millions of yen% change

2009/2008

Thousands of
U.S. dollars (Note 3)

2009

2008

2007

327,089
268,658
23,882
34,548(55,513)345,587
265,494
22,90257,191
26,756

333,683
242,149
16,33275,201
14,821

(5.4)
1.2
4.3
(39.6)—

3,328,815
2,734,156
243,057
351,602(564,967)

2009

320,594
2,407,064

418,6672,450,637

399,8282,299,607(23.4)(1.8)

3,239,384
24,496,890

4,656,461
3,891,076
765,385
27.57
13.91
2.52

4,595,168
3,758,545
836,623
26.01
13.22
2.84

4,305,459
3,433,872
871,587
24.91
12.49
3.60

1.3
3.5
(8.5)
6.0
5.2
(11.3)

47,389,181
39,599,796
7,789,385

Notes: 1. Operating revenues are shown after deduction of consumption taxes, etc.
2. Treasury stock is deducted from capital. In addition, treasury stock is subtracted from the total number of shares outstanding incomputing per share data.
3. Japanese yen amounts have been translated into U.S. dollars at the rate of ¥98.26= U.S.$1, the approximate exchange rate on
March 31, 2009, for the convenience of the reader.

2 CREDIT SAISON 2009

Hiroshi Rinno
President and CEO

Q2.

Please tell us about the trends in the core credit card businessin fiscal 2008.

In fiscal 2008, we issued 2.52 million new cards. Cards that showed substantial increases in cardholder
numbers included the Mizuho Mileage Club Card and the Yamada LABI Card, which are issued in partnership with the Mizuho Bank and Yamada Denki, respectively. This growth brought the total cardholder baseto 27.57 million. However, the decline in consumer spending was far greater than anticipated, and businessconditions remained extremely difficult.
The trend of department store closures and falling sales was especially serious in the second half of the
fiscal year. Because a large part of our card transaction volume consists of department store sales, this
impacted directly on card transactions. Revenues from cash advance
Economic stagnation motivated services also fell because of the lowering of interest rate limits under
the Money-Lending Business Control and Regulation Law. Thereconsumers to seek ways to reduce were also cost increases resulting from the need to develop systems tocosts. It also gave us the opportunity meet new requirements concerning the issuance of documents and theto remind consumers of the benefits of limitation of total lending to individuals. We also continued to receive
claims for interest repayments, and we had to add about ¥10 billion tocards, including the ability to the reserve.
accumulate points.
On the positive side, the recession motivated consumers to seek
ways to reduce costs, leading to renewed awareness of the benefits ofcards over cash payments, such as the ability to accumulate points. Other factors contributing to growth
included the increased use of cards to pay public utility bills and government charges, and the rapid spreadof electronic toll collection (ETC). Card shopping transactions increased by 3.5% year on year. Consumers
looking for smarter and more systematic ways to pay their bills also made increasing use of shopping credit
in fiscal 2008, leading to a 12% rise in the balance of revolving credit receivables to ¥294.9 billion. To
improve efficiency, we spun off our card-related administrative processing operations and merged themwith Qubitous Co., Ltd.
We also provide services to cardholders through our Eikyu Fumetsu.com website (http://www.a-q-f.com/).
We have made significant progress toward the development of this system as a business, and it now generates a transaction volume of ¥20 billion and income of ¥1 billion annually.

CREDIT SAISON 2009 3

Q3.

What progress have you made toward the integration of
the Saison and UC brands?

We laid the foundations for the integration of the credit card business
operations of Saison and UC in October 2007 with the establishmentof Qubitous Co., Ltd. The founding of this new company, which is
jointly owned by Credit Saison and the Mizuho Bank, represents animportant step toward meeting the need for improved profitability inthe credit card business. In April 2008, all processing for the Saisonand UC brands was centralized under Qubitous, which provides
infrastructure for the credit business as a specialist processor.
In addition to Saison and UC cards, Qubitous currently provides
contract processing for around
Qubitous Co., Ltd., a specialist 80 companies. There are plansfor expansion into other agency services, including e-money, businessprocessing company, was established to-business settlements and telecommunications. In addition to its
jointly by Credit Saison and high-quality processing services, Qubitous uses expertise accumulated
the Mizuho Bank. It is now developing through our credit business to offer support in a wide range of businessa new backbone system. situations. It is building integrated processing infrastructure that willbe among the best in Japan in both qualitative and quantitative terms.
The final stage in the Saison-UC merger will be the full integration of
our credit card business. That will require the integration of the basic information systems for both brands.
Our approach to integration has been based on sharing at the operational process level. In December 2008, webegan development of a new credit backbone system in cooperation with Qubitous and Orient Corporation.
We will invest approximately ¥30 billion in the initial development of common backbone infrastructure.
We have selected IBM Japan as the hardware vendor, and are currently working with that company to
finalize requirements and develop the system. After completion, the three companies will progressively
move their operations onto the new system. We plan to make our transition in the spring of 2012.
We anticipate that Qubitous will be able to dramatically improve its operational efficiency with therelease and launch of the new system.

Q4.

What trends do you anticipate in the credit card industry in fiscal 2009?

The megabank-led restructuring of the card industry is now largely over, and trends in the industry appear
to have stabilized. However, there are still unresolved issues confronting the credit card industry, including
the effects of the fully implemented new Money-Lending Business Control and Regulation Law and theInstallment Sales Law, and the persistently high level of claims for interest repayments.
Furthermore, merchant commission rates are falling in inverse proportion to the expanding scope ofcredit card use, and the environment for sourcing finance appears uncertain. While these issues affect theentire industry, the severity of their impact varies according to the business operations of each individualcompany and the size of its cardholder base. Some companies may even become unable to stay in business.
Some companies are trying to secure their survival by radically restructuring their business portfolios.
For example, some have reduced the scope of their activities by withdrawing from the cash advance business. Competition for market share is expected to intensify within the industry. We believe that to win inthis environment, we need to review our operations, including the strategic card partnership schemes that
we have established as joint ventures until now, and discover new sources of competitiveness.

4 CREDIT SAISON 2009

Q5.

What policies does the Credit Saison Group plan to implement in response tothese industry trends in fiscal 2009, and what are your performance forecasts?

We will continue to restructure and strengthen the credit card business. We will also lay solid foundations
for our role as a leading-edge service company by enhancing our cardholder service functions, especiallythose provided via the Internet.
Our greatest strengths are a customer base consisting of 34 million people and our background as a
distribution sector credit card company, which is reflected in our ability to understand our clients’ needs
and market our services in frontline retail situations.
We are actively developing projects
We will use these strengths to develop expanded collaborationin collaboration with major retailers. schemes with major retailers throughout Japan. We have also identiAnother priority is the expansion of fied a number of key themes. First, we will network with leading
companies in a wide range of industries through joint marketing with
our web-based services, including the Mizuho Bank. Second, we will expand our range of premium
the Eikyu Fumetsu.com online cards, centering on American Express cards. Third, we will use our
shopping mall. capabilities as a non-bank to develop composite marketing strategies
targeted toward corporations. Fourth, we will further enhance ourInternet-based member services through Eikyu Fumetsu.com and optional services.
We will also work dynamically to introduce cards that meet the needs of consumers in each area. Area marketing capabilities based on Credit Saison’s nationwide branch network will play a key strategic role in this process.
On the cost side, we will review the administrative efficiency of our credit business with the aim of
reducing labor costs, fees and other cost items. We also plan to achieve major reductions in advertisingexpenditure through a drastic media shift from print and television advertising to Internet-based advertising.
We also intend to cut communication costs by using the Internet to deliver usage statements.
We also have plans for our non-card activities. We want to build a multicore income structure by
aggressively expanding our operations in such areas as credit guarantees, leasing and rental and financing,while also maintaining comprehensive risk control systems.
Our most important priorities at the group management level are the rebuilding of Atrium, and thereinforcement of our group companies’ governance systems. We will also focus on simplifying the head
office organizations of group companies, and on developing human resources.
We anticipate that these measures will allow us to achieve operating revenues of ¥316.0 billion andordinary income of ¥36.0 billion in fiscal 2009. These figures are equivalent to a 3.4% decrease and a
16.3% increase, respectively, compared with our results for fiscal 2008. On this basis, we expect net income
to reach ¥17.0 billion, and we are predicting a dividend of ¥30.
*Please see details of the Priority Policies on pages 8-11.

Q6.

Human resources are vital to sustained growth. What are your plans forhuman resource development and management systems?

Traditionally, we have made ability the most important criterion for human resource development and advancement. We have sought to develop human resource management systems that allow motivated and enthusiastic
individuals to achieve their full potential, regardless of age, gender, academic background or past history.
In recent years, there has been an increase in the number of companies appointing female executives.
We were among the first to adopt a progressive stance in this area, and we already have 9 female divisional
managers and 34 female executives at the section manager level. We have also established unique systems
to allow younger employees to express their views freely. These include the C-Board system for direct
dialog with directors, and a system that allows employees to suggest their own starting salaries.
Other human resource policies include a recruitment system under which experienced people can be
hired at any time, and a system that allows employees to act as headhunters. There is also a self-selection
CREDIT SAISON 2009 5

system for preferred assignments. In addition, employees wishing to work in new positions, new businesses
or partner companies are able to apply through our “Open Challenge” internal recruitment system. In fiscal
2008, 25 employees found new positions through this system.
We have also expanded the range of employment options available to our employees. For example, we haveenhanced our systems for working mothers and those caring for aged family members. Over 100 employees are
currently working reduced hours while they care for children or aged relatives. These improvements to ourworking environment have also led to an increase in the number of females promoted to executive posts.
Our plans for restructuring group management across the Credit Saison Group include developing humanresources through rotation across multiple group companies. We will use multi-company human resource
management and transfer systems and education programs to improve the efficiency of our skill development
and promotion processes. By allowing employees to experience work in various industries, we believe that wewill be able to develop next-generation managers with broad horizons and an excellent sense of balance.
Management Track Profile at Credit Saison
Male/Female Ratio at Department Manager Level(Age)

Average ratio in Japanese companies,
based on Japanese enterprise data (%)

50–

82.4

Male/Female Ratio at Section Manager Level

17.6

3.1

(Age)

Average ratio in Japanese companies,
based on Japanese enterprise data (%)

50–

73.3

26.7

6.8

40–49

73.7

26.3

4.7

40–49

88.9

11.1 4.0

–39

85.7

14.3 10.4

–39

Total

87.0

13.0

Total

0

20

40

60

80

3.7

100 (%)

Age of Employees at Supervisor Level and Higher (Female)

0

20

6.8

14.8

85.2
78.2

5.8

21.8

40

60

80

100 (%)

Age of Employees at Supervisor Level and Higher (Male)

(Age)

(Age)

–29
30–34
35–39
40–44
45–49
50–54
55–
Total
0

Q7.

36
55
83
54
28
19
17
292
20

40

60

80

100

5

–29
30–34
35–39
40–44
45–49
50–54
55–
Total

120 (people)

38
53
85
34
23
9
247
0

20

40

60

80

100

120 (people)

Finally, do you have a concluding message for shareholders, and what isyour policy on shareholder returns?

Our basic policy on shareholder returns emphasizes long-term reliability. We are working under that policy tomaximize corporate value.
We currently face challenging business conditions, including stagnant consumer spending and tighter
regulatory requirements under the Money-Lending Business Control and Regulation Law and other laws.
However, we are determined to fulfill our mission as a market leader in the credit card industry by developing
our business outside of the square. Another priority will be measures to strengthen our management structure,including efficiency-oriented business restructuring, to support continuous growth. In this way, we aim toprevent shareholder returns from being affected dramatically by transient external factors, such as sudden
shifts in the market environment.
The credit card market continues to expand. We will work to provide our shareholders with returns that reflect
our business performance, while also accumulating the internal reserves that we need to maintain the advantageof the Credit Saison Group and achieve new business growth.
We look forward to the continuing support of shareholders and investors.

August 2009

Hiroshi Rinno, President and CEO
6 CREDIT SAISON 2009

Fiscal 2008 Topics

New services and alliances■ Business alliance with Shinhan Card Co., Ltd. (South Korea) (April)Electronic appliancerental catalogue■ Entered into rental business by forming an alliance with Yamada Denki
Co., Ltd. (June)■ Alliance with Higashi-Nippon Bank, Ltd. and Bank of the Ryukyus,
Limited in the credit guarantee business. (September and October)■ Started the mortgage loan “Credit Saison Flat 35” business. (March)

Credit Saison Flat 35
catalogue

Issuance of new affinity cards■ Started accepting applications for “Credit nimoca Card.” (May)■ Stared issuing “Mizuho Mileage Club Card Saison Suica.” (September)■ Started issuing “SMARK Card Saison” together with a shopping mallin Isezaki City. (October)■ Started accepting applications for “LalaGarden Kawaguchi Card
Saison.” (October)■ Formed alliance with Maruhiro Department Store, Ltd. (Saitama Prefecture) and started accepting applications for “MaruhiroM Club Card.”(October)Mizuho Mileage Club Card
Saison Suica■ Started accepting applications for the “National Lawyers’ Association
Saison Platinum Business American Express Card,” a premium card forlawyers. (March)

Restructuring of affiliated companies■ Qubitous Co., Ltd. became a Credit Saison subsidiary, jointly managedwith Mizuho Bank, Ltd. (April)■ Merger by acquisition of LAWSON CS Card Inc. (September)■ Established the holding company JPN Holdings Co., Ltd. (February)■ Announced restructuring plan for Atrium Co., Ltd. (March)

The call center at Qubitous

CREDIT SAISON 2009 7

Toward a Leading-Edge Service Company

Building a leading-edge service
company that puts customers’ needs first

Reforms in the Credit Card BusinessBusiness conditions have changed radically over the past few years. Our goal is to develop highly original
credit card services from which to expand income and establish a credit service business that does not rely on
cash advance business.

■ Collaboration with major retailers
Returning to our roots as a retail sector card company
Since 1982, Credit Saison has built a business as a distribution sector credit card company serving major retailers in the former Saison Group. We have grown by expanding our links with operators of various types of retail
outlets, including department stores, specialty stores and supermarkets, and by creating cards that provide a highlevel of convenience from the perspective of consumers.
Our knowledge of distribution sector cards is our greatest competitive strength in the current adverse environment, which is characterized by economic stagnation and sluggish consumer spending. We aim to expand ourcard transactions by applying this knowledge to the business operations of our partners, thereby helping them toimprove customer services and increase sales.
Specifically, we will expand sales through collaborations with multiple partners in each area. In addition to
our traditional partners, we are also actively developing joint marketing schemes with partners involved in new
business formats, such as outlet shopping malls, discount stores, specialty store retailers of private label apparel
Initiatives with Mitsui Fudosan and LaLaport Management(1) Issuance of two affinity cards• Mitsui Shopping Park Card Saison and MITSUI OUTLET PARK Card
• Can be used at Lalaport, LalaGarden and Mitsui Outlet Park.
(2) Joint operation with stores and facilities, Joint marketing with affiliated cards.
(3) Work jointly with Mitsui Fudosan Group to expand measures for attracting customers.

8 CREDIT SAISON 2009

(SPAs), and operators of businesses based in railway stations. The aim of this diversification is to strengthen ourability to adapt to changing trends in consumer spending.

■ Joint marketing with Mizuho Bank
Sharing the Mizuho Financial Group’s marketing network
We began to issue Mizuho Mileage Club Cards in partnership with the Mizuho Financial Group in 2004. By May
2009, we had issued 2.4 million cards. In just five years, the Mizuho Mileage Club Card has become our leadingcard in terms of number of cards issued. Cards issued by financial institutions that incorporate the features of bankaccount cards are more likely to be carried by cardholders. By adding various other functions, including ANA
mileage and access to East Japan Railway’s “Suica” system, we have developed the Mizuho Mileage Club Card
into a highly prestigious product with potential for long-term use. In fiscal 2009, we will further expand the scaleof our cardholder recruitment activities. We expect dynamic marketing by the Mizuho Bank to drive continuing
growth in our cardholder base.
In April 2009, we began to issue the Mizuho Saison Platinum American
Express Card, which is targeted toward wealthy Mizuho Bank customers. This productwill extend our coverage beyond the customer profile for the Mizuho Mileage Club
Card, and we aim to sign up 100,000 cardholders over the next three years.
Another initiative launched with the Mizuho Bank involves business-to-businesssettlement services for middle-ranked companies and small and mid-sized companies (SMEs) in Mizuho Bank’s customer base. Here, we handle invoicing and collection and other business-tobusiness transactions on behalf of customers. There is a huge market for business-to-business settlement services,
but little use has been made of credit-based methods in the past. We see this as an area with considerable
growth potential.
We are also expanding our marketing cooperation with Mizuho Bank in areas other than credit. In fiscal 2008,
we implemented a campaign offering preferential interest rates on Mizuho Bank time deposits for holders of ourGold cards. This concept was very popular with cardholders. We aim to make a continuing contribution to themarketing efforts of the Mizuho Bank, including the promotion of Mizuho Bank products to our cardholders.

■ Credit Saison Premium Cards
Product differentiation through partnership with American Express
Our most important strategy for sustainable growth entails service enhancement andthe expansion of our cardholder base for premium cards, including Platinum and Goldcards. The reinforcement of our alliance with American Express is a vital component

0123• • • •• •• • • •of that strategy.
We began to issue the Platinum cards in 2005 and the Gold cards in 2007. The
total number of cardholders, including holders of the Associe Card launched in late2008, has reached 105 million.
2009–2012 AMEX+GOLD Card Plan/Annual Shopping Transaction Volume (Billions of yen)2012
¥1,300 billion
2.80 million members

1,350.0
1,200.02009

1,050.0¥950 billion(up 12% year on year)
1.98 million members

900.0

2008
¥850 billion
1.62 million members

CS GOLD

750.0
600.0

CS GOLDCS GOLDUC GOLD

450.0
300.0

UC GOLDUC GOLD

150.0

AMEX

AMEX

AMEX

FY 2008
FY 2009
FY 2012*AMEX includes all AMEX cards, including agents. CS Gold includes all Gold cards. UC Gold includes personal cards only.

CREDIT SAISON 2009 9

In fiscal 2007, we also added American Express to Visa, MasterCard and JCB as one of the brands for proper
cards issued by Credit Saison. Our American Express card is the first to be issued in Japan without a yearly
membership fee. Credit Saison’s new proper card currently accounts for an expanding portion of cards issued
under the American Express brand. Its popularity with a wide range of users reflects the American Express
reputation for high-quality service.

■ Expanding corporate business
Strategic role for our nationwide branch network
Our marketing activities for products aimed at corporate users focus primarily on the increased use of corporate
credit cards. We are also working to expand our customer base for settlement services and develop the user basefor home appliance rentals. In the past, marketing activities in these areas have been handled by individual business divisions. In the current fiscal year, we are adopting a cross-sales approach based on the centralization of
corporate marketing activities in multiple areas at ten new branches throughout Japan.
Corporate account staff in these branches is also actively involved in the development of affiliated merchantsfor net business operators on a contracted agency basis. This is becoming an important new source of revenues.

Using the Internet to Expand Revenues and Reduce Costs
As of July 2009, over 3.5 million of our 27.5 million cardholders were registered for the use of our services via
the Internet. Convenient services for these members include the ability to check their card use and invoices online,
and access to information about affiliated merchants and campaigns. By communicating with members throughthe Internet, we are able to stimulate card usage while also reducing communication and member acquiring costs.
We will continue to encourage cardholders to sign up for Internet services. We plan to expand the number ofregistered members to 5 million by the end of March 2010.
We are also building on the high popularity of the Eikyu Fumetsu.com online shopping mall, which we
introduced exclusively for cardholders registered for Internet-based services, by developing Internet-based cardholder services into a new fee business. The name “Eikyu Fumetsu” literally means “permanent.” Cardholders
who use their cards to shop online can earn up to 20 times the normal number of permanent points. We earn
Concept Diagram of Internet-Based Business

Expansion of profits• Contingency fee revenue• Advertising revenue• Internet news posting revenue• Internet company agent
sales revenue

Customers get Eikyu Fumetsu points
by online shopping, requesting document, or opening accounts.

Cost reduction• WEB statements• WEB news
• Expansion of WEB cards• Deposits/accountinformation changes

Net Members(Net Answer, @U-Net)

Net business alliances
Obtain Net members frompowerful internet companies

Internet services canbe used from PC or
cellular phone.

Customers get Eikyu Fumetsu points
from research, auctions, or
downloading content.

10 C R E D I T S A I S O N 2 0 0 9

Internet card acquisition• From existing card alliancecompanies• From Eikyu Fumetsu .com
top sales shops• From powerful internet companiesaffiliation fees in the form of success payments linked to the value of transactions. The number of merchants
has already exceeded 440.
In addition to our online shopping mall, we have developed a range of other services that allow consumers
to accumulate points. These include online auctions under the Eikyu Fumetsu Auction system, internet researchthrough Eikyu Fumetsu Research, and downloads of digital content, such as music, movies and books, from
Eikyu Fumetsu Content.
This internet membership base will contribute to affiliate revenues and cost savings. We anticipate income
contributions of ¥2 billion in fiscal 2009 and ¥7 billion in fiscal 2011.

Growth in the Financing Business and New Activities
In addition to our credit card business, we are also involved in non-bank financing business. We are achieving
sustained growth in all of our activities in this area, including credit guarantee services, lease and rental services,and loan services.
In fiscal 2008, we added several more banks, including the Higashi-Nippon Bank and the Bank of the
Ryukyus, to the list of alliance partners for our credit guarantee business. We now have 193 partners, mostof which are regional banks and shinkin banks (financial cooperatives). The balance of credit guarantees now
stands at over ¥175.0 billion. Risk control will remain an important priority in this business area. We will continue our efforts to form new alliances with regional financial institutions.
In June 2008, we launched a new operating lease business that will not be affected by changes in the accounting standards for leases. Through collaboration with Yamada Denki, we offer home appliance rental services forcustomers. Under our innovative system, customers are supplied with the latest brand-new products at affordable prices and are able to purchase the items at the end of the rental period. We have strengthened our marketing
resources by combining our 10 branches nationwide, using know-how from our leasing business and Yamada
Denki’s network of stores. Target customers include business hotels, schools and hospitals. By 2010, we expect
this activity to grow into a business generating turnover of ¥50 billion and income of ¥1.5 billion.
In March 2009, we further expanded the scope of our financing business with “Flat 35” mortgage loans,which are long-term loans provided at low, fixed interest rates by the Japan Housing Finance Agency. Our Flat
35 package is designed to meet the needs of customers who are considering a house purchase. We aim to increase
the number of loans processed by adding unique supplementary benefits for services for Saison-UC cardholders.
Further information is available at http://www.saison-flat.com.

