CREDIT SAISON Co., Ltd.
Annual Report 2004

CREDIT SAISON Co., Ltd.

TM

ecycled paper.

Annual Report 2004

Financial Highlights
CREDIT SAISON CO., LTD. and Consolidated Subsidiaries
As of and for the years ended March 31% change

Thousands of
U.S. dollars(Note 3)

2004

2003

2002

2004/2003

2004

Consolidated:
Operating revenues (Note 1) ..................................................
Selling, general and administrative expenses.......................
Financial cost......................................................................
Operating income...............................................................
Net income (loss) ................................................................

¥ 220,332
156,502
9,825
54,00522,420¥ 212,242
147,018
12,81052,414(6,027)¥ 214,838
141,795
13,37059,673
18,2253.8
6.5(23.3)
3.0—$ 2,085,883
1,481,602
93,014
511,267
212,247

Total shareholders’ equity (Note 2).........................................
Total assets.........................................................................
Return on shareholders’ equity (ROE) (%) ...........................
Return on assets (ROA) (%) ................................................
Shareholders’ equity ratio (%) ............................................

258,253
1,352,710
9.1
1.7
19.1

236,028
1,280,823——
18.4

242,594
1,256,899
7.8
1.2
19.3

9.4
5.6

2,444,887
12,806,114

Per share data (in yen and U.S dollars) (Note 2):
Net income (loss) per share.............................................
Shareholders’ equity per share........................................

130.55
1,519.13(36.57)
1,380.26

108.56
1,436.58

—
10.1

1.24
14.38

Credit Card Business Data (Non-consolidated):
Card transaction volume.....................................................
Credit-card-related shopping services .............................
Cash advances ...............................................................
Total cardholders (Millions) .................................................
Active cardholders (Millions) ...............................................
New cardholders (Millions)..................................................

¥2,408,698
1,912,210
496,488
15.87
8.41
1.86

¥2,342,865
1,808,624
534,241
14.90
8.07
2.30

¥2,121,607
1,629,199
492,408
13.40
7.50
2.50

2.8
5.7
(7.1)
6.4
4.2
(19.1)$22,803,162
18,102,906
4,700,256

Millions of yen

Notes: 1. “Operating revenues” does not include consumption taxes.
2. Treasury stock is deducted from capital. In addition, treasury stock is subtracted from the total number of shares outstanding in computing per share data.
3. Japanese yen amounts have been translated into U.S. dollars at the rate of ¥105.63=U.S.$1, the approximate exchange rate on March 31, 2004, for theconvenience of the reader.

Operating Revenues

Net Income (Loss) and ROE

Total Assets and ROA(Billions of yen)(Billions of yen / %)(Billions of yen / %)

250

24

200

18

Net Income (Loss) (left scale)ROE (right scale)

10

2,000

Total Assets (left scale)
ROA (right scale)

2.0

8
1,500

1.5

1,000

1.0

500

0.5

6
150

12
4

100

6
2

50

0

0

0

0

-6

00

01

02

03

04

00

01

02

03

04

0

NE
00

01

02

03

04

Note: As a result of non-operating losses due to its agreement to a rehabilitation plan for The Seibu Department
Stores, Ltd., which entailed a loss on revaluation of investment securities, the Company recorded a net loss of¥6,027 million for the year ended March 31, 2003, and ROE and ROA for that year are not presented.

Forward-looking statements

This annual report contains discussions including management plans, projections, strategies and estimates that are not historical facts. Projections of future performance arebased on management extrapolations from current data, but actual future performance may differ materially from projections.

2004
Credit Saison is using two growth strategies
to work toward new breakthroughs.

目 次
CONTENTS

To Our Stakeholders .................................................................... 2
Five Questions for Credit Saison
Q1: How has Credit Saison achieved suchremarkable growth to date? .......................................... 6
Q2: How does Credit Saison benefit fromaggressively promoting its alliance strategy? ............... 8
Q3: What are Credit Saison’s core strategies forachieving steady growth in the future? ...................... 10
Q4: How does Credit Saison plan to leverage its position
as a leading company in the credit card industry
for future growth? ........................................................ 12
Q5: What are the critical issues in being a leading-edge
service provider?............................................................ 14
Card Tie-Ups ............................................................................... 16
Board of Directors and Statutory Auditors/
Corporate Governance .............................................................. 18
Major Group Companies ........................................................... 20
Financial Section......................................................................... 21
Corporate History....................................................................... 50
Corporate Information .............................................................. 51

Credit