Features of the Credit Saison Flat 35 Package• Our commitment to stress-free borrowing—loans available for up to 35 years* at the industry’s
lowest interest rates* Up to 50 years with our Flat 50 package, which is available only for quality, long-life housing• Exclusive benefits for Credit Saison cardholders (as of July 31, 2009)(1) Preferential loan processing charges
1.5% (1.575% including tax) instead of the normal fee of 1.7% (1.785% including tax)(2) Quintuple Eikyu Fumetsu points (maximum of 400 points) for card payments of premiums for Saison car and fire
insurance (“Jibun de Eraberu Kasai Hoken”)• Gifts of up to 10,000 Yamada points (points provided under Yamada Denki’s own system) (As of July 31, 2009)

C R E D I T S A I S O N 2 0 0 9 11

Corporate Governance

The Credit Saison Group is expanding and strengthening its business infrastructure to support its role as a leading-edge
service company with Credit card business as its core segment. We recognize that, along with the achievement of businessobjectives, the reinforcement of corporate governance is vital for obtaining the understanding and support of all our stakeholders—our customers, business partners, employees and society. To increase management transparency and strengthen
management supervision functions, the Company is developing internal control systems and strengthening compliance.

● Corporate governance system
The Board of Directors consists of 13 directors, including one
outside director. It decides important management matters andsupervises the directors’ performance. To ensure that business isconducted properly and soundly and to strengthen corporate
governance, the Board has acted to develop effective internal
control systems and establish and maintain a framework toensure group-wide compliance with laws, regulations and the
Articles of Incorporation.
To ensure that directors perform their duties appropriately, theBoard operates in accordance with the Board of Directors
Regulations. The directors perform their duties in accordancewith the Corporate Law, and properly manage the divisions under
their control in accordance with the Organizational and
Segregation of Duties Regulations to ensure that their businessactivities are executed appropriately and efficiently.
Directors serve a one-year term of office. This policy allows
us to build a flexible management structure capable of adapting toa changing business environment, while also requiring management to earn the confidence of shareholders every year.
The Company has introduced a statutory auditor system. The
Board of Corporate Auditors consists of four statutory auditors,
including four outside statutory auditors. The statutory auditors
conduct rigorous audits by attending Board of Directors meetingsand other important meetings, reading important resolution documents, and examining the conduct of business and the state of theCompany’s assets. The Board of Corporate Auditors also audits
the effectiveness and functioning of internal control systems andstrives to ensure the early detection of problems and improvementof accuracy. To assist the statutory auditors in their duties, theCompany has established the Auditors’ Secretariat, which consists of specialists in internal auditing.
The Company plans and implements compliance measures,and engages in risk management. To that end, the Company has
established the Compliance Department as a dedicated department to ensure the observance of laws, regulations and corporate
ethics, and the Compliance Committee and Risk Management
Committee as dedicated organizations to ensure compliance andrisk management.
The Internal Audit Office audits compliance, risk management, internal control systems and corporate governance in theorganizational operations and business activities of the entire
Credit Saison Group, and makes evaluations and recommendations based on the results.
We will continue to expand information sharing among groupcompanies and strengthen our group management systems, and to
study approaches to management that meet the needs of theCredit Saison Group and contribute to the improvement of consolidated value.

● Remuneration for directors andstatutory auditors
Under the new Corporate Law, the Company has revised its
remuneration system for directors to clarify their responsibility
for business execution and results and increase the independenceof statutory auditors and outside directors. The Company has

Corporate Governance StructureManagement Monitoring System
General Shareholders’ Meeting
Election

Election

Election

Board of Directors
Election • Delegation • Supervision

Cooperation

Audit Office

Guidance

Audit

Representative

Important Committees

Delegation of Management Authority

Departments
Monitoring

12 C R E D I T S A I S O N 2 0 0 9

ComplianceDepartment

Guarantee of effectivenessManagement
Function

Timely disclosure and provisionof materials

Monitoring
Board ofCorporate Auditors Inspection

Auditorseliminated the previous retirement bonus system and unified compensation for the performance of duties, including directors’
bonuses, and worked to increase awareness of the importance ofbusiness performance by promoting director ownership ofCompany shares.
Remuneration, etc., paid to directors and statutory auditors infiscal 2008 is as follows:
Details of remuneration for directors
Total remuneration paid to directors in fiscal 2008:¥478 million (including ¥12 million to an outside director)
Total annual remuneration paid to statutory auditors in fiscal 2008:¥68 million (including ¥50 million to outside statutory auditors)
Remuneration for independent auditors
Remuneration based on duties performed pursuant to Article 2,
Paragraph 1 of the Certified Public Accountants Law: ¥114 million
Other remuneration: ¥26 million● Overview of internal control systems
As per the Corporate Law, the Board of Directors has set basic
policies for directors to build a system that ensures compliancewith laws, regulations and the Articles of Incorporation and theadequacy and efficiency of its business. These policies are basedon a fundamental Company philosophy: “Always realize profitable growth and maximize the satisfaction of customers and otherstakeholders by pursuing innovative ideas and strategies.”
We have established a J-SOX Committee under the chairmanship of a representative director to oversee compliance with the
Financial Instruments and Exchange Act (known as the “J-SOX
Law”). We have also adopted the basic internal control plans andpolicies required to ensure the reliability of financial reports.
Specialist staff in the Compliance Department coordinate thedevelopment of internal control systems by the Company, and bycompanies included the consolidation, and independent monitoring is carried out by specialist staff from the Internal Audit
Office. On this basis, we are able to report to the authorities that
our internal control systems are working effectively.
With these systems, the Company aims to link internal control
to the fulfillment of corporate social responsibilities by enhancing
business performance and maximizing shareholder benefit whilebuilding trust with stakeholders through appropriate and efficientbusiness operations.

● Rigorous implementation and enhancementof compliance
Based on this reinforcement of corporate governance and internal
controls, the Compliance Committee and Compliance Division
are taking the lead in ensuring compliance with laws and regulations, and fairness and morality in business activities. The Crisis
Management Committee has a central role in developing a groupwide management structure for crisis management and ensuring a
rapid response to crises.
Senior Managing Director Toshiharu Yamamoto chairs theCompliance Committee, which reports to the Board of Directors. To
discuss compliance-related matters, the Committee convenes several
times a year, and its secretariat meets more than 20 times a year.
Executive Vice President Teruyuki Maekawa chairs the Crisis
Management Committee, which has developed a group-widecommunication system and responds rapidly to crisis situations.

In fiscal 2006, to further enhance compliance, the Company
reviewed its code of ethics and established standards of conduct
and employee conduct guidelines. To ensure familiarity andobservance with Company rules, regulations and ethics, we havepublished these standards and guidelines in Our Compliance, apamphlet distributed to regular and contract employees.
The Company is working to prevent misconduct and scandals
by publicizing its compliance consultation desk. The consultation
desk strives to create a user-friendly environment by maintaining
systems inside and outside the Company for accepting inquiries,
including dedicated addresses on the Company intranet and theInternet. When a report is received, the Compliance Divisioncooperates closely with an attorney to confirm the validity of thereport and quickly resolve the matter, reports to the Board of
Directors and Board of Corporate Auditors without delay, andthen takes action to prevent reoccurrence.
In addition, the Compliance Division invites outside lecturers
to conduct compliance training for executives, including directors
and division managers. The Company appoints compliance officers and compliance coordinators in each division, and the divisions take the initiative in conducting compliance training incooperation with the Compliance Division.
To raise awareness, we have announced that compliance specialists and staff are also empowered as J-SOX specialists and staff.

● Security and reliability of information systems
As the use of IT grows, maintaining the security and stability of
information systems is becoming increasingly important to ensurethat customers can rely on the Company’s credit cards. Here, wehave implemented countermeasures against system disruptions,which may be caused by a wide variety of factors, including natural
disasters, accidents or computer viruses. Higher systems efficiency
was achieved by centralizing clerical work. Credit Saison will continue efforts to keep its systems secure, reliable and efficient.

● Risk management
To prevent and appropriately respond to risk, the Company has
established risk management systems based on the Regulations
Concerning Management of Risk of Loss and Crisis Management
Regulations. The Company conducts periodic internal educationand training for people working with risk management, and theBoard of Directors periodically examines the regulations andissues revisions and improvements.
We maintain control over factors within the Credit Saison
Group that have the potential to create serious risks by monitoring
the operations of group companies under the Affiliated Company
Regulations, which are administered primarily by the Corporate
Planning Department. Our risk management systems are further
enhanced through information-sharing with the management
organizations of group companies.

● Proactive disclosure of information
The Company proactively discloses business information throughresults briefings, investment conferences, IR meetings and otherevents, and strives to ensure highly transparent management by
posting financial result summaries, IR activities and other information on its website.
URL for corporate and IR information:
http://corporate.saisoncard.co.jp/en
C R E D I T S A I S O N 2 0 0 9 13

Corporate Social Responsibility (CSR) of Credit Saison

Our vision is to become a leading-edge service company, and we regard our customers, business partners, employees andsociety at large as our stakeholders. We aim to fulfill our social responsibilities by providing returns to our shareholders
through activities that satisfy customers, are based on mutual respect for our interests and those of our business partners,
and instill shared ideals and goals in our employees. We will also build a reputation for reliability by adapting flexibly toa changing business environment, and by ensuring regulatory compliance in all business activities.

The Credit Saison approach to CSR
Our concept of CSR is not limited simply to regulatory compliance and the creation of profit. We believe that CSR also means
responding to the needs of citizens, communities and society, anddeveloping business methods and activities that meet and surpass
these needs. This concept guides our CSR activities, which are
based on three perspectives:(1) Activities that are essential to our corporate survival andthe interests of our customers, employees, shareholders
and stakeholders
Our corporate mission is to conduct our business activities in asound, appropriate and timely manner. This requires continual
effort to improve management transparency and strengthen thesystems used to monitor the achievement of management targets.
(2) Activities that contribute to society and the fulfillment of
our responsibilities through our core business activities in
the areas of credit cards and financing
In addition to being convenient, credit cards drive economic
activity as extremely effective tools for settlements. Our priority
is to prevent excessive use leading to heavy indebtedness, while
ensuring that credit cards help to enrich the lives of our customers
and contribute to economic development. As a finance company,
we are entrusted with personal credit information. We carefully
manage this information in accordance with the Private
Information Protection Law, and use it to prevent excessive
indebtedness through the prudent provision of credit and appropriate monitoring after credit is provided.
■ Appropriate management of personal information
We manage personal information in accordance with laws, regulations and other requirements, including guidelines and industry
rules. We have established internal corporate rules, and give our
employees training in ethics. Our efforts to raise awareness of
information management include the use of the “private information manager” qualification established by the Japan Consumer
Credit Industry Association. This qualification is now basicallycompulsory for employees who handle personal information.
Security measures have also been strengthened, with the use ofleased lines, limited access authorization, encryption, andrestricted access to data terminals. Since May 2006, Credit
Saison has been authorized to use the Privacy Mark, a certification given to businesses with appropriate systems for handlingpersonal information.

14 C R E D I T S A I S O N 2 0 0 9■ Preventing excessive indebtedness
We recognize the risks of credit, and strive to prevent excessive
borrowing by monitoring borrowers’ credit status after loans havebeen issued. Assistance for customers includes changes to contract terms and repayment amounts.
(3) Activities that contribute to society in ways that are
unique to Credit Saison
Tens of thousands of people, including our employees and theirfamilies, depend on the Credit Saison Group. We recognize our
responsibilities as an employer, and work constructively toresolve any employment issues. As a distribution sector credit
card company, we aim to use our business activities to provide
services and contribute to society.
■ Resolving employment issues
Credit Saison aims to provide amenable working environments
for all employees, regardless of age or gender. We have madeseveral workplace improvements in response to changes caused
by Japan’s falling birthrate and aging population. These include
systems to help female employees continue working after marriage and childbirth, and more flexibility for employees caring for
older relatives. We also actively re-employ retirees.
■ Developing unique services
Credit Saison maintains two-way communication with customers
through a nationwide network of 137 service counters. Customer
communication is also an important characteristic of our credit
card business. We are always ready to advise customers about
their credit use, and offer unique services to meet their needs.
This commitment to service is not limited to individual customers. We also work with our many partner companies toadvance our mutual interests through the issuance of affinity
cards and corporate cards.

Environmental protection and social contribution
Our customers can participate in social contribution activities with
their cards. For example, points earned through card use can beused to make donations to charities, including the World Heritage
Programme and World Terakoya Movement of the National
Federation of UNESCO Organizations in Japan, the environmental
activities of the Forest Culture Association, and guide dog training
by the Japan Guide Dog Association.
Our credit cards are made from recycled materials, and we use
environment-friendly materials to produce printed materials forcustomers. We encourage our employees to participate in the government’s COOL BIZ initiative, designed to reduce the need for air
conditioning in offices by introducing special summer dress codes.
Other initiatives include the reduction of paper use in our offices,and the sorting of office waste to facilitate recycling.

Board of Directors and Auditors (as of June 26, 2009)

Hiroshi Rinno

Teruyuki Maekawa

Toshiharu Yamamoto

President and CEO

Executive Vice President andRepresentative Director

Senior Management Director andRepresentative Director

Head of Public Relations Office,Corporate Planning Dept., Treasury
Dept., Business
Management Dept. and General
Affairs Dept.

Head of Human Resources Dept.,
Customer Satisfactions Promotion Office,Compliance Dept., System Planning Dept.
and Credit Division/General Manager,
Credit Division

Head of Audit Office andCredit Card Division

Hidetoshi Suzuki

Kazufusa Inada

Naoki Takahashi

Mitsusuke Yamamoto

Managing Director

Managing Director

Managing Director

Managing Director

General Manager,
Credit Card DivisionCorporate Planning Dept.
and Treasury Dept.

Head of Strategic
Investment Dept., Internet
Business Division and
Finance Division

Head of Sales
Development Division /General Manager,
Sales Development Division

Takayoshi Yamaji

Hideo Suzuki

Hiroshi Yamamoto Haruhisa Kaneko

Junji Kakusho

Yoshiro Yamamoto

Director

Director

Director

Director

Director

Director

Sales Promotion Dept.,
Financial Products Dept.,
Card Finance Dept. andLoan Center

Solution Dept. No.1,
Solution Dept.No.2,
Solution Dept.No.3,
Mizuho-Alliance
Development Dept. andLeasing & Rental
Business Dept.

General Manager,
Finance Division

Sales Planning & Marketing General Manager, Internet
Dept., Saison Card Dept.,
Business Division andMillennium Card Dept., UC
Internet Business Dept.
Card Dept., LABI Card Dept.,
Gold & AMEX Card Dept.
and Takashimaya Card Dept.

Hiroshi Tomizawa

Masaru Sakurai

Kotaro Matsumoto Atsushi Toki

Standing Auditor

Standing Auditor

Standing Auditor

Auditor(External)(External)(External)(External)(External)

C R E D I T S A I S O N 2 0 0 9 15Major Group Companies (As of March 31, 2009)

Qubitous Co., Ltd.

Atrium Group■ Processing business
Qubitous provides processing services in the areas of credit card
application screening, monitoring, call center operation, and otherprocessing operations, with a focus on credit services. The company engages in contracted processing for more than 70 client companies, primarily for Saison brand and UC brand credit cards. The
company will seek active expansion of its contracted processing
business with the aim of being the no.1 comprehensive processing
company in both quality and quantity by providing high-quality
services and attaining cost leadership.

■ Real estate liquidation and servicing business
The Atrium Group will make a new start as a wholly owned subsidiary of Credit Saison, specializing in real estate securitization andthe servicing business, from August 1, 2009. We will rapidly andflexibly implement a package of radical business restructuring measures that will take the Atrium Group back to its original structure
as a specialist in two core activities: short-term, high-turnover realestate liquidation for small and medium-sized properties, and thespecial servicing business. We will also further refine and enhance
the knowledge and skills that the Atrium Group has developed
through its involvement in the real estate business.
Atrium produces value by regenerating real estate assets.
We aim to build customer confidence and support by focusing on
customer satisfaction and implementing effective compliance andcorporate governance.

Saison Fundex Group■ Personal loans and mortgage loans
Under SAISON’s Loan Hyakusen brand, Saison Fundex offers cardloan products, such as the Cash reserve loan and VIP loans forprime borrowers, as well as the contract type loan products Lifestyle Support Loans and real Estate Mortgage Loans. The company
also provides project loans to companies that operate real estatebusinesses. In this business, it focuses on project content and meets
wide-ranging funding requirements.
■ Real estate development and construction
House Planning has built its business by making customer satisfaction its first priority.
Its goal is to supply comfortable, reliable and safe residential
properties, especially detached houses, on high-quality land.

JPN Holdings GroupJPN Holdings Co., Ltd. is a pure holding company for twobusiness companies: JPN COLLECTION SERVICE CO., LTD.,
which is involved in the servicing business, and the temporary
staffing company Cosmo Support Co., Ltd.
■ Servicing business
Powerful infrastructure in the form of a large-scale call center gives
the JPN Holdings Group an important advantage in this businessarea. The company provides services meeting a wide range ofneeds, from the management and recovery of small, unsecured
receivables to the purchase of receivables from financial institutions
and non-banks. The JPN Holdings Group also provides services tolocal authorities and other government sector organizations, including temporary staffing, research services and back-up services.
■ Temporary staffing business
The JPN Holdings Group provides total solutions relating tocollection services. Through its temporary staffing services, it
helps to improve the recovery performance of its clients, especiallyfinancial institutions and non-banks.

16 C R E D I T S A I S O N 2 0 0 9

Concerto Co., Ltd.
■ Amusement business
Concerto aims to create optimal amusement spaces for theenjoyment of its customers and has established 27 pachinko parlors
in eastern Japan. As an organization with strong regional links, it
contributes to local communities by combining spacious facilities
with fine-tuned services.
■ Real estate rental business
Concerto rents commercial buildings, especially its “The Prime”
properties in Shibuya and other central Tokyo locations. It is
working to develop new properties and expand its leasing businessunder a concept that calls for utilization and development ofproperties that enhance local communities.
■ Membership club management
The concept for Concerto’s uraku AOYAMA membership club isto provide “the ultimate in hospitality.” With facilities that include
a fitness gym, restaurant and guest rooms, this luxurious complex
provides superb service and the ideal environment in which to
enjoy the benefits of club membership.

Saison Information Systems Co., Ltd.
■ Information processing services
Saison Information Systems engages in systems construction andoperation grounded in a wealth of business process expertisedeveloped in fields such as finance and distribution. The company
also actively engages in payroll outsourcing and communications
middleware based on HULFT technology. It aims to be a company
that enjoys the complete trust of customers by providing a one-stop
service for everything from systems construction to outsourcing
and package products.

Card Tie-Ups
Credit Saison has expanded its affinity card range across wide-ranging sectors. With a cardholder base of 27.5
million (34 million including cardholders of affiliates), it issues more than 200 affinity cards under the SAISON
and UC brands.

Standard

SAISON CARD International

Gold Card
SAISON International

SAISON CARD International
American Express Card

SAISON Gold
American Express Card

MONEY CARD
(Loan Card)

UC CardUC Card GoldSAISON
American Express Card

SAISON Platinum
American Express Card

MONEY CARD GOLD
(Loan Card)

Shopping
0123
VALID THRU

Sogo Co., Ltd.

The Seibu Department
Stores, Ltd.

Parco Co., Ltd.

MARUHIRO DEPARTMENTSTORE. LTD.

SAKURANO DEPARTMENTS
STORE CO., LTD.

Takashimaya Company,
LimitedTakashimaya Company,
Limited

Ryohin Keikaku Co., Ltd.

The Loft Co., Ltd.

LAWSON Inc.

Yamada Financial Co., Ltd.

Mitsui Fudosan Co., Ltd.
LaLaport Management Co., Ltd.

Mitsui Fudosan Co., Ltd.

Tokyo Tatemono Co., Ltd.

Daiwa House Financial
Co., Ltd.

Travel & Entertainment

SEIBU HOLDINGS INC.

SOFTBANK MOBILE Corp.

Japan Football Association

United Airlines, Inc.

PADI

LPGA CLUBNishi-Nippon Railroad
Co., Ltd.

TOHO Cinemas Ltd.

Asiana Airlines, Inc.

WOWOW Inc.

Resona Card Co., Ltd.

Shizugin Saison Card Co., Ltd.

Yamaguchi Financial
Group, Inc.

KDDI CORPORATION.

Honda Motor Co., Ltd.

Mazda Motor Corporation

Japan Automobile Federation

YANASE & CO., LTD.

TOKYO GAS Co., Ltd.

Tokyo Gas Energy Co., Ltd.

Waseda University

Financial Institutions

Mizuho Bank, Ltd.

Automotive

Idemitsu Credit Co., Ltd.

Social Contribution and Others

World Wide Fund for
Nature Japan

Japan Leukaemia
Research FundC R E D I T S A I S O N 2 0 0 9 17

Financial Section
Six-Year Summary of Selected Financial Data
As of and for the years ended March 31

Thousands of
U.S. dollars(Note 4)

(Millions of yen)

As of and for the years ended March 31

2009

2008

2007

2006

2005

2004

2009

CONSOLIDATED
For the year:
Operating revenues (Note 1)¥ 327,089¥ 345,587¥ 333,683¥ 274,666¥ 240,385¥ 220,332$ 3,328,815

Selling, general and administrative expenses

268,658

265,494

242,149

193,126

172,024

156,5022,734,156

Financial cost

23,88322,902

16,333

11,965

9,771

9,825

243,057

Operating income

34,54857,19175,201

69,57558,59054,005

351,602

Net income (loss)(55,514)26,756

14,82242,22031,81822,420(564,967)$ 3,239,384

At year-end:
Total net assets (Note 2)¥ 320,594¥ 418,661¥ 399,828¥ 377,127¥ 301,310¥ 258,253

Total assets

2,407,064

2,450,637

2,299,607

2,062,612

1,512,949

1,352,710

24,496,890

Interest-bearing debt (Note 3)

1,893,017

1,854,057

1,608,307

1,480,380

1,146,928

1,011,563

19,265,388

Per share data (in yen and U.S. dollars):
Net income (loss) per share¥

Net assets per share(308.25) ¥1,766.95

148.78¥2,147.04

82.79¥

237.29¥185.002,077.69

2,013.85

1,721.35¥

130.55$(3,113)
17,982

1,519.13

Key financial ratios (%):
Return on shareholders’ equity (ROE)

—

7.1

4.0

12.8

11.4

9.1

Return on assets (ROA)

—

1.1

0.7

2.4

2.2

1.7

Shareholders’ equity ratio

13.2

15.8

16.2

17.5

19.9

19.1

NON-CONSOLIDATED
For the year:
Operating revenues (Note 1)¥ 270,901¥ 277,741¥ 270,275¥ 216,453¥ 190,248¥ 175,725$ 2,756,981

Selling, general and administrative expenses

220,709

223,816

204,765

156,887

135,403

123,746

2,246,173

Financial cost

21,531

20,322

14,067

9,700

8,186

7,154

219,123

Operating income

28,66133,60351,442

49,886

46,65944,824

291,685

Net income (loss)(44,973)

24,57910,221

27,131

25,79824,396(455,862)$ 3,096,184

At year-end:
Total net assets (Note 2)¥ 304,231¥ 361,520¥ 349,754¥ 341,423¥ 298,502¥ 261,792

Total assets

2,220,792

2,066,514

1,962,996

1,761,666

1,290,067

1,155,776

22,601,181

Interest-bearing debt (Note 3)

1,748,246

1,554,630

1,350,134

1,239,043

948,561

828,639

17,792,042

142.00$Per share data (in yen and U.S. dollars) (Note 2):
Net income (loss) per share¥(249.40) ¥136.51

¥

57.03

¥

152.21¥149.78¥(2,538)

Net assets per share

1,686.70

2,006.89

1,945.22

1,904.13

1,703.39

1,536.51

17,166

Dividends per share

30.00

28.00

28.00

26.00

20.00

18.00

0.305

Key financial ratios (%):
Return on equity (ROE)

—

7.0

3.0

8.5

9.2

9.8

Return on assets (ROA)

—

1.2

0.6

1.8

2.1

2.2

13.7

17.5

17.8

19.4

23.1

22.7

Card shopping¥3,891,076¥3,758,545¥3,433,872¥2,527,808¥2,078,117¥1,912,210

Shopping loans

5,785

6,092

5,693

6,952

9,440

13,36758,874

107,532

103,30385,43162,09736,17931,683

1,094,362

Equity ratio
TRANSACTION VOLUME: NON-CONSOLIDATEDGuarantees$39,599,796

Cash advances and specialty loans

1,091,556

1,116,594

1,058,335

739,038

592,359555,984

11,108,854

Agency services

1,347,261

1,269,579

809,992

747,998576,270

328,119

13,711,185

100,272

88,27387,48890,011

82,99973,6651,020,476

—

—

—

—

—

2,763

—

16,692

16,187

10,700

9,794

8,317

6,604

169,876

6,560,174

6,358,573

5,491,515

4,183,698

3,383,681

2,924,399

66,763,424

LeasesMerchandise sales
OthersTotal volume of new contracts

Notes: 1. Operating revenues do not include consumption taxes.
2.	Effective from the year ended March 31, 2007, the Company adopted “Accounting Standard for Presentation of Net Assets in the Balance Sheet” (ASBJ Statement No.
5) and “Implementation Guidance on Accounting Standard for Presentation of Net Assets in the Balance Sheet” (ASBJ Guidance No. 8). Under the previous accounting
standard, total net assets were recorded as shareholders’ equity. The figure for total net assets for the year ended March 31, 2006 has been calculated using the new
accounting standards. Figures for prior years utilize the old standards.
3. Interest-bearing debt includes asset-backed securities.
4.	Japanese yen amounts have been translated into U.S. dollars at the rate of ¥98.26= U.S.$1, the approximate exchange rate on March 31, 2009, for the convenience ofthe reader.

18 C r e d i t S a i s o n 2 0 0 9

Management’s Discussion and Analysis

THE CREDIT SAISON GROUPThe Credit Saison Group has five business segments: Credit Service,
Finance, Real Estate, Entertainment and Other. The Credit Service
Segment is the Group’s most important segment, and provided
approximately 75% of total operating revenues in fiscal 2008.
The Group’s operating revenues consists primarily of fees fromaffiliated stores generated via credit card and installment purchases,
and customer fees generated via revolving account payments,
specialty loans and other transactions. Both of these are earned in our
mainstay Credit Service Segment.
Operating expenses consists primarily of advertising expenses,
point redemption costs, costs of uncollectible receivables, personnel
expenses, fees and financial costs.

CHANGES IN THE SCOPE OF CONSOLIDATION
In fiscal 2008, ending March 31, 2009, the Credit Saison Group had
eleven consolidated subsidiaries, compared with eight in the previous
fiscal year. The number of affiliated companies accounted for by theequity method decreased from nine to eight in the year under review.
With regard to consolidated subsidiaries, from fiscal 2008 QubitousCo., Ltd. was included in the consolidation as a result of acquisition ofits shares. In addition, AW3 YK, Grande Trust Nine YK and a special
purpose company, MAPJ, were also added to the consolidation due
to their increasing importance to the Group’s operations. However,LAWSON CS Card, Inc., which was included in the consolidation fromfiscal 2008 following additional acquisition of its shares, was excluded
from the consolidation as of September 1, 2008 due to its merger
with Credit Saison. A&A Corporation was also excluded from theconsolidation as of February 16, 2009 due to a merger with ConcertoCo., Ltd., which is a consolidated subsidiary of Credit Saison.

ANALYSIS OF INCOME STATEMENTS
In fiscal 2008, the Japanese economy continued to be significantly
affected by the worldwide financial crisis, which was triggered by the
U.S. subprime loan crisis. The economic outlook became uncertain
due to concerns driven by a very apparent economic vicious circle:
The financial crisis was reflected in substantial stock market falls andsudden yen appreciation, which in turn caused sharp deteriorationin corporate earnings. The worsened corporate performance raised
concerns about employment conditions and weakened personal
consumption, all of which led to further economic downturn.
In the non-banking sector, to which the Credit Saison Groupbelongs, industry reorganization is likely to be accelerated undera new competitive landscape resulting mainly from a drastic shift in

Total Operating Revenues

the earnings structure of businesses affected by amendments to the
Money-Lending Business Control and Regulation Law.
In the real estate and real estate financing business sectors, markets
continue to be slow. The U.S. subprime loan crisis triggered an abrupt
credit crunch, which in turn caused significant liquidity deteriorationin real estate transactions, as well as large-scale bankruptcies in theconstruction business and the real estate business.
Under these circumstances, Credit Saison’s consolidated operating
revenues decreased by 5.4% year on year to ¥327,089 million, while
consolidated operating income decreased by 39.6% year on year to ¥34,548
million. The bottom line was a consolidated net loss of ¥55,514 million.

Operating Revenues and Expenses, and Operating Income
In fiscal 2008, operating revenues decreased by ¥18,498 million, or
5.4%, year on year to ¥327,089 million. The Credit Service Segment,
our core segment, maintained about the same level of operating
revenues as in the previous fiscal year, edging up by ¥10 million to¥254,725 million.
Card shopping revenues rose due to an increase in the card
shopping transaction volume, although cash advance revenues
decreased, affected by the shrinking market. The Finance Segment
posted operating revenues of ¥46,733 million, a year-on-year increaseof ¥2,363 million, or 5.3%, on the back of steady performances in thecredit guarantee business and the lease and rental business. The Real
Estate Segment, however, recorded a significant drop in operating
revenues, due to market conditions characterized by ever-lower
liquidity in real estate transactions. As the segment was also affectedby the normalization of the one-time peak contributing to the previous
year’s performance, which included sales of several large-scale
projects, the operating revenues of the segment decreased by ¥19,407
million, or 51.1%, to ¥18,550 million.
Operating expenses amounted to ¥292,541 million, a year-onyear increase of ¥4,145 million, or 1.4%. Among major items, the costof writing off of uncollectible receivables rose by ¥2,878 million, or
3.9%, to ¥77,204 million, mainly due to an increase in receivables inwhich third parties, including attorneys, had intervened on customers’
behalf, as well as due to an increase in the provision for allowance forlosses on interest repayments.
Regarding selling, general and administrative (SG&A) expenses
other than the costs of uncollectible receivables, advertising expenses
stood out with a remarkable decrease in its amount by ¥3,607 million, or
16.2%, to ¥18,711 million. Other major SG&A items included a ¥13,357
million provision for allowance for losses on card point programs(down ¥1,374 million, or 9.3%, year on year), ¥52,907 million in fees

Breakdown of Selling, General and Administrative (SG&A) Expenses(Millions of yen)

(Millions of yen)

327,089345,587

333,683

274,666

240,385

Years ended March 31,

2009

2008

Cost of uncollectible receivables

77,20474,326% change

57,58056,015

2.8

277

59

366.5

		 Provision for losses on interest repayment

14,821

14,6501.2

		 Allowance for losses on guarantees

4,525

3,602

25.6

191,455

191,1670.1

		 Advertising expenses

18,711

22,318(16.2)

		 Provision for point program

13,357

14,731(9.3)

		 Personnel expenses

47,31145,440

4.1

		 Fees paid

52,907

52,791

0.2

Total SG&A expenses

268,658

265,493

1.2

3.9

Included in the above:
		 Allowance for losses on accounts receivable
		 Losses on accounts receivable

SG&A expenses excluding cost of uncollectible receivables
Included in the above:

05

06

07

(Years ended March 31)

08

09

Credit Saison 200919

paid (up ¥116 million, or 0.2%, year on year) and ¥47,311 million inpersonnel expenses (up ¥1,871 million, or 4.1%, year on year). Financial
costs amounted to ¥23,883 million, a ¥981 million, or 4.3%, year-onyear increase.
As a result, operating income for fiscal 2008 decreased by ¥22,643
million, or 39.6%, from the previous fiscal year to ¥34,548 million.
Non-operating Revenues and Expenses, and Net Income
Net non-operating losses soared to ¥83,698 million from the previous
fiscal year’s level of ¥1,404 million. Non-operating revenues marked
only a slight increase of ¥345 million to ¥19,566 million, includinga ¥12,835 million gain on sales of investment in Visa Inc. and otherinvestment securities. In addition, non-operating expenses increased
substantially by ¥82,639 million year on year to ¥103,264 million, mainly
due to a ¥90,404 million loss on business restructuring of Atrium Co.,
Ltd. Regarding Atrium Co., Ltd., out of a ¥1,681 million provision forallowance for doubtful accounts, ¥1,661 million was provided for a loan
to Mr. Tsuyoki Takahashi, the former representative director of Atrium
Co., Ltd.
As a result of the above, a ¥55,514 million net loss was posted forfiscal 2008.

POLICY FOR RETURN TO SHAREHOLDERS
To raise shareholder value, Credit Saison places high importanceon initiatives to reinforce our corporate culture and to continuously
expand our businesses. Our fundamental policy for shareholder
returns calls for steady enlargement of internal reserves to realize theinitiatives described above, while delivering appropriate, stable andcontinuous dividend payments to our shareholders.
Dividend per Share
Based on its dividend policy, Credit Saison allocated annual dividendsof ¥30 per share in fiscal 2008, ¥2 more than in the previous fiscal year.
Other than cash dividend payments, shareholders who also holdcredit cards issued by Credit Saison are granted “Eikyu Fumetsu
Points,” which have no expiry date and can be exchanged for itemsof choice at any time on Eikyu Fumetsu.com. The number of points
granted depends on the number of shares owned.

REVIEW OF OPERATIONS BY SEGMENT
Credit Service Segment
This segment consists of the credit card shopping business, servicing(loan collection agency) business and other businesses. Segment
operating revenues for fiscal 2008 maintained about the same level
as in the previous fiscal year, and amounted to ¥254,725 million, while
segment operating income decreased by 16.0% to ¥25,679 million.

(i) Credit Card Shopping BusinessIn the credit card sector, credit card usage has continued to grow asa result of increased use of credit cards for small-amount settlements
via electronic money, as well as settlement of public utility bills, such as
electricity, gas and water services.
Meanwhile, the effects of the Money-Lending Business Control
and Regulation Law have appeared in the shrunk market scale ofcash advance services due to tighter credit standards, or in increased
development costs for new IT systems. Thus, it is expected that thebusiness environment will continue to be challenging for all companies
in this business sector.
In this business climate, Credit Saison strived to expand its networkof alliances with large-scale retailers in Japan, public transport companies
and major credit card issuers overseas. We also focused on improving
business efficiency by reinforcing our Internet strategies, restructuring
our sales network and implementing measures against credit risks.
The total number of cardholders as of March 31, 2009 increased
by 6.0% from the previous fiscal year-end to 27.57 million, adding a
total of 2.52 million new cardholders.
The card shopping transaction volume amounted to ¥3,891
billion, a year-on-year increase of 3.5%, while the shopping-related
revolving credit balance rose by 11.8% to ¥294.8 billion. The numberof active cardholders also increased, up by 5.2% to 13.91 million. In
addition, cash advances on cards decreased by 0.7% to ¥665.3 billion,¥6.0 billion of which has been securitized by Credit Saison, resulting ina net balance of ¥659.3 billion.
Key Initiatives in the Credit Card Shopping Business during Fiscal 2008
P Alliance Network Expansion
	In the fiscal year under review, Credit Saison continued to expand its
alliance network with retail companies, public transport companies
and major credit card issuers overseas, taking full advantage of its
corporate strengths.
		 Examples include the Sakurano Saison Card for customers
of Sakurano Department Stores, issued in alliance with Sakurano
Tohoku Co., Ltd. and Sakurano Department Store Co., Ltd.; SMARK
Card Saison for customers of the commercial facility SMARK in
Isezaki City, Gunma Prefecture, issued in alliance with Prime Place
Co., Ltd., a wholly-owned subsidiary of Tokyo Tatemono Co.,
Ltd.; LaLa Garden Kawaguchi Card Saison for customers of thecommercial facility LaLa Garden Kawaguchi in Kawaguchi City,
Saitama, issued in alliance with LaLaport Management Co., Ltd.;
Maruhiro M Club Card and the Atre M Club Card for customersof Maruhiro Department Stores, issued in alliance with Maruhiro
Department Store Ltd., which has ten department stores in Saitama
Prefecture; and nimoca Saison Card, which was issued in alliancewith Nishi-Nippon Railroad Co., Ltd. and also provides nimoca IC
card services.

Operating Revenues and Operating Income by Segment(Millions of yen)

Operating Revenues

Operating Income (Loss)

2009

2008

% change

2009

2008

% change

Credit Service

254,725

254,7150.0

25,67930,581(16.0)

Finance

46,73344,370

5.3

10,548

11,252(6.3)

Real Estate

18,55037,958(51.1)

613

22,761(97.3)

Entertainment

15,53814,3967.9

1,652(3,010)

—

Other

1,939

1,995

(2.8)

1,345

1,327

1.4

Total

337,485

353,434(4.5)

39,83762,911(36.7)

Eliminations or corporate(10,396)(7,847)—(5,289)(5,720)—Consolidated

327,089345,587(5.4)

34,54857,191(39.6)

Note: Operating revenues and operating income of each segment include intersegment operating revenues.

20 C r e d i t S a i s o n 2 0 0 9

	 In addition, Credit Saison and UC CARD Co., Ltd. havereached an agreement with Shinhan Card Co., Ltd, a leading cardcompany in South Korea, regarding a business alliance in ourcredit card operations.
		 Through this new business alliance, the three parties will be able
to provide value-added services to their respective cardholders
and affiliated stores in Japan and South Korea. The parties will
also cooperate in the development of new products and services.
Furthermore, in the future, we are willing to go beyond the threecompany alliance, and encourage banks and card companies in thewider Asia-Pacific region to participate in broad-based partnership.
To this end, we will study the possibility of constructing an alliancenetwork that will provide added value to the cardholders of eachcompany participating in such alliances.
P Enhancement of Internet Strategies
	The total number of Net Members, including SAISON Card Internet
members (Net Answer members) and UC Card Internet members(@UNet members) reached 3.26 million as of March 31, 2009, a
30.4% year-on-year increase.
		 Credit Saison operates Eikyu Fumetsu.com, an online shopping
mall for its Internet card members, using two powerful tools at our
disposal: our growing list of Net Members and the non-expiring
Eikyu Fumetsu Points. In the two and a half years since its opening,
this online mall has grown to have 350 tenants and ¥1.7 billion inmonthly sales, and set a daily sales record of ¥80 million. We aredetermined to reinforce our initiatives in new Internet businesses,
such as Eikyu Fumetsu Auctions, Eikyu Fumetsu Research, Eikyu
Fumetsu Contents and Eikyu Fumetsu Click, in order to grow fee
businesses based on commissions from online shops into major
revenue sources.
P Restructuring of the Sales Network	To further improve management efficiency, we have worked torestructure our sales network. Our efforts during fiscal 2008 include
closing 25 Saison counters and opening 17 new counters in new
locations. We are aiming to operate our service counters in a mannerthat takes revenues and efficiency aspects into account throughout
all processes, from the offering of a new card to the provision ofvarious services.
P Ensuring Credit Risk Management
	Although interest refund claims and receivables intervened for by
third parties, including attorneys and certified judicial scriveners,
are maintaining their high level, the increasing trend previously
observed abated in fiscal 2008.
		 We will continue to focus on improving the quality of receivables
through credit management while keeping an eye on trends
regarding changes in laws and regulations, and maintain thoroughcredit control that balances returns and risks through appropriate
offers of credit.
New Developments and Future Initiatives
To expand our revenue base in the credit card businesses, Credit
Saison promoted solicitation of revolving account payments at sitesof purchase in cooperation with clients including affiliated stores,
resulting in a steady growth in the revolving account balance in fiscal
2008. Since commission rates of revolving account payments wererevised for SAISON brand credit cards in March 2009, we expect
greater revenues to be generated by the revolving account businessin fiscal 2009 and thereafter.
Credit Saison also implemented initiatives to secure high-net-worth
cardholders, who are expected to be frequent and high-amount card
users. These initiatives included a tie-up with the Japan Federation of
Bar Associations (JFBA), through which we launched the Lawyers Saison
Platinum Business American Express Card. We intend to expand ourbase of high-net-worth customers and high-quality receivables, as wellas continue our revenue structure reforms in the credit card businessthrough initiatives including readjusted card renewal standards andcost reductions attained through wider use of online statements.
(ii) Servicing (Loan Collection Agency) BusinessDue mainly to the amendment of the Money-Lending Business Control
and Regulation Law, the business environment of the non-banking
sector has worsened considerably, in turn significantly affecting theservicing industry.
In this business climate, JPN Collection Service Co., Ltd. shiftedto a holding company structure in February 2009. With this change,
the company aims to strengthen its ability to respond promptly andflexibly to changes in the business environment, enable businessdevelopments in new business domains and enhance its compliancerelated systems.
In the fiscal year under review, the Credit Saison Group began toactively offer services for government and municipal offices, launched
new initiatives with existing business partners and developed sales
for small-amount unsecured loan receivables in the agency business.
However, due mainly to requests from clients to review transaction
conditions and tightened credit standards in credit companies, which
decreased the number of outsourced transactions, operating revenues
for the servicing business in fiscal 2008 remained at the same level as in
the previous fiscal year.
Finance Segment
This segment consists of the credit guarantee business, the lease
and rental business and the loan business. In fiscal 2008, transaction
volumes in the credit guarantee business and the lease businessremained strong, resulting in segment operating revenues of¥46,733 million, a 5.3% year-on-year increase. However, the cost of
uncollectible receivables increased, mainly due to the introductionof new accounting standards for lease transactions in fiscal 2008,
and operating income for the segment decreased by 6.3% from theprevious fiscal year to ¥10,548 million.
(i) Credit Guarantee Business
Credit Saison focused on obtaining high-quality items by utilizing
its close business relationships with affiliated financial institutions inboth sales and management, particularly in the guarantee businessfor unsecured free-loans to individual customers. In addition, we
endeavored to increase our transaction volume by entering into a
total of 35 new alliances with regional financial institutions. As a result,the gross guarantee balance before recording an allowance for losses
on guarantees increased by 13.1% from the previous fiscal year to¥176.8 billion.
(ii) Lease & Rental Business
Credit Saison provides a variety of unsecured consumer loans, such as
Member’s Loans for SAISON Card cardholders. The balance of otherconsumer loan receivables stood at ¥34.6 billion, down by 30.5% fromthe previous fiscal year-end.
(iii) Loan Business
Credit Saison engages in financing collateralized by real estate
properties with individuals and corporations. Reflecting stricter
screening of facilities, the balance of loans decreased by 57.0% year
on year to ¥106.2 billion. Meanwhile, the trust receivables of ¥70.0
billion that were securitized in August 2007 were redeemed earlier
than scheduled due to a decrease in qualified receivables. In addition,
Credit Saison started to offer a long-term fixed-rate housing loan
called Flat 35 (the receivable of which is acquired and securitized by
Japan Housing Finance Agency) in March 2009.

Credit Saison 200921

(iv) Lease Business
Based on statistics provided by Japan Leasing Association, theoverall lease contract volume for the industry marked its lowest levelin 22 consecutive months, reflecting weakened capital investment
by corporations.
Nevertheless, Credit Saison increased its lease contract volume by
13.6% from the previous fiscal year to ¥100.2 billion. This achievement
was partly a result of our efforts to enhance our relationships withexisting business partners and to steadily obtain new affiliated stores.
In addition, in alliance with Yamada-Denki Co., Ltd., we launched adigital household equipment rental business targeting corporations.
We aim to grow this new business by continuously diversifying rentableequipment and sales channels.
Real Estate Segment
This segment consists of the real estate liquidation business, theservicing business, the real estate loan guarantee business, thestrategic investments business, and the real estate leasing business.
Since the second half of fiscal 2008, the Atrium Group, which
previously formed the core of the real estate-related business of theCredit Saison Group, has focused on selling off real estate inventories
under a strategy prioritizing the improvement of operating cash flows.
However, actual sales of real estate inventories failed to achieve
the planned target, due to the extreme deterioration in liquidity
seen in the real estate market. Moreover, Atrium’s subrogation
payments in the real estate loan guarantee business surged beyond
its forecast, which hindered Atrium from reducing its assets. As aresult, operating revenues of the segment decreased by 51.1% year
on year to ¥18,550 million, and operating income dropped sharply
by 97.3% to ¥613 million.
The Credit Saison Group has concluded that the key causeof this deterioration in business results was that the Atrium Groupprioritized the profit aspect too much when the real estate market
was booming, and therefore concentrated too much on large-scale
development projects. Based on this analysis, we will refrain fromlarge-scale development projects, and withdraw from the real estateloan guarantee business and the strategic investments business, which
are two major factors behind our performance decline.
Accordingly, loss on valuation of inventories, provision for losses
on doubtful accounts of guarantor’s claims, and other losses incurred inconnection with the said two businesses, were recorded in the financial
statements as “loss on business restructuring of subsidiaries.”(i) Real Estate Liquidation BusinessWe limited procurement to real estate-collateral acquired in the realestate loan guarantee business, and concentrated our efforts onsales activities to improve operating cash flows. However, due to thedownturn in the real estate market, actual sales were far below theplanned figure.
(ii) Servicing Business
While refraining from procuring loan receivables, we steadily collectedpurchased loan receivables. We also strived to sell real estate
properties as commercialized products.
(iii) Real Estate Loan Guarantee Business
The balance of loan guarantees as of February 28, 2009 decreased as aresult of ever-stricter screening of the execution of financial guarantees.
In addition, reflecting the deterioration in the real estate market,
the subrogation payment ratio (aggregate amount of subrogation
payments since the business start / aggregate amount of financial
guarantees executed since the business start) rose to 15.2% as ofFebruary 28, 2009. Since Credit Saison has determined the real estateloan guarantee business to be one of the causes of our recent weakbusiness performance, we withdrew from this business as of March
25, 2009. Accordingly, provision for losses on doubtful accounts

22 C r e d i t S a i s o n 2 0 0 9

of guarantor’s claims, and other losses incurred in connection withthis business, were recorded in the financial statements as “loss on
business restructuring of subsidiaries.”(iv) Strategic Investments BusinessIn fiscal 2008, Credit Saison earned dividend income from securitizedlarge-scale rental properties. However, although we worked to sell
off the Atrium Value Balance Fund, which was planned for closure,
we failed to complete this task due to the severe situation in thereal estate market. Moreover, there was substantial impact from thebankruptcy of portfolio companies, resulting in losses being recordedin the statement of operations.
Since Credit Saison has determined the strategic investments
business to be one of the causes of our recent weak businessperformance, we withdrew from this business as of March 25, 2009.
Accordingly, a loss on valuation of inventories, and other losses incurredin connection with this business, were recorded in the statement ofoperations as “loss on business restructuring of subsidiaries.”(v) Real Estate Leasing BusinessThis business includes the rental property business, which utilizes realestate properties owned by Credit Saison, and the real estate sublease business, which operates and manages real estate properties
rented collectively from real estate owners.
In response to the Atrium crisis, the Board of Directors of Credit
Saison approved the implementation of a proposal for Credit Saison
to support the restructuring of Atrium Co., Ltd. at the meeting held on
March 25, 2009.
Accordingly, Credit Saison and Atrium entered into a basic
agreement regarding restructuring support. This support comprises
financial support by which Credit Saison will assume debt owed by
Atrium to financial institutions and other relevant transactions, thereby
consolidating Atrium’s interest-bearing debt. Furthermore, Atrium will
issue new shares to Credit Saison by means of a third-party allocationof new shares through a debt-equity swap, and Atrium will become awholly owned subsidiary of Credit Saison through a share exchange.
Credit Saison believes that the implementation of the restructuring
support described above will secure the corporate value of the Credit
Saison Group, and contribute to the best interests of our shareholders,by ensuring that Atrium’s business remains as an integral part of
the Group. Meanwhile, Credit Saison will also conduct a promptand fundamental review of Atrium’s business structure and realize
fundamental reforms, including withdrawal from the real estate loan
guarantee business and strategic investment business.
Entertainment Segment
This segment consists of the amusement business and otheroperations. Although the effects of tightened regulations on gamemachines still remained, Credit Saison continued to create sound, safe
and comfortable facilities that have the support of their communities.
We also worked to streamline our operations to raise cost efficiency.
As a result, operating revenues of the segment amounted to ¥15,538
million, a 7.9% year-on-year increase, and operating income stood at¥1,652 million.
Other Segment
This segment is comprised of the insurance agency business,
information processing service business, non-life insurance businessand others. Operating revenues of the segment decreased by 2.8%
year on year to ¥1,939 million, while operating income increased by
1.4% to ¥1,345 million.

LIQUIDITY AND FINANCIAL POSITION
Fund Procurement and Liquidity Management
The Credit Saison Group emphasizes stability and low cost in
the procurement of funds, and is actively working to diversify

fund procurement methods. Key procurement methods include
negotiated transactions with banks, farming and forestry-related
financial institutions, life insurance companies and non-life insurancecompanies. In addition, the Group procures funds indirectly throughsyndicated loans and committed lines of credit, and directly by issuingcommercial paper and by securitizing receivables. Consolidated
interest-bearing debt (including debt incurred through off-balance
sheet securitizations in the amount of ¥183.1 billion) totaled ¥1,893.0
billion as of March 31, 2009. Of this total, loans, bonds, commercial
paper, and securitized receivables accounted for 62.8%, 14.9%, 8.5%,
and 13.8%, respectively.
With regard to indirect fund procurement, in an effort to mitigate
refinance risks and reduce costs, Credit Saison is working to strengthen
its alliances with existing lenders. We also aim to diversify sources ofprocurement and examine new counterparties, targeting financial
institutions with which we can expect long-term stable transactions.
In terms of direct fund procurement, in an effort to mitigate liquidity
risk and reduce costs, Credit Saison not only utilizes corporate bonds
and commercial paper, but is also setting up new fund procurement
schemes, including securitization of receivables that will be unaffectedby the creditworthiness of Credit Saison.
To support smooth fund procurement from the capital market,
Credit Saison has obtained credit ratings for the bonds it issues. We
have been given an A+ rating for domestic unsecured corporate
bonds, and an a-1 rating for domestic commercial paper by Rating
and Investment Information, Inc. (R&I).
As regards securing liquidity, of the total assets held by theCredit Saison Group, installment accounts receivable centered on
the credit card business accounted for 71.8%. Their annual average
turnover was more than three times, helping Credit Saison maintain ahigh level of liquidity.
Cash FlowsNet Cash Used in Operating Activities
Net cash used in operating activities soared to ¥69,670 million, marking
a 189.1% increase from the previous fiscal year. Although there weremajor cash in-flow items, including non-cash expenses of depreciation
and amortization of ¥17,456 million, a ¥49,150 million loss before
income taxes and minority interests was posted, in addition to ¥33,270
million income taxes paid.

(Billions of yen/%)(Millions of yen/%)

15.7

17.1

16.2

14.9

5.0

7.6

6.3

6.2

8.5

13.3

8.8

11.1

13.5

13.8

65.6

67.9

65.5

64.1

62.8

19.9

05

06

07

(Years ended March 31)

M Loans
M Asset-backed securities
M Commercial paper
M Bonds

08

09

05

320,594

16.1

399,828

1,146.9 1,480.3 1,608.3 1,854.0 1,893.0

360,717

Assets, Liabilities and Equity
Total assets at the end of fiscal 2008 decreased by 1.8% or ¥43,573 million
year on year, to ¥2,407,064 million. Major decreasing factors included a¥43,064 million increase in allowance for doubtful accounts recorded incurrent assets, due to Atrium’s provision for losses on doubtful accountsof guarantor’s claims in connection with its business withdrawal.

Changes in
Total Net Assets andCapital Adequacy Ratio

301,309

Net Cash Provided by Financing Activities
Net cash provided by financing activities amounted to ¥54,653 million,
a 63.0% decrease from the previous fiscal year. The breakdown of cash
flows from financing activities shows ¥80,000 proceeds from securitizedaccount receivables and lease investment assets and ¥46,000 million
net increase in commercial paper as cash in-flows, and ¥53,429 million
net decrease in short-term debts as cash out-flows.
As a result of the above, in addition to a ¥425 million increase in
cash and cash equivalents of newly consolidated subsidiaries, cash andcash equivalents at the end of fiscal 2008 decreased by ¥25,363 million
from the previous fiscal year end to ¥68,282 million.

Composition of InterestBearing Debt

418,661

Net Cash Used in Investing Activities
Net cash used in investing activities dropped by 88.6% year on yearto ¥10,800 million. Major cash in-flow items included ¥6,964 proceedsfrom sales or redemption of investment securities, while cash out-flow
items included ¥20,147 million payments for purchases of property
and equipment and other assets.

Finance leases that do not transfer ownership had been accounted
for as operating leases until the previous fiscal year. Effective fromfiscal 2008, “Accounting Standard for Lease Transactions” (AccountingStandards Board of Japan (ASBJ) Statement No. 13, issued by the
ASBJ on March 30, 2007, revising the previous accounting standard
issued by the Business Accounting Council on June 17, 1993) and“Guidance on Accounting Standard for Lease Transactions” (ASBJ
Guidance No. 16 issued by the ASBJ on March 30, 2007, revising theprevious implementation guideline issued by the Japanese Institutionof Certified Public Accountants on January 18, 1994) are adopted, andin accordance with these new accounting standards, finance leased
that do not transfer ownership are capitalized.
The effect of the accounting change described above was toincrease lease investment assets by ¥187,955 million, which pushed up
current assets by 8.2% or ¥165,613 million to ¥2,188,844 million.
The said accounting change also had an impact on net lease assets
and software in fixed assets, which was to decrease them by ¥169,385
million and ¥18,569 million, respectively. Accordingly, total fixed assets
decreased by 48.9% or ¥209,186 million from the previous fiscal year,to ¥218,220 million. A breakdown of this change shows that property
and equipment decreased by ¥164,323 million to ¥47,919 million;
intangible assets decreased by ¥4,617 million to ¥43,209 million; andother investments and other assets decreased by ¥40,246 million to¥127,092 million.
Total liabilities as of the end of fiscal 2008 stood at ¥2,086,470
million, a 2.7% or ¥54,494 million year-on-year increase. Major
increasing factors included an increase in interest-bearing debt
resulting from the issuance of commercial paper and borrowings fromfinancial institutions. Current liabilities increased by ¥57,853 million to¥972,236 million, while long-term liabilities decreased by ¥3,359 million
to ¥1,114,234 million.
As a result, the balance of interest-bearing debt as of March
31, 2009 amounted to ¥1,893,017 million, a 2.1% or ¥38,960 million
increase from the previous fiscal year end. This balance includes
securitized receivables of ¥183.1 billion accounted for as off-balance
sheet transactions.
Total equity at the end of fiscal 2008 declined by 23.4% or ¥98,067
million year on year, to ¥320,594 million. This decrease was mainly due
to loss on business restructuring of subsidiaries posted in connection

17.5 16.2
15.8

06

07

(Years ended March 31)

08

13.2

09

M Total net assets
Shareholders’ equity ratio

Credit Saison 200923

with Atrium Co., Ltd. The regulatory capital adequacy ratio dropped
by 2.54 percentage points to 13.2%.

deteriorating corporate performance, have the potential to negatively
impact operating revenues, losses on receivables and other results aswell as financial position.

CREDIT RISKSOf total receivables (i.e. the balance calculated by adding up thebalance of installment accounts receivables and the balance ofcontingent liabilities related to the Finance Business and the Real
Estate-related Business), receivables overdue by more than 90 days
amounted to ¥216,427 million, marking an increase of 169.5% year
on year. The balance of the allowance for uncollectible receivables(current assets) as of March 31, 2009 was ¥118,365 million, a 57.2%
year-on-year increase. Consequently, the ratio of the allowance to thereceivables overdue for more than 90 days rose to 180.3% from 125.8%
at the previous fiscal year end.

RISK INFORMATION
The following presents an overview of operating, accounting andother issues that exert or could exert a significant influence on investor
decisions. Forward-looking statements are Credit Saison Groupestimates as of March 31, 2007.
1. Operating Conditions
Results and financial position in the Credit Saison Group’s primaryCredit Service, Finance and Real Estate-related business are subject
to the influence of domestic economic conditions. Factors contingent
upon economic conditions, including worsening of the employment
environment, disposable household income or consumer spending,affect or may affect transaction volume and repayment in Groupbusinesses including credit cards, loans, credit guarantees, and realestate mortgage loans, and therefore have the potential to negatively
impact Group operating revenues and cost of uncollectible receivables.
Recently, an increasing number of individuals have assumed substantial
loan and credit card obligations from multiple financial institutions.
This problematic economic situation also has the potential to affectGroup results. Small and medium-sized companies are the principal
customer group of the Lease segment. Factors contingent upon
economic conditions, including contraction in capital expenditures and

2. Changes in Cost of Funds
Changes in financial conditions and reduction in the Credit Saison
Group’s credit rating may increase interest rates on funds the Groupprocures and have the potential to negatively impact operating
revenues and other results as well as financial position. Changes ininterest rates on loans and other instruments are impacted by a widearray of considerations. These include the maximum interest rates andfees as prescribed by the Law Concerning the Regulation of Receivingof Capital Subscription, Deposits and Interest on Deposits (the Capital
Subscription Law) and other regulations, which may mandate that
the Credit Saison Group operate below the maximum allowable
limits; changes in the terms of customer contracts; and interest rates
applicable to other companies in the consumer credit business. The
Credit Saison Group may be unable to price its products and services
to reflect higher interest rates on the capital it procures, which would
have the potential to reduce the Group’s interest margin.
3. Competitive Environment
Financial system has undergone substantial deregulation in recent
years, which has resulted in energetic restructuring of the retail financial
services industry in Japan. Large mergers in the credit card industry,the entry of competitors from other industries and other events havecaused competition to intensify. In this changing market, the results
and financial position of the Credit Saison Group may be negatively
impacted by the occurrence of events such as reduced profitability
due to a decrease in fee rates from member stores or changes in theterms of transactions with business partners.
4. Unfavorable Performance among Primary Alliance Partners
In the credit services business, the Credit Saison Group has agreements
including affinity card issuance and member store contracts withnumerous companies and organizations. Unfavorable performance
among these alliance partners has the potential to negatively impact

Comparison of Delinquent Receivables and the Allowance for Receivables(Millions of yen)

2009

2008

¥2,273,707¥2,352,769(3.4)(2) Receivables overdue by more than 90 days

216,427

80,305169.5(3) Collateralized portion included in (2)150,768

20,439637.6(4) Allowance for losses on receivables includedin current assets

118,365

75,30057.2

Receivables overdue by more than 90 days as apercentage of receivables [(2) ÷ (1)]

9.5%

3.4%

—

125.8%—

2.5%—(1) Receivables

Ratio of allowance of losses on receivables to receivables
overdue by more than 90 days [(4) ÷ ((2)–(3))]

180.3%(Reference) Receivables overdue by more than 90 days
excluding collateralized portion as a percentageof receivables [((2)–(3)) ÷ (1)]2.9%

% change

Delinquency Ratio (Over 90days) and Write-off Ratio(Non-consolidated basis)(Billions of yen/%)

3.36 3.49
2.98
2.46

2.74
2.44

Changes in the Allowance for Uncollectible Receivables(Millions of yen)

2009

2008

% change

Allowance for losses on receivables at the
beginning of the year

¥90,899¥70,573

28.8

Increase

90,072

69,87028.9

Decrease

59,08449,545

19.3

Allowance for losses on receivables at the end of the year

121,886

90,898

34.1

277

59

366.5

(Reference) Losses on receivables

24 C r e d i t S a i s o n 2 0 0 9

2.75

2.89

2.01 2.06

05

06

07

08

09

(Years ended March 31)

P Write-off ratio
P Delinquency ratio (more than 90 days)

the Credit Saison Group’s performance and financial position. For
example, the Credit Saison Group acquires approximately 50 percentof new cardholders through the outlets of alliance partners in theretailing industry. Reduced ability to attract customers or lower sales
among these companies has the potential to negatively impact theCredit Saison Group’s operating revenues. In addition, the Credit
Saison Group has capital relationships with a number of its alliancepartners. Unfavorable performance among such alliance partners has
the potential to incur impairment losses on investment securities in theCredit Saison Group’s portfolio.
5. System Operation Problems
The Credit Saison Group relies heavily on computer systems andcommunication networks in numerous aspects of its main businesses,
including the credit services business. A number of situations could
compromise the Credit Saison Group’s sales capabilities, damage its
credibility and cause other problems that would have the potential
to negatively impact the Credit Saison Group’s performance andfinancial position. These situations include Group and counterparty
system inoperability resulting from temporary system overload
due to factors such as system errors or spikes in access caused byGroup or counterparty hardware or software problems; breakdown
in communication networks resulting from factors including natural
disasters and accidents; and illegal or inappropriate system operation.
6. Leakage of Personal Information and Other Issues
The Credit Saison Group maintains a large volume of personal
information concerning its cardholders and others, and implements
appropriate controls throughout the Group. However, based on the
Private Information Protection Law, incidents such as leakage or illegal
use of this information are regulatory violations that could result in
administrative guidance, orders or fines. This would damage theCredit Saison Group’s credibility and cause other problems that would
have the potential to negatively impact the Credit Saison Group’s
performance and financial position.
7. Regulatory Changes
The Credit Saison Group operates in accordance with current
regulations and the risks that result from these regulations. The Group’sbusinesses are subject to the Installment Sales Law, the Money-Lending
Business Control and Regulation Law and other laws. Circumstances
arising from amendments to or changes in the interpretation of theselaws in the future would have the potential to negatively impact on theCredit Saison Group’s operations, performance and financial position.
On December 13, 2006, the Law Partially Revising the MoneyLending Business Control and Regulation Law came into force and,as a result, over the approximately three years after the promulgationof the amended law, the regulations on excessive lending by moneylending businesses will be strengthened, the constructive repayment
system will be abolished and the interest rate ceiling set in the Capital
Subscription Law will be lowered. In anticipation of these revisions,
we changed the actual annual percentage rate of the cash advance
service offered with the credit card issued by the Company to 18.0% orlower, within the interest rate ceiling set by the Interest Rate Restriction
Law. For the SAISON brand, the new percentage rate starts from thebalance as of July 17, 2007. For the UC brand, the new rate starts fromthe amount handled on June 11, 2007.
Moreover, the portion of interest that is higher than the interest
rate ceiling set by the Interest Rate Restriction Law can be deemedinvalid and may be subject to claims for reimbursement. Credit Saison isbooking an allowance for losses on interest repayments in preparation
for future claims for reimbursements of this type, but future regulatory
revisions or regulatory trends that unexpectedly expanded such
reimbursement claims would have the potential to negatively impact
on the Credit Saison Group’s performance and financial position.

The type, content and degree of potential regulatory revisions are
difficult to predict, and the Credit Saison Group has no control overtheir potential impact on its operations.
8. Impairment Loss of Property and Equipment and Evaluation Losses
A material decline in the fair value of the Credit Saison Group’s landand buildings, or a projected decline in operating income in businesses
employing such assets that is not deemed to be temporary, will
incur impairment losses that have the potential to negatively impact
the Credit Saison Group’s results and financial position. Moreover,a material decline in the fair value of investment securities andinvestments and loans to affiliates, or unfavorable performance among
investees, has the potential to incur evaluation losses.
9. Retirement Benefit Obligations
A decrease in the fair value of the assets in the pension plans of theCredit Saison Group and changes in the actuarial assumptions used to
calculate retirement benefit obligations have the potential to negatively
impact the Credit Saison Group’s results and financial position.
10. Influence of the Real Estate Market
The businesses in which the Credit Saison Group engages, especiallythe Real Estate-related Business, tend to be easily influenced byeconomic trends, interest-rate fluctuations, land price movements,
housing-related taxation and other factors. If inventory facilities were
to fail to sell as scheduled, those facilities could result in deteriorationin financial liquidity for the Group, which would then potentiallyworsen the Group’s financial position. In addition, if the credit crunchand other unfavorable effects brought by the subprime loan issue
started in 2007 were to persist, real estate market conditions could be
worsen further, and the Group’s sales activities, operating results andfinancial position could be unfavorably affected. Moreover, if natural
disasters were to occur, properties of the Group could be damaged
or lost, which also would have the potential to negatively impact theGroup’s performance and financial position.

OUTLOOK FOR THE FISCAL YEAR ENDING MARCH 2009
The business environment for the fiscal year ending March 31, 2010 in
the non-banking sector, in which Credit Saison is engaged, are likely
to continue to be challenging, affected by the industry realignment
led by mega-banks, amendments of the Money-Lending BusinessControl and Regulation Law and Installment Sales Act, the credit
crunch brought by the worldwide recession triggered by the financial
crisis in the United States, and sluggish personal consumption due toslowdown in the domestic economy.
In response to these severe business conditions, Credit Saison,
as a credit card company in the distribution industry, is determinedto eliminate redundancies in the credit card business. We will also
continue to reinforce this core business area by using our expertiseto strengthen cooperation with clients and thereby expand businessalliances, co-develop new products with affiliated retailers by utilizing
27 million card members as a key asset, promote low-cost operationsin Qubitous Co., Ltd., and improve the quality of loan receivables
through credit control that quickly adapts to amendments in laws
and regulations and changes in the business environment. We also
aim to maximize group synergies by enhancing corporate governanceand establishing a group management structure capable of realizing
sustainable growth.
Based on the activities described above, Credit Saison forecasts
its consolidated results for the period ending March 31, 2010 to be
operating revenues of ¥316.0 billion, operating income of ¥35.0 billion,
and net income of ¥17.0 billion.

Credit Saison 200925

Consolidated Balance Sheets
Credit Saison Co., Ltd. and Consolidated Subsidiaries
As of March 31, 2009 and 2008

Thousands of
U.S. dollars (Note 2)

Millions of yen

2009

2008

2009

ASSETS
Current Assets:
Cash and deposits¥

67,367¥57,245$685,597

Receivables and Lease investment assets:
Accounts receivable-installment (Notes 4 and 6)

		 1,729,043 		 1,738,773 		 17,596,611

Lease investment assets (Notes 5, 6 and 10)

		195,755 		— 		

1,992,211

Short-term loans receivable		

3,465 		34,401 		

35,263

Less: Allowance for doubtful accounts

		(118,365) 		

(75,301) 		 (1,204,605)

		 1,809,898 		 1,697,873 		 18,419,480
Operational investment securities (Note 11)		2,499 		4,471 		25,433

Securities (Note 11)		1,000 		2,500 		10,177

Inventories (Notes 6 and 7)

		212,254 		

198,028 		

2,160,126

Deferred tax assets (Note 13)		24,574 		

25,052 		

250,094

Prepaid expenses and other current assets

		

71,252 		

38,062 		

725,139

Total current assets

		 2,188,844 		 2,023,231 		 22,276,046

Property and Equipment, at Cost:
Lease assets (Note 10)		517 		

310,019 		

5,265

Buildings and improvements		

36,881 		

35,114 		

375,344

Fixtures and equipment		29,047 		

30,216 		

295,609Total

		66,445 		

375,349 		

676,218

Less: Accumulated depreciation

		(34,694) 		 (176,216) 		

(353,085)

Net property and equipment

		31,751 		

199,133 		

323,133Land		

15,743 		

11,504 		

160,214

Construction in progress		

425 		

1,605 		4,328Total property and equipment

		47,919 		

212,242 		

487,675

Investment securities (Note 11)		40,062 		

53,977 		

407,711

Investments in unconsolidated subsidiaries and affiliated companies		

25,384 		

39,231 		

258,336

Long-term loans receivable		

15,368 		

28,514 		

156,400

Intangible assets

		

43,209 		

47,826 		

439,744

Lease deposits		7,386 		7,717 		75,165

Deferred tax assets (Note 13)		36,813 		

44,657 		

374,656

Others		

5,601 		9,145 		56,997

Less: Allowance for doubtful accounts		(3,522) 		

(15,598) 		

(35,840)

Less: Allowance for losses on investments
in unconsolidated subsidiaries and affiliated companies

		

— 		

(305) 		

—Total investments and other assets

		

170,301 		

215,164 		

1,733,169

Investments and Other Assets:

Total assets
The accompanying notes are an integral part of these statements.

26 C r e d i t S a i s o n 2 0 0 9¥ 2,407,064¥2,450,637$ 24,496,890

Thousands of
U.S. dollars (Note 2)

Millions of yen

2009

2008

2009

217,060$ 2,090,119

LIABILITIES AND EQUITYCurrent Liabilities:
Notes and accounts payable¥ 205,375¥

Short-term loans (Note 9)		398,192 		

406,901 		

4,052,433

Current portion of long-term debt (Notes 6 and 9)

		139,751 		

98,176 		

1,422,250

Commercial paper (Note 9)		160,000 		

114,000 		

1,628,333

Current portion of long-term lease obligations (Note 9)		201 		

— 		

2,049

Accrued income taxes		

1,900 		15,018 		

19,339Unearned income

		

6,276 		5,704 		63,873

Accrued employees' bonuses		2,289 		2,083 		23,300Accrued directors' bonuses

		

72 		

98 		

733

Allowance for losses on interest repayments

		

15,647 		

11,630 		

159,238

Allowance for losses on business structural reforms

		

— 		

435 		—

Allowance for losses on collecting gift tickets

		163 		

141 		

1,658

Accrued expenses and other current liabilities		

42,370 		

43,137 		

431,198

Total current liabilities		972,236 		

914,383 		

9,894,523

Long-Term Liabilities:
Long-term debt (Notes 6 and 9)

		 1,011,975 		 1,019,780 		 10,298,950

Long-term lease obligations (Note 9)		648 		

— 		

6,597

Accrued pension and severance costs (Note 12)		3,238 		5,326 		32,955

Accrued retirement benefits to directors and corporate auditors		143 		

241 		

1,453

Allowance for losses on guarantees

		

4,525 		3,608 		46,051

Allowance for losses on warranty for defects

		

86 		

124 		

875

Allowance for losses on point program		

53,538 		

45,474 		

544,861

Allowance for losses on interest repayments		

29,039 		

33,841 		

295,525

Negative goodwill

		

1,417 		298 		

14,423

Others (Note 13)		9,625 		8,901 		97,955

Total long-term liabilities

		 1,114,234 		 1,117,593 		 11,339,645

Commitments and Contingent Liabilities (Notes 8 and 20)
Equity (Note 21)
Common stock		

75,929 		

75,685 		

772,739

Capital surplus

		

81,573 		

81,331 		

830,174

Stock acquisition rights

		

0 		

— 		

0

Retained earnings		

165,291 		

225,855 		

1,682,185

Net unrealized gain on available-for-sale securities		

2,842 		10,171 		

28,927

Deferred loss on derivatives under hedge accounting

		(1,236) 		

(670) 		

(12,581)Less: Treasury stock, at cost		

(6,098) 		

(6,093) 		

(62,060)

Total

		

318,301 		

386,279 		

3,239,384

Minority Interests		2,293 		32,382 		

23,338

Total equity

		

320,594 		

418,661 		

3,262,722

Total liabilities and equity¥ 2,407,064 		 2,450,637$ 24,496,890

The accompanying notes are an integral part of these statements.

Credit Saison 200927

Consolidated Statements of Operations
Credit Saison Co., Ltd. and Consolidated Subsidiaries
For the Years ended March 31, 2009 and 2008

Thousands of
U.S. dollars (Note 2)

Millions of yen

2009

2008

2009

Operating Revenues (Note 18)
Income from the credit service business
Income from the finance business
Income from the real estate related business
Income from the entertainment business
Income from the other business
Financial income
Total operating revenues¥ 250,814
		 40,545
		 13,000
		 15,521
		
1,939
		
5,270
		 327,089¥ 247,279
		 41,284
		 31,238
		 14,379
		 1,995
		 9,412
		 345,587$ 2,552,555
		 412,627
		 132,304
		 157,959
		19,738
		
53,632
		 3,328,815

Operating Expenses:
Selling, general and administrative expenses
Financial cost
Total operating expenses

		 268,658 		 265,494 		 2,734,156
		 23,883 		 22,902 		 243,057
		 292,541 		 288,396 		 2,977,213

Operating Income		

34,548 		 57,191 		

351,602

		
		
		
		
		
		
		
		
		
		

796 		
— 		
12,835 		— 		— 		 14,413 		
— 		
99 		
— 		
967 		
5 		133 		
2,193 		106 		
375 		
— 		3,362 		 3,503 		
19,566 		 19,221 		

8,105
130,621———55
22,315
3,812
34,216
199,124

Non-Operating Revenues:
Gain on sales of Property and Equipment and Intangible assets
Gain on sales of investment securities (Note 14)
Gain on redemptions of investment securities
Gain on changes in equity interest
Equity in earnings of equity method-affiliated companies
Equity in earnings of limited liability partnerships and other similar partnerships
Gain on reversal of allowance for doubtful accounts
Gain on reversal of allowance for losses on business structural reforms
Other
Total non-operating revenues
Non-Operating Expenses:
Loss on devaluation of investment securities
Impairment loss (Note 15)
Loss on business restructuring of subsidiaries (Note 16)
Loss on business structural reforms
Provision of allowance for doubtful accounts (Note 17)
Provision for losses on collecting gift tickets
Equity in losses of equity method-affiliated companies
Loss on changes in equity interest
Loss on adjustment for changes of accounting standard for lease transactions
Other
Total non-operating expenses
Non-Operating Expenses, Net
Income (Loss) before Income Taxes and Minority Interests
Income Taxes (Note 13):
Current
DeferredIncome (Loss) before Minority Interests
Minority interest in net income (loss)
Net Income (Loss)		
2,038 		622 		
20,744
		
776 		
515 		
7,898
		 90,404 		— 		 920,051
		— 		 2,441 		—		
1,681 		 11,264 		
17,101		— 		111 		—
		
1,066 		— 		10,851
		
2 		
418 		
20
		504 		
— 		
5,128
		
6,793 		 5,254 		
69,131
		 103,264 		 20,625 		 1,050,924
		 (83,698) 		 (1,404) 		 (851,800)
		 (49,150) 		 55,787 		 (500,198)
		 15,847 		 33,848 		 161,276
		 15,622 		 (11,280) 		 158,985
		 (80,619) 		 33,219 		 (820,459)
		 (25,105) 		 6,463 		 (255,492)¥ (55,514)¥ 26,756$ (564,967)
Yen

2009

Per Share Data
EquityNet income (loss), basic
Net income, diluted
Cash dividends
The accompanying notes are an integral part of these statements.
Diluted net income per share is not disclosed because of the Companies net loss position.

28 C r e d i t S a i s o n 2 0 0 9

U.S. dollars (Note 2)

2008

2009

¥ 1,766.95¥ 2,147.04$ 17.982
		 (308.25) 		 148.78 		 (3.137)
		— 		 148.41 		
—
¥
30.00
¥
28.00
$ 0.305

Consolidated Statements of Changes in Equity
Credit Saison Co., Ltd. and Consolidated Subsidiaries
For the Years ended March 31, 2009 and 2008

Millions of yen

Balance at March 31, 2007

Issued numberof shares ofcommon stock(thousands)

Commonstock

CapitalsurplusStockacquisitionrights		181,313¥ 75,231¥ 80,876¥ —Retainedearnings¥ 204,130

Net income for the year ended March 31, 2008		

26,756

Cash dividends

		(5,031)

Net unrealized Deferred loss
gain onon derivatives
available-for- under hedge
sale securities
accounting

Treasurystock

Minority
interests¥ 19,152¥ (6,047)¥ 26,669¥(183)

Increase in treasury stock		(0)454 		

455

Decrease in treasury stock
Exercise of stock options

		339 		

Purchase of shares of consolidated subsidiary
Net changes in the year
Balance at March 31, 2008

		181,652¥ 75,685¥ 81,331¥ —		 (8,981) 		

(487)¥ 10,171(670)¥ 225,855

Net loss for the year ended March 31, 2009

		 (55,514)

Cash dividends

		(5,040)Adjustment of retained earnings for
newly consolidated subsidiaries

		

(10)

¥

Increase in treasury stock		(2)244 		

244

Decrease in treasury stock
Exercise of stock options

		233 		

Purchase of shares of consolidated subsidiary
Net changes in the year
Balance at March 31, 2009

		 181,885¥ 75,929¥ 81,573

		

0

¥

0

		 (7,329) 		
¥ 165,291¥ 2,842

		

(4)

		

(42)
		 5,713¥ (6,093)

		

(6)

		

3

		

(2)

(566)

¥ (1,236)¥ 32,382

		 (30,089)¥ (6,098)¥ 2,293

Treasurystock

Minority
interests

Thousands of U.S. dollars (Note2)
Issued numberof shares ofcommon stock(thousands)

Balance at March 31, 2008

		 181,652

Commonstock

Capitalsurplus$ 770,252 $ 827,707

Stockacquisitionrights$—Net unrealized Deferred loss
gain onon derivatives
available-for- under hedge
sale securities
accounting

Retainedearnings$ 2,298,549 $ 103,514

Net loss for the year ended March 31, 2008

		 (564,967)

Cash dividends		(51,288)

Adjustment of retained earnings for
newly consolidated subsidiaries

		

(109)

$ (6,819)

Increase in treasury stock
Decrease in treasury stock
Exercise of stock options

		233 		

		

(18)2,487 		2,485Purchase of shares of consolidated subsidiary
Net changes in the year
Balance at March 31, 2009

		 181,885$ 772,739 $ 830,174

		

0

$

0

		 (74,587) 		
$ 1,682,185 $ 28,927$ (62,008) $ 329,553

		

(59)

		

30

		

(23)

(5,762)

		 (306,215)$ (12,581)$ (62,060) $ 23,338

The accompanying notes are an integral part of these statements.

Credit Saison 200929

Consolidated Statements of Cash Flows
Credit Saison Co., Ltd. and Consolidated Subsidiaries
For the Years ended March 31, 2009 and 2008

Thousands of
U.S. dollars (Note 2)

Millions of yen

Cash Flows from Operating Activities:
Income (loss) before Income Taxes and Minority Interests¥
Adjustments to reconcile income before income taxes to
net cash provided by (used in) operating activities:
Income taxes paid		
Depreciation and amortization
		
Loss on business restructuring of subsidiaries
		
Increase (decrease) in allowance for doubtful accounts		
Increase (decrease) in accrued pension and severance costs		
Increase (decrease) in allowance for losses on point program		
Increase (decrease) in allowance for losses on interest repayments		
Increase (decrease) in allowance for other reserves		Interest and dividends income		Interest expenses
		
Equity in loss (earning) of equity method-affiliated companies		Equity in earning of limited liability partnerships and other similar partnerships
		Foreign currency exchange (gain) loss		(Gain) loss on sales of investment securities
		
Loss on devaluation of investment securities		
Net (gain) loss on changes in equity interest		Impairment loss
		
Loss on disposal of property and equipment, and other assets		(Increase) decrease in operational investment securities		(Increase) decrease in trade receivables		(Increase) decrease in lease investment assets
		Proceeds from liquidation of trade receivables		(Increase) decrease in inventories		(Increase) decrease in other assets
		Interest and dividends received
		Interest paid		Increase (decrease) in notes and accounts payable		
Increase (decrease) in other liabilities
		
Other
		
Net Cash Provided by (Used in) Operating Activities		
Cash Flows from Investing Activities:
Payments for purchases of investment securities
		
Proceeds from sales or redemption of investment securities (Note 22 (b))
		
Payments for purchases of shares of consolidated subsidiaries
		
Payments for purchases of investments in subsidiaries resulting in change in scope of consolidation (Note 22 (c)) 		
Proceeds from purchase of investments in subsidiaries resulting		in change in scope of consolidation (Note 22 (c))
Payments for purchases of property and equipment, and other assets
		Proceeds from sales of property and equipment, and other assets
		Payments for short-term and long-term loans
		Proceeds from short-term and long-term loans		(Increase) decrease in other assets
		
Net Cash Used in Investing Activities		
Cash Flows from Financing Activities:
Increase (decrease) in short-term debts
		Increase (decrease) in commercial paper		Proceeds from long-term debts
		
Repayments of long-term debts
		Proceeds from issuance of bonds
		
Repayment of bonds
		
Repayment of payables under securitized lease receivables
		Proceeds from securitized account receivables and lease investment assets
		Payments of payables under securitized account receivables and lease investment assets		
Repayments of lease obligations
		Proceeds from issuance of stock resulting from exercise of subscription rights to shares		Proceeds from issuance of new stock		Proceeds from minority shareholders
		Proceeds from sales of treasury stock		
Purchases of treasury stock		
Cash dividends paid		
Cash dividends paid to minorities		
Net Cash Provided by Financing Activities		Translation Gain (Loss) on Cash and Cash Equivalents		
Increase (Decrease) in Cash and Cash Equivalents		Cash and Cash Equivalents at the Beginning of Year		
Increase in Cash and Cash Equivalents of Newly Consolidated Subsidiaries
		
Cash and Cash Equivalents Increased by Merger		
Cash and Cash Equivalents at the End of Year (Note 22 (a))¥
The accompanying notes are an integral part of these statements.

30 C r e d i t S a i s o n 2 0 0 9

2009

2008

(49,150)¥ 55,787

2009$(500,198)(33,270) 		 (54,902) 		
17,456 		 68,051 		
90,404 		— 		
14,044 		 20,325 		
(2,733) 		 (1,166) 		
8,064 		9,269 		(793) 		(432) 		168 		
1,259 		(6,257) 		 (6,687) 		
23,748 		 22,694 		
1,066 		(967) 		(5) 		
(133) 		(22) 		294 		
(11,500) 		 (13,490) 		
2,038 		622 		
2 		319 		
776 		
1,296 		748 		 14,737 		
(16,828) 		
— 		
28,393 		 (253,379) 		
(42,771) 		
— 		— 		 190,000 		
(32,749) 		 (40,523) 		
(16,983) 		 (5,018) 		
7,025 		7,160 		(23,624) 		 (22,462) 		
(11,403) 		 (20,210) 		
(15,953) 		
3,458 		438 		
— 		(69,670) 		 (24,098) 		

(338,590)
177,647920,051
142,931(27,810)82,068(8,074)
1,710(63,683)
241,682
10,851(55)(224)(117,042)
20,744
20
7,898
7,613
(171,261)
288,958(435,284)—(333,288)(172,836)
71,497(240,428)(116,045)(162,351)
4,462(709,037)(3,564) 		 (22,687) 		
6,964 		 26,723 		(273) 		— 		(362) 		— 		(36,268)
70,869(2,782)(3,679)

— 		

5,643

(20,147) 		 (98,961) 		
5,121 		357 		
(4,113) 		
(200) 		2,176 		832 		
2,843 		(438) 		(10,800) 		 (94,374) 		

555 		

(205,038)
52,120(41,854)
22,14528,935(109,909)(53,429) 		 17,668 		
46,000 		 12,700 		
90,735 		 164,100 		
(81,774) 		 (54,274) 		
17,869 		 68,564 		
(37,240) 		 (43,140) 		
— 		 (13,029) 		
80,000 		— 		(981) 		— 		(99) 		
— 		
0 		
— 		
489 		
908 		
2 		236 		1 		0 		(6) 		
(5) 		
(5,040) 		 (5,030) 		
(1,874) 		 (1,057) 		
54,653 		 147,641 		29 		(253) 		(25,788) 		 28,916 		
93,645 		 62,397 		425 		
1,496 		— 		836 		
68,282¥ 93,645$(543,752)
468,146
923,417(832,218)
181,850(378,994)—
814,166(9,983)(1,010)
0
4,972
23
11
(59)
(51,288)(19,071)556,210293(262,443)
953,033
4,320—
694,910

Notes to Consolidated Financial Statements
Credit Saison Co., Ltd. and Consolidated Subsidiaries
For the Years ended March 31, 2009 and 2008

1.		BASIS OF PREsenting consolidated
FINANCIAL STATEMENTS
The accompanying consolidated financial statements have been
prepared based on the accounts maintained by Credit Saison Co.,
Ltd. (the “Company”) and its consolidated subsidiaries (together the“Companies”) in accordance with the provisions set forth in the Financial
Instruments and Exchange Act and its related accounting regulations
and in conformity with accounting principles generally accepted in Japan,
which differ from International Financial Reporting Standards in certain
respects as to application and disclosure requirements.
In preparing these consolidated financial statements, certain
reclassifications and rearrangements have been made to the consolidated
financial statements issued domestically in order to present them in aform which is more familiar to readers outside Japan. In addition, certain
reclassifications have been made in the 2008 consolidated financial
statements to conform to the classifications used in 2009.

2.		 U.S. DOLLAR AMOUNTSJapanese yen amounts have been translated into U.S. dollars at the rate of¥98.26=US$1, the approximate exchange rate on March 31, 2009, for theconvenience of the reader. These translations should not be construed as
representations that Japanese yen amounts actually represent, have beenor could be converted into U.S. dollars at that or any other rate.

3.		 Summary of SIGNIFICANT ACCOUNTING POLICIES(a) B asis of consolidation and accounting for investments
in affiliated companies
As at March 31, 2009, the consolidated financial statements include
the accounts of the Company and its eleven (eight for 2008)
significant subsidiaries.
(New)
Qubitous Co., Ltd.
LAWSON CS Card, Inc.
(Qubitous Co., Ltd. and LAWSON CS Card, Inc. are included among ourconsolidated subsidiaries effective from the fiscal year ended March 31,
2009, in line with new or additional acquisition of shares.)
AW3 YK
Grande Trust Nine YK
Special-purpose company MAPJ
(AW3 YK, Grande Trust Nine YK and the special-purpose company MAPJ
are included among our consolidated subsidiaries effective from the fiscal
year ended March 31, 2009, due to an increase in their materiality.)(Exclusion)
A&A Corporation(A&A Corporation was excluded from the scope of consolidation as ofFebruary 16, 2009 due to a merger with Concerto Co., Ltd.)LAWSON CS Card, Inc.
(LAWSON CS Card, Inc was excluded from the scope of consolidation as
of September 1, 2008 due to a merger with the Company.)
All significant intercompany balances and transactions andunrealized profit among the Companies, if any, have been eliminated on
consolidation. Unconsolidated subsidiaries would have no material effecton the consolidated financial statements of the Companies and havetherefore been excluded from consolidation.
The investments in eight (nine for 2008) significant affiliates areaccounted for by the equity method.

(Exclusion)
LAWSON CS Card, Inc.
(LAWSON CS Card, Inc., which was previously included among our affiliatedcompanies accounted for by the equity method until the fiscal year ended
March 31, 2008, is excluded from the scope of the equity method applicationand included among our consolidated subsidiaries due to additional
acquisition of shares during the fiscal year ended March 31, 2009).
Investments in unconsolidated subsidiaries and affiliates not accounted
for by the equity method are stated at cost, due to their immaterial effects
on the consolidated financial statements of the Companies.
All assets and liabilities of consolidated subsidiaries are marked to fairvalue as of the acquisition of control, and any differences between equity
at fair value and the investment amounts are recognized as goodwill, whichis amortized on a straight-line basis over an effective period extending towithin 20 years. However, if the amount is not material, it is charged toincome when incurred.
(b) Inventories
Prior to April 1, 2008, inventories were stated at cost, determined by the
specific identification method. In July 2006, the Accounting Standards
Board of Japan (ASBJ) issued ASBJ Statement No.9,” AccountingStandard for Measurement of Inventories”. This standard requires thatinventories held for sale in the ordinary course of business be measured
at the lower of cost or net selling value, which is defined as the selling
price less additional estimated manufacturing costs and estimateddirect selling expenses. The replacement cost may be used in placeof the net selling value, if appropriate. The Companies applied the new
accounting standard for measurement of inventories effective April 1,
2008. The effect of this change was to decrease income before income
taxes and minority interests for the year ended March 31, 2009 by ¥720
million (US$7,325 thousand).
Supplies are stated at cost determined principally by the latest
purchase cost method.
(c) Financial instrumentsi Derivatives
All derivatives are recognized as either assets or liabilities and measured
at fair value, and gains or losses on derivative transactions are recognizedin the consolidated statements of operations except for derivatives thatare designated as “hedging instruments” (see iii. Hedge accounting).
ii Securities
Securities held by the Companies are classified into four categories:
Trading securities, which are held for the purpose of generating profits
on short-term differences in prices, are measured at fair value, with changes
in fair value included in profit or loss for the period in which they arise.
Held-to-maturity debt securities that the Companies intend to hold tomaturity with such ability are stated at cost after accounting for premiums or
discounts on acquisition, which are amortized over the period to maturity.
Investments in equity securities issued by unconsolidated subsidiaries andaffiliates are accounted for by the equity method. Exceptionally, investments incertain unconsolidated subsidiaries and affiliates are stated at cost.
Securities not included in the above categories are defined as“available-for-sale securities.” Available-for-sale securities that havemarket prices are measured at fair value, and the cumulative change infair value is not credited or charged to income, but net unrealized gains
or losses on these securities are reported as a separate item in equity at
a net-of-tax amount other than the amounts related gains or losses on
embedded derivative.
Available-for-sale securities that do not have market prices arestated at cost using the moving-average method. Equities of limited

Credit Saison 200931

liability partnerships for investment business and of other similar
partnerships (defined as “securities” by Article 2, Section 2 of the
Financial Instruments and Exchange Act) are valued at the net equity
equivalents based on the recently available financial statements ofthe partnership corresponding to the reporting dates of the financial
statements defined by the partnership agreements.
In cases where the fair value of held-to-maturity debt securities,
equity securities issued by unconsolidated subsidiaries and affiliates, oravailable-for-sale securities has declined significantly and such decline inof the value is not deemed temporary, those securities are written down tofair value, and the resulting loss is included in profit or loss for the period.
(Change of accounting policy 2008)
Beginning in the fiscal year ended March 31, 2008, the trust beneficiaryinterests conventionally included in “installment accounts receivable”,
which is qualitatively segregated such as senior or subordinated and had
been held by a number of holders, are included in “Investment securities”
as these have been categorized as securities following an announcementof “Practical Solution on Accounting for Trusts” (Implementation
Guidance No. 23 issued by ASBJ) on August 2, 2007. This change had no
impact on profits and losses.
Trust beneficiary interests included under “investment securities”
amounted to ¥1,098 million as of March 31, 2008, while the respective trust
beneficiary interests included in “installment accounts receivable” at March
31, 2007 were ¥300 million.
iii Hedge accounting
Derivatives used as hedging instruments by the Companies are
principally interest rate swaps and foreign currency forward contracts.
The related hedged items are securities bank loans and bonds issued
by the Companies.
The Companies use interest rate swaps and foreign currency forward
contracts to manage their exposure to fluctuations in foreign exchange
and interest rates. The Companies do not enter into derivatives for
speculative purposes.
As per the accounting standard for derivative financial instruments, a) all
derivatives except those which qualify for hedge accounting, are recognized
as either assets or liabilities and measured at fair value, and gains or losses
on derivative transactions are recognized in the consolidated statements ofoperations, and b) for derivatives used for hedging purposes, if derivatives
qualify for hedge accounting because of high correlation and effectivenessbetween the hedging instruments and hedged items, gains or losses onderivatives are deferred until maturity of the hedged transactions.
The interest rate swaps that qualify for hedge accounting and meet
specific matching criteria are not remeasured at market value, but thedifferentials paid or received under the swap agreements are recognized
and included in interest expense or income.
(d) Property and equipment
Depreciation of property and equipment is computed principally by thestraight-line method over the estimated useful lives of the assets. Lease
assets are depreciated by the straight-line method over the respective
lease periods.
(e) Lease
In March 2007, the ASBJ issued ASBJ Statement No.13, “AccountingStandard for Lease Transactions”, which revised the previous accounting
standard for lease transactions issued in June 1993. The revised accounting
standard for lease transactions is effective for fiscal years beginning on orafter April 1, 2008.
The Companies applied the revised accounting standard effective
April 1, 2008.

32 C r e d i t S a i s o n 2 0 0 9(lessee)
Under the previous accounting standard, finance leases that deemto transfer ownership of the leased property to the lessee were to becapitalized. However, other finance leases were permitted to be accounted
for as operating lease transactions if certain “as if capitalized” information
is disclosed in the note to the lessee’s financial statements. The revised
accounting standard requires that all finance lease transactions should becapitalized to recognize lease assets and lease obligations in the balance
sheet. In addition, the revised accounting standard permits leases which
existed at the transition date and do not transfer ownership of the leased
property to the lessee to be accounted for as operating lease transactions.
(lessor)Under the previous accounting standard, finance leases that deem totransfer ownership of the leased property to the lessee were to be treatedas sales. However, other finance leases were permitted to be accounted
for as operating lease transactions if certain “as if sold” information isdisclosed in the note to the lessor’s financial statements. The revised
accounting standard requires that all finance leases that deem to transfer
ownership of the leased property to the lessee should be recognized aslease receivables, and all finance leases that deem not to transfer ownershipof the leased property to the lessee should be recognized as lease
investment assets. In addition, the revised accounting standard permits thevalue of lease investment assets of leases which existed at the transition
date and do not transfer ownership of the leased property to the lessee
to take over the appropriate book value (net of accumulated depreciation)of the leased property as of March 31, 2008 , and after the adoption of therevised accounting standard, the aggregate amount equivalent to interests
is allocated over the lease term based on the straight-line method.
The effect of this change was to increase in operating income by ¥943
million (US$9,601 thousand), and to decrease loss before income taxes
and minority interests by ¥943 million (US$9,601 thousand).
Also as a result of the adoption of the revised accounting standard,
lease investment assets categorized as current assets increased by¥187,955 million, while lease assets and intangible assets decreasedby ¥169,385 million (acquisition cost ¥310,019 million, accumulated
depreciation ¥140,634 million), and 18,569 million, respectively, in the
consolidated balance sheet.
The amount provided as an allowance for losses on receivables
related to lease investment assets as of April 1, 2008 also changed,
resulting in a ¥504 million (US$ 5,128 thousand) loss on adjustment forchanges in the accounting standard for lease transactions, recorded
under non-operating expenses.
Among securitizations of lease receivables accounted for as financialtransactions, the rights to receive future lease revenues that are includedin lease investment assets transferred in the course of said securitizations,and that also meet the criteria for extinguishment of financial instruments,
are accounted for as transfers.
In line with the above accounting changes, certain amounts statedin the consolidated statement of cash flows are shown as “(Increase)decrease in lease investment assets” in cash flows from operating
activities. Specifically, these are amounts that relate to lease transactions
formerly included in “Depreciation and amortization” (¥54,227 million,
for the year ended March 31, 2008) and “Loss on disposal of property andequipment, and other assets” (¥11,511 million for the year ended March
31, 2008) in cash flows from operating activities; “Payments for purchasesof property and equipment, and other assets” (¥(73,548) million for theyear ended March 31, 2008) and “Proceeds from sales of property andequipment, and other assets” (¥347 million, for the year ended March 31,2008) in cash flows from investing activities; and “Repayment of payables
under securitized lease receivables” (¥(13,029) million, for the year ended
March 31, 2008) in cash flows from financing activities.

(f) Intangible assets
Intangible assets are amortized by the straight-line method over the useful
lives. Intangible assets held for lease are depreciated by the straight-line
method over the respective lease periods.
(g) Long-lived assets
The Companies review their long-lived assets for impairment whenever
events or changes in circumstance indicate the carrying amount ofan asset or asset group may not be recoverable. An impairment loss
would be recognized if the carrying amount of an asset or asset groupexceeds the sum of the undiscounted future cash flows expected toresult from the continued use and eventual disposition of the asset or
asset group. The impairment loss would be measured as the amountby which the carrying amount of the asset exceeds its recoverable
amount, which is the higher of the discounted cash flows from thecontinued use and eventual disposition of the asset or the net selling
price at disposition.
(h) Bond issue costs
Bond issue costs are amortized by the straight-line method over thebond term.
(i) Allowance for doubtful accounts
Receivables and lease investment assets are classified into four risk
categories: bankrupt, doubtful, substandard and normal.
The Companies individually provide a specific reserve for bankrupt anddoubtful receivables based on the fair value of any underlying collateral.
The Companies provide collectively a general reserve for substandard
and normal receivables, applying a ratio determined based on the
Companies’ loan loss experience.
(j) Accrued employees’ bonuses
Accrued employees’ bonuses are provided at the estimated amounts,
which are to be paid for services rendered through the year.
(k) Accrued directors’ bonuses
Accrued directors’ bonuses is maintained at the amount accrued at the endof fiscal year, based on the estimated future payments and service period.
(l) Allowance for losses on business structural reforms
To prepare for losses potentially incurred through business structuralreforms, the estimated amount of future losses was earmarked at the time
when business structural reforms were decided upon.
(m) Allowance for losses on collecting gift tickets
Allowance for losses on collecting gift tickets etc, issued by the Company
takes into account its registration of collected tickets in order to prepare
for the possible future use of those tickets that had been recorded asrevenue after the passage of the constant period.
(Additional information 2008)
In the past, uncollected gift tickets, etc. were recorded as non-operating
revenue by reversing the same amount of liability. However, following
an announcement of “Audit treatment for regulatory deposit, reserve ordeposit and allowance for retirement benefit for officers” (Opinion No. 42
issued by the Japanese Institute of Certified Public Accountants (“JICPA”)
Audit and Assurance Practice Committee), in order to prepare for possible
losses incurred through collection of such gift tickets, etc., for the year
ended March 31, 2008, the Company changed its accounting method toenable provision of loss for the amount of vouchers expected to be usedin future to be based on the amount of vouchers hitherto collected.
As a result, operating income and income before income taxes andminority interests decreased by ¥30 million (US$295 thousand) and ¥141
million (US$1,407 thousand), respectively.
(n) Allowance for losses on interest repayments
Allowance for losses on interest repayments is provided at the estimatedamount based on payment experience, required to refund upon customers’
legal claims.
(o) A llowance for losses on investments in unconsolidated subsidiaries
and affiliated companies
Allowance for losses on investments in unconsolidated subsidiaries andaffiliated companies is provided for based on their financial conditions.
(p) Accrued pension and severance costs
Accrued pension and severance costs are provided for employees’
retirement benefits based on the projected benefit obligation and the fairvalue of pension plan assets at the end of the fiscal year.
Unfunded past service costs and actuarial differences of the plans
are amortized over a period of nine to eleven years, within the averageremaining services period at the time of occurrence. Amortization of
unfunded past service costs and amortization of actuarial differences startfrom occurrence and from the following fiscal year, respectively.
(q) Accrued retirement benefits to directors and corporate auditors
Directors and corporate auditors customarily receive lump-sum payments
upon termination of services, subject to shareholders’ approval.
Some consolidated subsidiaries accrued retirement benefits in an
amount equal to the total benefits calculated based on the unfunded
retirement plan for the directors and corporate auditors.
(Additional information 2008)
Previously, in order to prepare for future payments, the estimatedallowance for retirement benefits for directors and corporate auditors wasrecorded at the fiscal year-end as per the Company’s internal regulations.
However, on April 18, 2007, the Board of Directors resolved to abolishthe retirement benefit plan of the Company after the conclusion of theGeneral Meeting of Shareholders on June 23, 2007.
Following this resolution, the Company decided to pay out theaccumulated retirement allowances to the directors and corporate
auditors for their respective service periods up until the ordinary General
Meeting of Shareholders. Payment will be made when directors andcorporate auditors resign from their post. Accrued retirement benefits todirectors and corporate auditors of the Company have been reversed forthe purpose of recording these under “Long-–Term liabilities—Others”
until the time when the respective resignations occur. The relevant unpaid
amount included under “Long-term liabilities—Others” as at March 31,
2008 was ¥464 million.
(r) Allowance for losses on guarantees
An allowance for losses on guarantees is provided for potential losses
arising from the Companies’ guarantee obligations of customers’ liabilities(personal loans to individuals from the banks with which the Companies
have guarantee service arrangements).
The allowance is provided at an amount determined by applying
the ratio of the Companies’ loss experience to the balance of guarantees
outstanding at each year-end.
(s) Allowance for losses on warranty for defects
Allowance for losses on warranty for defects is provided for the potential
repair costs on sold real estate due to the Companies’ warranty fordefects. The allowance is provided at the amount estimated based on thepast experience of repair costs.

Credit Saison 200933

(t) Allowance for losses on point program
To stimulate card usage, the Company provides cardholders with credit
card points, which can be exchanged for various commodities and services.
Allowance for losses on point program is provided based on estimatedusage of card points outstanding at year-end and exchange experience.
(u) Income taxes
Deferred income taxes are recorded to reflect the impact of temporary
differences between assets and liabilities recognized for financial reporting
purposes and such amounts recognized for tax purposes.

(v) Per share information
Basic net income per share is computed by dividing net income available
to common shareholders by the weighted-average number of commonshares outstanding for the period, retroactively adjusted for stock splits.
Diluted net income per share reflects the potential dilution that
could occur if securities were exercised or converted into common stock.
Diluted net income per share of common stock assumes full exercise of
the Companies’ stock options at the beginning of the year (or at the timeof issuance) with an applicable adjustment for related interest expense,
net of tax, and full exercise of outstanding warrants.
Cash dividends per share presented in the accompanying consolidated
statements of operations are dividends applicable to the respective years
including dividends to be paid after the end of the year.

(w) Cash and cash equivalents
Cash and cash equivalents in the consolidated statements of cash flows comprise cash on hand, demand deposits in banks and highly
liquid, short-term investments with a low risk of fluctuation in value that are scheduled to mature within three months of acquisition.

4.		 Accounts receivable-installment
As of March 31, 2009 and 2008, liquidated receivables were as follows, and the following amounts of trust beneficiary rights and other receivables
generated from liquidation or operational transactions were included in accounts receivable-installment.
Thousands of
U.S. dollars

Millions of yen

Liquidating receivables:
Single-payment card shopping ,etc
Revolving card cashing
Real estate mortgage loan
Trust beneficiary rights and other receivables include:
Single-payment card shopping ,etc
Revolving card cashing
Real estate mortgage loan
Acquisition from operational transaction

2009

2008

2009

¥ 164,000¥ 120,000$ 1,669,041

		

6,061 		25,302 		

61,679		— 		

68,375 		

—		

195,689 		

154,629 		 1,991,548

		38,547 		

17,785 		

		

— 		

25,126 		

—		110 		

270 		

1,117

5.		 Lease investment assets
As of March 31, 2009, liquidated lease investment assets were as follows, and the following amounts of trust beneficiary rights were
included in lease investment assets.
Millions of yen

Liquidating receivables
Trust beneficiary rights

34 C r e d i t S a i s o n 2 0 0 9

Thousands of
U.S. dollars

2009¥ 13,100$ 133,320
		 26,994 		 274,715

392,2986.		 Pledged assets
As of March 31, 2009, pledged assets and liabilities related to pledged assets were as follows:
Thousands of
U.S. dollars

Millions of yen

2009

Pledged assets
Accounts receivable-installment
Lease investment assets
Inventories
Liabilities related to pledged assets
Current portion of long-term debt
Long term debt

¥ 40,000$ 407,083
		 39,019 		 397,101
		 24,000 		 244,250
		 3,430 		 34,911
		 85,589 		 871,044

7.		 Inventories
Inventories at March 31, 2009 and 2008 consisted of the following:
Millions of yen

Receivable by purchase
Real estate for sale
Other
Total

Thousands of
U.S. dollars

2009
2008
2009
¥ 21,142¥ 29,926$ 215,166
		 189,710 		 164,016 		 1,930,695
		
1,402 		4,086 		14,265¥ 212,254¥ 198,028$ 2,160,126

8.		 Loan commitments(a) Lender
The Companies provide cashing and card loan services that supplement their credit card operations.
The unexercised loans contingent with the loan commitments in these businesses were as follows:
Millions of yen

Total loan limits
Loan executions

Thousands of
U.S. dollars

2009
2008
2009
¥ 9,041,581¥ 8,486,458 $ 92,016,900
		
649,947 		
670,926 		 6,614,564¥ 8,391,634¥ 7,815,532 $ 85,402,336

Most of the contracts for the above loan commitments were for cashing services supplementary to credit card services furnished to the Company’s
cardholders, such that not all unexecuted loans will be exercised.
The above amounts include the commitments connected with the liquidated revolving receivables on card cashing.
(b) Borrower
The Companies have concluded loan commitment contracts with 11 banks for efficient procurement of working capital. The portion of the credit line that
had not been exercised under these contracts as of March 31, 2009 was as follows:
Thousands of
U.S. dollars

Millions of yen

Total loan limits
Loan executions

¥
		
¥

2009
155,000 $35,000 		
120,000 $1,577,448
356,198
1,221,250

Credit Saison 200935

9.		 Short-term loans and long-term debt
Short-term loans are represented principally by 30 to 365 day notes to banks, with an average interest rate of 1.24% as of March 31, 2009.
Commercial paper is issued by the Companies, with an average interest rate of 1.04% as of March 31, 2009.
Long-term debt and lease obligations as of March 31, 2009 and 2008 consisted of the following:Thousands of
U.S. dollars

Millions of yen

Average 1.60 % unsecured loans from banks, insurance companies andother financial institutions, due in installments through 2018
0.46% to 3.39% bonds, due in installments through 2017*1
Lease obligations*2
Average 0.79% payables on under securitized lease receivables*3
Average 1.05% payables on under securitized loans*3
Subtotal
Less: Current portion

2009

2008

2009

¥ 791,144¥ 782,182$ 8,051,532

		281,563 				849 		

300,803 		 2,865,484
— 		

		

— 		

34,971 		

—		

79,019 		— 		

804,184

8,647

		 1,152,575 		 1,117,956 		 11,729,847
		(139,952) 		

(98,176) 		 (1,424,300)¥ 1,012,623¥1,019,780

Millions of yen

Thousands of
U.S. dollars$ 10,305,547* 1 Pledged bonds ¥10,000 million (US$101,771 thousand) were included in bonds.
* 2 Because interests are included in lease obligations, presentation of average interest rate is omitted.
* 3 Payables under securitized lease receivables and loans result from liquidation.

The aggregate annual maturities of long-term debt subsequent to March 31, 2009 are as follows:Year ending March 31

2010
2011
2012
2013
2014 and thereafter¥ 139,952$ 1,424,300

		 128,711 		 1,309,906
		 167,703 		 1,706,729
		 186,819 		 1,901,268
		 529,390 		 5,387,645

As is customary in Japan, short-and long-term bank loans are made under general agreements that provide that additional security
and guarantees for present and future indebtedness will be given upon request of the bank under certain circumstances, and that any
collateral so furnished will be applicable to all indebtedness to the bank. To date, the Companies have not received any such requests
from their banks.

10.		 lease transactions(a) F inance leases that do not transfer ownership (lessee)
i. Lease assets
Property and equipment – mainly servers and other equipment
Intangible assets – mainly software used in the credit service businessii. Depreciation
	Depreciation equivalent is computed by the straight-line method under the assumption that the lease term equals the useful life, and that there is no
residual value.
iii.	As discussed in Note 3 (e), the Companies accounts for leases which existed at the transition date (March 31, 2008) do not transfer ownership of theleased property to the lessee as operating lease transactions.
	 Pro forma information of such leases existing at the translation date, such as acquisition cost, accumulated depreciation, obligations under financeleases, depreciation expense, interest expense, on a “as if capitalized” basis for the years ended March 31, 2009 and 2008 are as follows:

36 C r e d i t S a i s o n 2 0 0 9

Pro forma capitalization of leased items

Thousands of
U.S. dollars

Millions of yen

2009

Building:
Acquisition cost
Accumulated depreciation
Net book value
Other (fixtures and equipment)
Acquisition cost
Accumulated depreciation
Net book value
Total:
Acquisition cost
Accumulated depreciation
Net book value

¥

340

¥

2009

497

$ 3,461		(201) 		

(287) 		

(2,045)

		

139 		

210 		

1,416

		 1,836 		 2,004 		 18,692
		 (1,201) 		 (1,134) 		 (12,227)
		

635 		

870 		

6,465

		 2,176 		 2,501 		 22,153
		 (1,402) 		 (1,421) 		 (14,272)¥

Minimum future lease payments774¥ 1,080

¥
		
¥

387

¥

451 		
838

$ 7,881
Thousands of
U.S. dollars

Millions of yen

2009

Due within one year
Due after one year
Total

2008

2008

2009

477

$ 3,939666 		

¥ 1,143

4,592$ 8,531

The impairment loss account for leased assets amounted to ¥6 million (US$62 thousand) and ¥11 million as of March 31, 2009 and 2008, respectively.

Lease payments, depreciation equivalent and interest equivalentThousands of
U.S. dollars

Millions of yen

2009

Lease payments
Reversal of impairment loss account for leased assets
Depreciation equivalentInterest payable equivalent

¥

593

¥

2008

2009

711

$ 6,034

		

6 		

5 		

60

		

599 		

657 		

6,091

		

31 		

53 		

318

Depreciation equivalent is computed by the straight-line method over their lease term determined by their useful lives, with zero residual value.
Interest equivalent, which represents the aggregate lease payments less the acquisition cost equivalent, is allocated over the lease term based on
the interest method.
(b) Finance leases that do not transfer ownership (lessor)
i. Lease investment assets

Thousands of
U.S. dollars

Millions of yen

2009

Gross lease receivables
Residual value
Unearned interest income
Lease investment assets¥ 230,710
		$ 2,347,955

— 		

—

		 (34,955) 		

(355,744)¥ 195,755$ 1,992,211

ii. Collection schedule for the amount of lease payments related to lease investment assets after March 31, 2009
Thousands of
U.S. dollars

Millions of yen

2009

Due within one year
Due within two year and after one year
Due within three year and after two year
Due within four year and after three year
Due within five year and after four year
Due after five year
Total

¥ 47,610$ 484,535

		

45,174 		

459,737

		

40,491 		

412,080

		

31,525 		

320,827

		

19,915 		

202,677		

11,040 		

112,355¥ 195,755$ 1,992,211

Credit Saison 200937

iii. The Companies account for the value of lease investment assets of leases which existed at the transition date and do not transfer ownership ofthe leased property to the lessee to take over the appropriate book value (net of accumulated depreciation) of the leased property as of March 31,
2008, and after the adoption of the revised accounting standard, the aggregate amount equivalent to interests is allocated over the lease term basedon the straight-line method.
As a result, loss before income taxes and minority interests was larger by ¥8,741 million (US$88,963 thousand) than it would have been if the revised
accounting standard had been retroactively adopted starting from the lease transaction commencement dates.
(c) Operating leases (lessee)
Minimum future lease payments as of March 31, 2009 and 2008 were as follows:
Thousands of
U.S. dollars

Millions of yen

Due within One YearDue after One Year
Total

2009

2008

2009

¥ 2,451¥ 1,155$ 24,942

		 4,309 		 3,574 		 43,850¥ 6,760$ 68,792¥ 4,729

11.		 Available-for-sale securities(a) As of March 31, 2009 and 2008 acquisition costs and amounts on the consolidated balance sheets of available-for-sale securities that have market
value are summarized below:
Millions of yen

Thousands of U.S. dollars

2009

2008

Acquisition
cost

Balancesheet
amount¥ 17,753¥ 24,216

2009

Difference

Acquisition
cost

Balancesheet
amountDifference¥ 6,463¥ 22,035¥ 39,761¥ 17,725 $ 180,676 $ 246,451 $ 65,775

Balancesheet
amountAcquisition
cost

Difference

Balance sheet amountexceeding acquisition cost:
Equity shares
Bonds
Government
Other
Subtotal

		

— 		

— 		

— 		

1,500 		1,500 				1,098 		1,158 		60 		604 		

636 		

— 		—33 		 11,175 		 11,780 		

0 		

— 		

605

		 18,851 		 25,374 		

6,523 		 24,139 		 41,897 		 17,758 		 191,851 		 258,231 		 66,380

		(793) 		1,560 		1,138 		Balance sheet amountnot exceeding acquisition cost:
Equity shares
Bonds
Government
Corporate
Other
Subtotal
Total

5,022 		4,229 		

(422) 		 51,105 		 43,041 		

(8,064)

		

— 		

— 		

— 		

1,000 		1,000 		

0 		

— 		

— 		

—

		

200 		

153 		

(47) 		

200 		

174 		

(26) 		

2,035 		1,558 		

(477)

		

1,692 		971 		

(721) 		3,031 		2,368 		

(663) 		 17,219 		

9,879 		

(7,340)		

6,914 		5,353 		 (1,561) 		

5,791 		4,680 		 (1,111) 		 70,359 		 54,478 		 (15,881)¥ 25,765¥ 30,727¥ 4,962¥ 29,930¥ 46,577¥ 16,647 $ 262,210 $ 312,709 $ 50,499(b) Available-for-sale securities whose fair value is not readily determinable as of March 31, 2009 and 2008 were as follows:
Carrying amountThousands of
U.S. dollars

Millions of yen

Available-for-sale:
Equity securities
Debt securities
Other
Total

2009

2008

2009

¥ 8,490¥ 8,780$ 86,403

		 2,111 		— 		

21,487

		 2,233 		 5,592 		

22,723¥ 12,834¥ 14,372$ 130,613(c)	Proceeds from sales of available-for-sale securities for the years ended March 31, 2009 and 2008 were ¥14,421 million (US$146,766 thousand)and ¥4,353 million, respectively.
		
Gross realized gains and losses on these sales, computed on the moving-average cost basis, were ¥12,835 million (US$130,621 thousand)and ¥1,305 million (US$13,277 thousand), respectively for the year ended March 31, 2009 and ¥501 million and ¥1,591 million, respectively
for the year ended March 31, 2008.

38 C r e d i t S a i s o n 2 0 0 9

(d)	The carrying values of debt securities by contractual maturities for securities classified as available-for-sale securities at
March 31, 2009 were as follows:
Thousands ofMillions of yen

U.S. dollars

2009
Available-for-sale securities

Due in one year or lessDue in one to five years
Due in five to ten years
Due after ten years
Total¥ 1,000$ 10,177

		

0 		

0

		

— 		

—

		

153 		

1,558

¥ 1,153$ 11,735

12.		 Retirement benefit plans
The Company and some of its consolidated subsidiaries had defined benefit plans composed of a corporate pension plan and a lump-sum payment plan.
Effective October 1, 2004, the Company and certain of its consolidated subsidiaries changed the former defined benefit pension plans to cash balanceplans. Moreover, as per the Defined Contribution Pension Plan Law, a certain portion of future benefits was shifted either to defined contribution plans or to
prepaid retirement benefit payment plans at the employee’s option.
(a) Accrued pension and severance costs
Accrued pension and severance costs as of March 31, 2009 and 2008 are calculated below:
Thousands of
U.S. dollars

Millions of yen

2009

Retirement benefit obligations
Plan assets
Funded status
Unrecognized actuarial differences
Unrecognized prior service costs
Accrued pension and severance costs¥ (10,835)

¥

2008

2009

(9,532)$ (110,269)

		

6,105 		4,560 		62,134		(4,730) 		

(4,972) 		

(48,135)

		

4,743 		3,230 		48,271

		(3,251) 		

(3,584) 		

(33,091)		

(3,238) 		

(5,326) 		

(32,955)(b) Retirement benefit expenses
Retirement benefit expenses for the year ended March 31, 2009 and 2008 are stated below:
Thousands of
U.S. dollars

Millions of yen

Service costs
Interest costs
Expected return on plan assets
Actuarial difference recognized as expense
Prior service costs recognized as expenses
Other*
Retirement benefit expenses

2009

2008

2009

¥ 541

¥ 496

$ 5,511

		

215 		

212 		 2,192

		 (168) 		 (192) 		 (1,708)
		705 		

665 		 7,178

		 (625) 		 (596) 		 (6,374)		310 		

¥ 978276 		 3,158¥ 861$ 9,957* Other represents payments to defined contribution pension fund, and other items.

The principal assumptions used in determining retirement benefit obligations and other components for the Companies’ plans are stated below:

Discount rate
Expected rate of return on plan assets
Period of recognition of prior service costs
Period of recognition of actuarial differences

2009

2008

2.0%

2.0%

3.0%

4.0%

9-11 years evenly

9-11 years evenly

9-11 years evenly

9-11 years evenly

Credit Saison 200939

13.		 Deferred tax assets and liabilities(a) Effective tax rate
The effective income tax rate of the Companies differs from the statutory tax rate for the year ended March 31, 2009
for the following reasons:Statutory tax rate
Reconciliation:
Expenses not deductible for tax purposes
Inhabitants taxes per capita
Amortization of negative goodwill
Equity in net earnings (losses) of affiliated companies
Increase (decease) of evaluation allowance
Income tax credit
Other
Effective tax rate

200940.70%(0.55)(0.37)
0.18(0.88)(105.98)0.04
2.83(64.03)%* A difference of 5% or less between the effective income tax rate of the Companies and the statutory tax rate has been omitted from the2008 column above.

(b) Deferred tax assets
Deferred tax assets as of March 31, 2009 and 2008 were comprised of the following:Thousands of
U.S. dollars

Millions of yen

2009

Deferred tax assets:
Inventories
Amortization of goodwill
Accumulated Impairment losses of property and equipment, and other assets
Accumulated depreciation expense of property and equipment, and other assets
Operational investment securities
Investment securities
Allowance for losses on receivables
Allowance for losses on interest repayments
Accrued expenses
Accrued enterprise taxes
Accrued pension and severance costs
Allowance for losses on point program
Other allowance
Long-term unearned revenue
Accumulated deficit carryforwards
Unrealized losses on available-for-sale securities
Unrealized losses on hedging derivatives
Other
SubtotalLess evaluation allowance
Total deferred tax assets
Deferred tax liabilities:
Capital gains deferred for tax purposes
Unrealized gains on available-for-sale securities
Unrealized gains on hedging derivatives
Adjustment account of retirement debt
Adjustment account of debt
Other
Total deferred tax liabilities
Net deferred tax assets

40 C r e d i t S a i s o n 2 0 0 9

2008

2009

¥ 24,343¥ 3,217$ 247,745
		 1,671 		 3,344 		 17,009
		 4,118 		 3,034 		 41,905
		 1,383 		 2,877 		 14,078
		 6,241 		— 		 63,512
		 2,776 		 2,178 		 28,250
		 29,796 		 18,072 		 303,235
		 18,187 		 18,506 		 185,089
		675 		
246 		
6,868
		160 		 1,243 		
1,629
		 1,417 		 2,166 		 14,419
		 21,790 		 18,508 		 221,758
		 2,966 		 2,657 		 30,188
		488 		
732 		
4,969
		612 		
180 		
6,224
		
26 		
99 		
269
		
818 		
428 		
8,326
		 2,726 		 3,180 		 27,739
		 120,193 		 80,667 		1,223,212
		 (56,112) 		 (4,024) 		 (571,056)
		 64,081 		 76,643 		 652,156
		(212) 		(212) 		 (2,154)
		 (1,371) 		 (6,691) 		 (13,952)
		(15) 		
(20) 		
(154)		(478) 		— 		 (4,869)
		(369) 		— 		 (3,750)
		(283) 		(11) 		 (2,885)
		 (2,728) 		 (6,934) 		 (27,764)¥ 61,353¥ 69,709$ 624,392

Net deferred tax assets are presented on the consolidated balance sheets as of March 31, 2009 and 2008 as follows:
Thousands of
U.S. dollars

Millions of yen

2009
2008
2009
¥ 24,574¥ 25,052$ 250,094
		 36,813 		 44,657 		 374,656
		
— 		
— 		
—
		
35 		
— 		
358

Current assets
Investment and other assets
Current liabilities-other
Long-term liabilities-other14.		 Gain on sales of investment securities
Gain on sales of investment securities included profit of ¥11,383 million (US$115,844 thousand) from sales of shares of Visa Inc. shares.

15.		 Impairment loss
For the year ended March 31, 2009, the Companies wrote down the book value of amusement facilities in change for use, operating
facilities and real estate for lease from which operating income had deteriorated and was not expected to recover in the short term.
The Companies recorded impairment losses for the year on the following assets:
March 31, 2009

Asset
Certain amusement facilities
Operating facilities
Real estate for lease

Description
Buildings, Other (Fixtures, equipment, other)
Buildings, Other (Fixtures, equipment, other), Software
Buildings

Location
Kanto region
Kanto
TohokuFor the year ended March 31, 2008, the Companies wrote down the book value of amusement facilities, operating facilities and realestate for lease from which operating income had deteriorated and was not expected to recover in the short term.
The Companies recorded impairment losses for the year on the following assets:
March 31, 2008

Asset
Certain amusement facilities
Operating facilities
Real estate for lease

Location
Description
Buildings, Other (Fixtures, equipment, other), Lease deposits Kanto region
Kanto
Buildings, Other (Fixtures, equipment, other)
TohokuBuildings

Accumulated impairment losses were subtracted directly from individual assets. Impairment losses recognized for the years ended March 31, 2009 and2008 were as follows :Thousands of
U.S. dollars

Millions of yen

2009

Property and equipment:
Buildings and improvements
Other (Fixtures and equipment, other)
Investments and other assets:
Intangible assets
Lease deposits
Total

¥ 566

¥

2008

2009

346

$ 5,753

		 210 		164 		 2,139

		

0 		

— 		

6

		

— 		

5 		

—

¥ 776

¥

515

$ 7,898

Regarding certain amusement facilities, operating facilities and real estate for lease, the recoverable amount is measured at value in use, and thediscount rate use for computation of the present value of future cash flow is 4.0%. (4.0% in 2008)
The assets of the Companies are grouped by the operating unit that is able to control income efficiently. However, real estate for lease and idle
assets are grouped by the physical unit, and operating facilities and amusement facilities are grouped by site.

Credit Saison 200941

16.		 Loss on business Restructuring of subsidiaries
In connection with the business withdrawal of subsidiaries, a loss on business restructuring was recorded for the fiscal year ended
March 31, 2009. The following is a breakdown of the loss on business restructuring:Thousands of
U.S. dollars

Millions of yen

2009

Loss on valuation of inventories
Provision for losses on doubtful accountLoss on valuation of operational investment securities
Loss on valuation of investment securities
Impairment loss
Other
Total

¥ 45,529$ 463,355

		 27,218 		 277,004
		 15,300 		 155,709
		258 		

		

47 		

478

		

2,052 		20,876¥ 90,404

2,629$ 920,051

17.		 Provision of allowance for doubtful accounts
Provision of allowance for doubtful accounts in non-operating expenses for the fiscal year ended March 31, 2009 included a provision
for a loan to Mr. Tsuyoki Takahashi, the former representative director of the Company’s consolidated subsidiary, Atrium Co., Ltd.
This provision amounted to ¥1,661 million (US$16,904 thousand) and was based on an estimated credit loss calculated as the loanbalance outstanding minus the estimated disposal value of the collateral pledged for the loan. The outstanding loan to Mr. Takahashi
as of March 31, 2009 was ¥1,980 million (US$20,154 thousand). The loan has been applied to the payment of personal income tax andinhabitant tax incurred through execution of stock options, and expenses for stock option execution. Mr. Takahashi resigned from his
position as representative director on the day of the 30th general shareholders’ meeting of Atrium Co., Ltd., May 28, 2009.
(2008)
With respect to a part of the long-term loans (performance-linked subordinated loans), the Companies have recorded a provision
for losses on receivables that matches the projected uncollectible amount after revaluating the loans by taking into account changes
in the environment surrounding the base for repayment.

18.		 Operating revenues
Operating revenues for the years ended March 31, 2009 and 2008 were comprised of the following revenues and expenses:
Millions of yen

Income from the credit service business
Finance business:
Sales
Cost of sales
Income from finance business
Real estate related business:
Sales
Costs of sales
Income from real estate related businessEntertainment business:
Sales
Cost of sales
Income from entertainment business
Other business:
Sales
Cost of sales
Income from other business
Financial income
Total operating revenues

42 C r e d i t S a i s o n 2 0 0 9

2009¥ 250,814

2008¥ 247,279

Thousands of
U.S. dollars

2009$ 2,552,555

		
		
		

40,545 		 109,594 		— 		 68,310 		
40,545 		 41,284 		

412,627—
412,627						

66,048 		 112,225 		
53,048 		 80,987 		
13,000 		 31,238 		

672,181
539,877
132,304						

92,373 		 109,449 		
76,852 		 95,070 		
15,521 		 14,379 		

940,088782,129
157,959

		
1,939
		
—
		
1,939
		
5,270
¥ 327,089

		
2,535
		
540
		
1,995
		
9,412
¥ 345,587

		19,738		—		
19,738
		
53,632$ 3,328,815

19.		 Derivatives
Contractual values or notional principal amounts and unrealized profits (losses) on derivative transactions as of March 31, 2009 and 2008 aresummarized below:(a) Interest rate transactions
Millions of yen

2009
contractual value or
notional principal amount

Over-the-counter interest rate swaps:
Floating-rate receipt /fixed-rate payment
Total

Total

Over 1year¥ 4,000¥ 4,000¥ 4,000¥ 4,000

2008
unrealized
profit (loss)

contractual value or
notional principal amountunrealized
profit (loss)

Total

Over 1year¥ (152)¥ 20,750¥ 20,500¥ (883)¥ (152)¥ 20,750¥20,500¥ (883)Thousands of U.S. dollars

2009
contractual value or
notional principal amount

Over-the-counter interest rate swaps:
Floating-rate receipt /fixed-rate payment
Total

unrealized
profit (loss)

Total

Over 1year$ 40,708$ 40,708$ (1,550)$ 40,708$ 40,708$ (1,550)

Notes: 1.	Fair value is calculated based on prices and other information presented by financial and other institutions with which theCompanies has concluded derivatives agreements.
2. Hedged derivatives transactions are excluded.

(b) Foreign exchange transactions
Millions of yen

Thousands of U.S. dollars

2009
contractual value or
notional principal amount
Total

Over-the-counter foreign currency forward contracts:
Purchase-rate (US$)
Total

Over 1year

unrealized
profit (loss)

contractual value or
notional principal amount
Total

Over 1year

unrealized
profit (loss)¥ 1,171

¥

—

¥

(8)

$ 11,914

$

—

$

(86)

¥ 1,171

¥

—

¥

(8)

$ 11,914

$

—

$

(86)

Notes: 1.	Fair value is calculated based on prices and other information presented by financial and other institutions with which the Companies has concluded derivatives agreements.
2.	Where foreign currency forward contracts have been applied to foreign currency receivables and/or payables to finalize their yen-denominated settlement amounts, and thosereceivables and/or payables have been stated in the consolidated balance sheets at the said yen-denominated settlement amounts, such foreign currency forward contracts are
excluded.
3.	Hedged derivatives transactions are excluded.

(c) Other
Millions of yen

2009
contractual value or
notional principal amount

Over-the-counter credit derivatives:
Selling of protection
Total

Total

Over 1year¥ 3,000¥ 3,000¥ 3,000¥ 3,000

2008
unrealized
profit (loss)

contractual value or
notional principal amountunrealized
profit (loss)

Total

Over 1year¥ (680)¥ 3,000¥ 3,000¥ (356)¥ (680)¥ 3,000¥ 3,000¥ (356)

Thousands of U.S. dollars

2009
contractual value or
notional principal amount

Over-the-counter Credit derivatives:
Selling of protection
Total

unrealized
profit (loss)

Total

Over 1year$ 30,531$ 30,531$ (6,920)$ 30,531$ 30,531$ (6,920)

Notes:	Fair value is calculated based on prices and other information presented by financial and other institutions with which theCompanies have concluded derivatives agreements.

Credit Saison 200943

20.		 Commitments and contingent liabilities
As of March 31, 2009, the Companies were contingently liable as credit guarantors for customers borrowing from the alliance banks, amounting
to ¥175,055 million (US$1,781,544 thousand).

21.		 Equity(a) Equity
Since May 1, 2006, Japanese companies have been subject to the Companies Act of Japan (the “Companies Act”). The significant provisions
in the Companies Act that affect financial and accounting matters are summarized below:
i Dividends
Under the Companies Act, companies can pay dividends at any time during the fiscal year in addition to the year-end dividend upon resolution at
the shareholders meeting. For companies that meet certain criteria such as; (1) having the Board of Directors, (2) having independent auditors, (3)having the Board of Corporate Auditors, and (4) the term of service of the directors is prescribed as one year rather than two years of normal termby its articles of incorporation, the Board of Directors may declare dividends (except for dividends in kind) at any time during the fiscal year if thecompany has prescribed so in its articles of incorporation. However, the Company cannot do so because it does not meet all the above criteria.
Semiannual interim dividends may also be paid once a year upon resolution by the Board of Directors if the articles of incorporation of thecompany so stipulate. The Companies Act provides certain limitations on the amounts available for dividends or the purchase of treasury stock.
The limitation is defined as the amount available for distribution to the shareholders, but the amount of net assets after dividends must be
maintained at no less than ¥ 3 million.
ii Increases/decreases and transfer of common stock, reserve and surplus
The Companies Act requires that an amount equal to 10% of dividends must be appropriated as a legal reserve (a component of retained earnings)
or as additional paid-in capital (a component of capital surplus) depending on the equity account charged upon the payment of such dividends
until the total of aggregate amount of legal reserve and additional paid-in capital equals 25% of the common stock. Under the Companies Act, thetotal amount of additional paid-in capital and legal reserve may be reversed without limitation. The Companies Act also provides that common
stock, legal reserve, additional paid-in capital, other capital surplus and retained earnings can be transferred among the accounts under certain
conditions upon resolution of the shareholders.
iii Treasury stock and treasury stock acquisition rights
The Companies Act also provides for companies to purchase treasury stock and dispose of such treasury stock by resolution of the Board of
Directors. The amount of treasury stock purchased cannot exceed the amount available for distribution to the shareholders which is determinedby specific formula. Under the Companies Act, stock acquisition rights are presented as a separate component of equity. The Companies Act
also provides that companies can purchase both treasury stock acquisition rights and treasury stock. Such treasury stock acquisition rights arepresented as a separate component of equity or deducted directly from stock acquisition rights.
(b) Common stock
The Company has 300,000,000 authorized shares of which 181,884,725 shares as of March 31, 2009 and 181,651,525 shares as of March 31, 2008
were issued.
Type and number of shares issued and treasury stock(Thousands of shares)

Balance at March 31, 2007
Number of shares increase
Number of shares decrease
Balance at March 31, 2008
Number of shares increase
Number of shares decrease
Balance at March 31, 2009

Issued shares (Common stock)

Treasury stock (Common stock)

181,313

1,710
29 *2

—

0 *3

181,652
233 *4—
181,885

Notes: 1.	Increase in number of issued shares		Number of stock acquisition rights issued:
339 thousand shares
2. Increase in treasury stock		Changes in equity interest to consolidated
subsidiaries;27 thousand shares
		 Acquisition of fractional shares;2 thousand shares
3. Detail of decrease
		 Sales of fractional shares; Less than a thousand shares

44 C r e d i t S a i s o n 2 0 0 9

339 *1

1,739
4 *5
0 *6
1,743

4. Increase in number of issued shares		Number of stock acquisition rights issued:
233 thousand shares
5. Increase in treasury stock		Changes in equity interest to consolidated
subsidiaries;1 thousand shares
		 Acquisition of fractional shares;3 thousand shares
6. Detail of decrease
		 Sales of fractional shares; Less than a thousand shares(c) Stock option plansi The Company has the following option plans for directors, corporate auditors, officers, employers and corporate counselors of the Companies asof March 31, 2009, which were approved by the General Shareholders’ Meetings
Date of approval

Number ofstock acquisition rights
unexercised

Type and number oftargeted shares

Exercise priceEffective period

Issue price

Per share addition tocommon stock

June 25, 2005

15,268

Common stock
1,526,800 shares¥3,740 per share

June 30,2007 toJune 29, 2010

¥3,740¥1,870June 27, 2003—

Common stock—¥2,095 per share

June 30, 2005 toJune 29, 2008

¥2,095¥1,048Notes: 1. Conditions of execution
		In the event a granted person retires or resigns under the regulations, stock acquisitions rights may be exercised within two years after that. In the event a granted person retires
voluntary or dies, stock acquisitions right will be canceled.
2. Transfer of stock option
		 Transfer of stock option to the third person needs the approval of the Board of Directors’ Meeting.

ii Stock options for certain subsidiaries
Date of approval

Number ofstock acquisition rights
unexercised

Type and number oftargeted shares

Exercise priceEffective period

Issue price

September 13, 2004

158

Common stock
94,800 shares¥259 per share

September 14, 2006 to
September 13, 2009

¥259

December 16, 2003—

Common stock—¥162 per share

December 17, 2005 to
December 16, 2008¥162

All of the unexercised stock acquisition rights were waived on April 28, 2009.
(d) Dividend
i Dividend payment
Resolution

Type of share

Total amount(¥ million)

Thousands of
U.S. dollars

Dividend pershare (¥)

U.S. dollars

Record date

Effective date

General Meeting of
Shareholders on June 21,2008

Common
stock

5,040

51,288

28.00

0.285

March 31,2008

June 24,2008

ii For dividend payments with an effective date in the year ended March 31, 2010, the record date occurred in the year ended March 31, 2009
Expected resolution

Type of share

Source ofpayment

Total amount(¥ million)

Thousands of
U.S.dollars

Dividend pershare (¥)

U.S.dollars

Record date

Effective date

General Meeting of
Shareholders on June 26,2009

Commonstock

Retainedearnings

5,406

55,022

30.00

0.305

March 31,2009

June 29,
2009

Credit Saison 200945

22.		 Cash Flows Information(a) T he balances of cash and cash equivalents as of March 31, 2009 and 2008 are reconciled with the respective consolidated balance sheet
items as follows:
Thousands of
U.S. dollars

Millions of yen

Consolidated balance sheet:
Cash and deposits
Securities
Short-term loans
Segregated trustee deposits
Cash and cash equivalents at end of year

2009

2008

2009

¥ 67,367¥ 57,245$ 685,597

		1,000 		2,500 				— 		 33,981 				(85) 		

¥ 68,282

10,177—(81) 		

(865)

$ 694,910¥ 93,645(b) Description of proceeds from sales or redemption of investment securities
Thousands of
U.S. dollars

Millions of yen

2009

Proceeds from sales of investment securities
Proceeds from redemption of investment securities¥
		

Proceeds from distribution of limited liability partnerships andother similar partnerships or return of capital

3,036

¥

2009
$

30,8983,920 		 20,897 		

39,894

		Total proceeds from sales or redemption of investment securities

2008
¥

8 		
6,964

4,399

1,427 		76

$70,869¥ 26,723(c) Breakdown of major assets and liabilities of subsidiaries newly added to the consolidation through share acquisition
The following is a breakdown of assets and liabilities of newly consolidated subsidiaries at the time of the first consolidation, acquisition costs of thesesubsidiaries, and net revenues from or net payments for acquisitions.

Qubitous Co., Ltd.

Millions of yen

Current assets
Noncurrent assets
Current liabilities
Long-term liabilities
Negative goodwill
Minority interests
Total
Cash and cash equivalents
Net increase in purchaseThousands of
U.S. dollars

LAWSON CS CARD, Inc.

$ 105,447

Current assets
Noncurrent assets
Goodwill
Current liabilities
Long-term liabilities
Equity in purchase
Total
Cash and cash equivalents
Net decrease in purchase¥ 10,361

		 15,799 		 160,784
		 (25,009) 		 (254,521)
		(647) 		

(6,588)		(2) 		

(17)		(247) 		

(2,510)		

255 		

2,595

		(810) 		

(8,238)

555

5,643

¥

$

Thousands of
U.S. dollars

Millions of yen¥ 47,717$ 485,621

		440 		

4,482

		244 		

2,480

		 (47,474) 		 (483,149)
		(76) 		

(769)

		(182) 		

(1,856)

		669 		

6,809

		(307) 		

(3,130)(362)$(3,679)Loss onimpairment

Capitalexpenditures¥

23.		 Segment information(a) Business segments
Segment information by business segment for the years ended March 31, 2009 and 2008 were as follows:
Millions of yen

Year ended March 31, 2009

Operating revenues
outsidecustomers

intersegment

total

Operatingexpenses

OperatingincomeAssetsDepreciation¥ 254,147 ¥578 ¥ 254,725 ¥ 229,044¥ 25,679 ¥ 1,504,110¥ 13,197¥
Credit service
		 42,482 		 4,251 		 46,733 		 36,185 		 10,548 		
412,928 		
352 		
Finance		 13,000 		 5,550 		 18,550 		 17,938 		
613 		
338,613 		
515 		
Real estate related
		 15,521 		
17 		 15,538 		 13,886 		 1,652 		
19,493 		 3,178 		
Entertainment
		
1,939 		— 		1,939 		594 		 1,345 		
517 		
2 		
Other		 327,089 		 10,396 		 337,485 		 297,647 		 39,837 		 2,275,661 		 17,244 		Total— 		 (10,396) 		 (10,396) 		
(5,106) 		 (5,289) 		
131,403 		
253 		
Eliminations or corporate 		¥ 327,089 ¥— ¥ 327,089 ¥ 292,541¥ 34,548 ¥ 2,407,064¥ 17,497¥
Consolidated

46 C r e d i t S a i s o n 2 0 0 9—¥ 23,172

— 		

331

62 		

186

761 		

2,447

— 		

18

823 		 26,154
— 		
823

(4,403)¥ 21,751

Thousands of U.S. dollars

Year ended March 31, 2009

Operating revenues
outsidecustomers

intersegment

total

Operatingexpenses

OperatingincomeAssetsDepreciation$ 2,586,473 $ 5,877 $ 2,592,350 $ 2,331,007 $ 261,342 $ 15,307,451
Credit service
		 432,341 		 43,261 		 475,602 		 368,265 		 107,337 		 4,202,409
Finance		 132,304 		 56,481 		 188,785 		 182,552 		
6,233 		 3,446,089
Real estate related
		 157,959 		
172 		 158,131 		 141,318 		 16,814 		
198,378
Entertainment		
19,738 		— 		
19,738 		
6,043 		 13,695 		
5,263
Other
		 3,328,815 		 105,791 		 3,434,606 		 3,029,185 		 405,421 		 23,159,590
Total— (105,791) 		 (105,791) 		 (51,972) 		 (53,819) 		 1,337,300
Eliminations or corporate 		$ 3,328,815 $— $ 3,328,815 $ 2,977,213 $ 351,602 $ 24,496,890
Consolidated$ 134,311

Loss onimpairment$—

Capitalexpenditures$ 235,825

		

3,578 		

— 		

		5,243 		634 		

1,893

		32,341 		 7,742 		

24,899

		

19 		

3,373

— 		

179

		 175,492 		 8,376 		 266,169
		

2,578 		

— 		

3,639

$ 178,070$ 8,376$ 269,808

Depreciation

Loss onimpairment

Capitalexpenditures

Millions of yen

Year ended March 31, 2008

Operating revenues
outsidecustomers

intersegment

total

Operatingexpenses

OperatingincomeAssets¥ 254,110 ¥605 ¥ 254,715 ¥ 224,134¥ 30,581 ¥ 1,467,334¥ 8,643¥— ¥Credit service
		 43,865 		
505 		 44,370 		 33,118 		 11,252 		 546,981 		 54,653 		— 		Finance		 31,238 		 6,720 		 37,958 		 15,197 		 22,761 		 278,161 		468 		 800 		
Real estate		 14,379 		
17 		 14,396 		 17,406 		 (3,010) 		
25,833 		 4,011 		 496 		
Entertainment
		
1,995 		— 		1,995 		668 		 1,327 		
507 		
2 		
— 		
Other
		 345,587 		 7,847 		 353,434 		 290,523 		 62,911 		 2,318,816 		 67,777 		 1,296 		
Total— 		 (7,847) 		 (7,847) 		 (2,127) 		 (5,720) 		 131,821 		
240 		
— 		
Eliminations or corporate 		¥ 345,587 ¥— ¥ 345,587 ¥ 288,396¥ 57,191 ¥ 2,450,637¥ 68,017¥ 1,296 ¥Consolidated

11,90575,012
1,160
8,517
13
96,607919
97,526

Notes 1. Business segments are defined in consideration of the operations of the Companies.
2.	Significant operations of each segment are as summarized below.
			 (a) Credit service: credit card and collection of receivables			 (b) Finance: guarantees, loans and equipment leasing			 (c) Real estate related: liquidation of real estate, servicing business, strategic investment business and real estate loan guarantees			 (d) Entertainment: Amusement			 (e) Other: Insurance agency business
3. Significant components of ‘Eliminations or corporate‘ are as follows:
Millions of yen

Non-allocatable operating expenses
Corporate assets

2009¥ 5,075
157,503

Thousands of U.S. dollars

2008¥ 5,466
189,584$

2009
51,646
1,602,921

		 Non-allocatable operating expenses include administrative expenses incurred by the management control department of the Company.
		 Corporate assets include surplus funds , long-term investments (investment securities) and assets used by the management control department of the Company.
4.	In March 2007, the ASBJ issued ASBJ Statement No.13, “Accounting Standard for Lease Transactions”, which revised the previous accounting standard for lease transactions
issued in June 1993. The revised accounting standard for lease transactions is effective for fiscal years beginning on or after April 1, 2008 with early adoption permitted for fiscal
years beginning on or after April 1, 2007. The Companies applied the revised accounting standard effective April 1, 2008.
			 In the finance business, the effect of this change was to increase operating revenue and operating income by ¥943 million (US$9,601thousand). For the year ended March 31,
2008, the amount of lease transactions included depreciation by ¥54,227 million and capital expenditures by ¥74,575 million.
5. The consolidated subsidiaries withdrew from the real estate loan guarantees and the strategic investment business at March 25, 2009.

(b) Geographic information
The Companies are not required to prepare information for geographic segment since no consolidated subsidiaries or branches are located outside Japan.
(c) Overseas sales
The Companies are not required to prepare information for overseas sales since the aggregated amounts of overseas sales of the Companies are notmaterial (less than 10% of consolidated sales).

24.		 Related party Disclosures(a) Transactions and balances of the Company with its affiliated company, UC CARD CO., LTD for the years ended March 31, 2009 and 2008 were as follows:
Thousands of
U.S. dollars

Millions of yen

Transactions:
Volume of new contracts
Balances:
Accounts payable
Prepaid expenses and other assets (other receivable)

2009

2008

2009

¥ 1,211,980¥ 1,215,558$ 12,334,423

		69,124 		

75,932 		

703,483		

7,769 		6,933 		79,071Credit Saison 200947

(b) Transactions and balances of the Companies with Mr. Takahashi, a director of the Company’s consolidated subsidiaries, forthe years ended March 31, 2009 was as follows:
Thousands of
U.S. dollars

Millions of yen

2009

Transactions:
Amount of loan
Amount of interest received
Balances:
Long-term loans receivable
Prepaid expenses and other assets (other receivable)¥ 1,987		$ 20,222

35 		

360

		 1,980 		

20,154

		

28 		

283

The consolidated subsidiaries recorded provision of allowance for doubtful accounts of ¥1,661 million (US$16,094 thousand) for the
long-term loans receivable, and this provision was based on an estimated credit loss calculated as the loan balance outstanding minus
the estimated disposal value of the collateral pledged for the loan. The loan has been applied to the payment of personal income tax
and inhabitant tax incurred through execution of stock options, and expenses for stock option execution.
Mr. Takahashi resigned from his position as representative director on the day of the 30th general shareholders’ meeting ofAtrium Co., Ltd., May 28, 2009.

25.		 Business combination (purchase method)
At the Board of Directors’ meeting held on February 20, 2008, the Company resolved to spin off its credit card processing operations to Qubitous Co.,
Ltd. via a physical absorption-type demerger effective from April 1, 2008 (the “demerger”), in accordance with a business integration and realignment
agreement with Mizuho Bank, Ltd. and UC CARD CO., LTD concluded on May 17, 2007. In addition, at the Board of Directors’ meeting held on March
26, 2008, the Company resolved to acquire 51% of shares in Qubitous Co., Ltd. to bring this company into the consolidation following the completionof the spin-off. Based on these resolutions, the following demerger took effect on April 1, 2008.
(a) Details of the demerger
i. Name and business of the acquired company
		 Qubitous Co., Ltd.
		 Credit card processing businessii. Major purpose of the demerger
		In accordance with the business integration and realignment agreement with Mizuho Bank, Ltd. and UC CARD CO., LTD concluded on May
17, 2007, the Company spun off its credit card processing operations to Qubitous Co., Ltd. via a demerger effective from April 1, 2008. Aftercompleting the spin-off, the Company acquired 51% of shares in Qubitous Co., Ltd. Qubitous Co., Ltd. will develop its operations as oneof the Company’s subsidiaries in the credit card processing business, with the aim of becoming a “integrated processing service company”
capable of not only credit card-related services but also a wide range of other settlement services.
iii. Date of the demerger
		 April 1, 2008
iv. Legal form of the demerger
		 Acquisition of sharesv. Ratio of acquired voting rights
		 51.00%(b) Period during which the acquired company’s business results were included in the consolidated financial statements
From April 1, 2008 to March 31, 2009(c) Acquisition costs and breakdown of costs
	The cost of the acquisition of Qubitous Co., Ltd. was ¥255 million (US$2,595 thousand), equal to the value of 510 shares of Qubitous Co., Ltd.
common stock.
(d) Transfer ratio by share type and its calculation method, and number of shares issued and their appraisal value
Not applicable(e) Amount of goodwill generated, and its sources, amortization method and period
Details are not disclosed as the amount of goodwill was immaterial.
(f)	The pro-forma amount of the effect on the consolidated statement of income for the fiscal year ended March 31, 2009, following thecompletion of the demerger at the beginning of said fiscal year
Not applicable

48 C r e d i t S a i s o n 2 0 0 9

26.		 Additional information
The Board of Directors meeting held on March 25, 2009, approved the implementation of a proposal for the Company to support the restructuringof Atrium Co., Ltd. (“Atrium”) (“Restructuring Support”). The Restructuring Support comprise (i) financial support (the “Financial Support”), throughwhich Atrium’s interest-bearing debt will be consolidated through the assumption by the Company of debt owed by Atrium to financial institution
and other relevant transactions (the “Debt Assumption”), and Atrium will issue new shares to the Company by means of a third party allocation of newshares through a debt equity swap (the “Capital Increase”), and (ii) a share exchange (the “Share Exchange”), through which Atrium will become awholly-owned subsidiary of the Company. Pursuant to such resolutions, the Company and Atrium also entered into an agreement in connection with
the Debt Assumption and a basic agreement pertaining to the Restructuring Support (the “Basic Agreement”).
(a) Purpose and background	Atrium has determined that the biggest cause of the decline of its business results is that it concentrated too much on large-scale development
projects. Atrium resolved to withdraw from the real estate loan guarantees and the strategic investment business, and instead concentrate its
resources on the liquidation of real estate business and the servicing business.
		 In accordance with this decision, Atrium recorded non-operating expenses of ¥91,063 million (US$926,760 thousand) in its consolidated
financial statements for the fiscal year ended February 28, 2009, and fell into excess liabilities of ¥54,399 million (US$553,619 million). As a result,it was noted in Atrium’s consolidated financial statements that there were material doubts as to the company’s status as a going concern. Underconsidering these circumstances, the Company determined that restructuring Atrium’s business operations would secure the corporate value of
the Credit Saison Group and be in the best interest of the shareholders of both the Company and Atrium.
(b) Name of the counterpart of the agreements regarding business restructuring support
Atrium Co., Ltd.
(c) Date of execution of the agreements
March 25, 2009(d) Summary of the agreements
i. Debt assumption and consolidated loan		On March 31, 2009, the Company assumed Atrium borrowings other than those from the Company, as well as corporate bonds, subordinatedcorporate bonds and subordinated loans (¥90,684 million (US$922,893 thousand) in total), and Atrium’s interest rate swap agreement (¥54,887
million (US$558,589 thousand)) in the notional principal.
			 Atrium then assumed liability for reimbursing the Company for the principal, interest, late charges and all other charges incurred inconnection with repaying the assumed debts described above, and became liable to repay the consolidated loan to the Company, in respectof the money needed to fulfill such repayment liability.
ii. New share issuance through a third-party allocation		Pursuant to the Basic Agreement, the first new share issuance through a third-party allocation (the “First Capital Increase”) was carried out
on April 10, 2009. Because the First Capital Increase was conducted through a debt equity swap, in which the partial amount of the loanthat Atrium owes to the Company pursuant to the loan agreement dated March 25, 2009 served as payment in kind, Atrium did not receive
any proceeds. Instead, Atrium’s interest-bearing debt was reduced by approximately ¥11,091 million (US$112,874 thousand).
			 In connection with the issuance of new shares to the Company by Atrium by means of a third party allocation of new shares of Atrium
to the Company (the “Second Capital Increase”), an amendment to Atrium’s Articles of Incorporation was approved at Atrium’s 30th
Ordinary General Meeting of Shareholders held on May 28, 2009. The approved amendment stipulates that the maximum number ofshares authorized to be issued shall be increased to 575,248,800 shares, thereby satisfying the condition for the Second Capital Increase.
Accordingly, the Company paid the consideration to Atrium in the form of payment in kind (a debt equity swap) on June 1, 2009, and theprocedures necessary to conduct the Second Capital Increase have been completed. Because the Second Capital Increase was conducted
through a debt equity swap, in which the partial amount of the loan that Atrium owes to the Company pursuant to the loan agreement
dated March 25, 2009 served as payment in kind, Atrium did not receive any proceeds. Instead, Atrium’s interest-bearing debt was reduced
by approximately ¥48,300 million (US$491,551 thousand).
			 By the First and Second Capital Increases, Atrium’s excess liabilities have been eliminated.
iii. Share exchange		The Basic Agreement provides that the Company shall allocate and deliver 0.13 shares of common stock of the Company for one share ofcommon stock of Atrium. It also provides that Atrium shall be a wholly owned subsidiary of the Company as of August 1, 2009, when the said
share exchange becomes effective. The Company and Atrium resolved to conduct, and subsequently entered into an agreement concerning,
the Share Exchange at their Boards of Directors meeting held on June 17, 2009.

Credit Saison 200949

50 C r e d i t S a i s o n 2 0 0 9

Corporate Information (As of March 31, 2009)
CREDIT SAISON CO., LTD.
Head Office:

52F Sunshine 60 Bldg., 1-1, Higashi-Ikebukuro 3-chome,
Toshima-ku, Tokyo 170-6073, Japan
Telephone: 81-3-3988-2111
www.saisoncard.co.jp

Incorporated:

May 1, 1951

Paid-in Capital:¥75,929 million

Number of Employees:

Consolidated: 3,789
Non-consolidated: 2,190

Closing of Accounts:

March 31

Stock Listing:Tokyo Stock Exchange, First Section

Ticker No.:

8253

Independent
Auditor:Deloitte Touche Tohmatsu

Transfer Agent:

The Sumitomo Trust & Banking Co., Ltd.
Stock Transfer Agency Department

Common Stock Authorized:

300,000 thousand shares

Common Stock Outstanding:

185,444 thousand shares (as of August 1, 2009)

C R E D I T S A I S O N 2 0 0 9 51

Corporate History
1951 May The Company is established as a retailer specializing

1999

in installment sales.

1968 Jun. The Company is listed on the First Section of theTokyo Stock Exchange.

1976 Mar. The Seibu Department Stores, Ltd. and the Company

2000 Aug. Net Answer, a web site for cardholders, is started.
2001 Mar. Nominated for inclusion in the Nikkei Stock Average(Nikkei 225).

establishes a shareholding relationship and develops a
consumer credit system for the Saison Group.

1980 Aug. The Company’s name is changed from Midoriya
Department Stores to Seibu Credit Co., Ltd.

Total transaction volume surpasses¥2 trillion.

Nov. A supporting company contract for the Japannational soccer team is concluded.

2002 Feb. Transfers shares of Saison Life Insurance Co., Ltd. to
GE Edison Life Insurance Co., Ltd. (currently AIG
Edison Life Insurance Company).

1982 Aug. Credit Saison begins to build a nationwide networkof Saison Counters to process Seibu Card issues,and to install automated cash dispensers.

New membership point service SAISON Dream isstarted (currently Eikyu Fumetsu Points, or
SAISON Permanent Points in English).

1983 Mar. The name Seibu Card is changed to SAISON CARD.
1988 Jul. Credit Saison reaches agreements with VISA and
MasterCard and issues SAISON Visa Card and
SAISON MasterCard.

400,000 points — a seven day journey
for two to St Andrews, Scotland.

1989 Oct. The Company’s name is changed to
Credit Saison Co., Ltd.

2003 Jan. Begins using SAISON CARD EXPRESS for speedy

1991 Jan. The affinity card business is started.
1991

online card issuance.

Total transaction volume surpasses¥1 trillion.

Mar. A special benefit plan for shareholders is introduced.
Aug. An agreement is reached on a comprehensive alliancewith the card division of Idemitsu Kosan Co., Ltd.
(Idemitsu Card mydoplus is issued in April 2004.)

1992 Apr. Credit Saison begins to issue Saison Postal Savings
Cards, the first cards in Japan to support signature-lesstransactions (in Seiyu food outlets).

1992

Sep. Super Value Plus, an insurance product exclusively
for cardholders, is issued through a business alliance
between Credit Saison, Saison Automobile and Fire
Insurance Co., Ltd. and Sompo Japan Insurance Inc.

Total number of cardholders surpasses
10 million.

1995 Jun. SAISON JCB CARD is issued in cooperation withJCB Co., Ltd.

2004 Feb. A decision is made to form a strategic equity andbusiness tie-up with Resona Holdings, Inc. (Resona
Card+S (Resona Card SAISON) is issued in
October 2004.)

1997 Oct. SAISON American Express Card is issued throughan affiliation with AMERICAN EXPRESS.

Apr. A basic agreement is reached with Takashimaya

Company, Limited on a strategic alliance in thecredit card business. (TAKASHIMAYA SAISON
Card is issued in September 2004.)
Aug. A basic agreement on forming a strategic alliancein the credit card business is concluded with theMizuho Financial Group, Inc., Mizuho Bank, Ltd.
and UC CARD Co., Ltd.

1999 Sep. Issues 2 combined credit/cash cards with regionalbanks, Shonai SAISON cards and Suruga
SAISON card.

’51

’55

’60

’65

52 C R E D I T S A I S O N 2 0 0 9

’70

’75

’80

’85

’90

’95

’00

’01

’02

’03

’04

An agreement is reached on a comprehensive alliancewith the Yamaguchi Financial Group. (YM SAISON
Card is issued in October 2007.)

2005 Apr. The new credit center Ubiquitous starts operation.

Jun./Jul. The maximum interest rate for cash advances isreduced to 18%.
Mizuho Mileage Club Card SAISON reaches
2 million cards issued.
Oct. Establishment of Qubitous Co., Ltd., the industry’s
first comprehensive processing service specialist.

Mizuho Mileage Club Card SAISON is issued.
Oct. Chojo-SAISON Credit Card for Japanese expatriatesin Shanghai is issued.

Qubitous is made a consolidated subsidiary in
April 2008.

SAISON Platinum American Express Cardis issued.

Integration of SAISON and UC point services (application of SAISON Permanent Points to the UC Card
point system).
Issuance of the SAISON NEXT Card, successor to
the Postal Savings Card.
Nov. Issuance of the SAISON American Express Gold
Card and the first American Express cards with noannual fee to be issued in Japan; both cards issued
in alliance with American Express.

Dec. Credit Saison acquires an additional 12.4% of
the shares of Resona Card Co., Ltd., making thiscompany an equity-method affiliate.

2008 Apr. Agreement to form a business alliance with Shinhan
Card Co., Ltd. (South Korea).

2006 Jan. Credit Saison merges with UC CARD Co., Ltd.

Jun. Launch of the rental business (commencement ofhome appliance rental in an alliance with Yamada
Denki Co., Ltd.).

(card issuance business).

Total number of cardholders surpasses
20 million.
Mar. A new loan product, SAISON Card Loan, is issued.

Total number of cardholders of Yamada LABI Cardsurpasses 1 million.

Jun. A comprehensive alliance is formed with Yamada

Sep. Absorption by merger of LAWSON CS Card, Inc.

Denki Co., Ltd. in the credit card business.
Jul.

Oct. Launch of the new credit operation center“Kansai Ubiquitous.”

Agrees to form a business alliance with The
Shizuoka Bank, Ltd. (Shizugin Saison Card
Co., Ltd. is established in October 2006 and the
ALL-S Card is issued in July 2007.)2009 Apr. Begins to accept applications for Mitsui Shopping
Park Card Saison.

Oct. The Eikyu Fumetsu.com online shopping mallis opened.
JPN COLLECTION SERVICE Co., Ltd. is listed on
the Hercules Section of the Osaka Stock Exchange.
Nov. A shareholder agreement is signed with Daiwa House
Industry Co., Ltd. and a joint venture is established.
(Heart One Card is issued in May 2007.)

2006

Aug. Atrium Co., Ltd. becomes a 100% subsidiary via ashare exchange.

Total transaction volume surpasses¥5 trillion (non-consolidated)2007 Mar. Saison Asset Management Co., Ltd. launches its
own investment trusts. (Saison Vanguard Global
Balance Fund received NIKKEI service awards inJanuary 2008.)

’05

’06

’07

’08

’09
C R E D I T S A I S O N 2 0 0 9 53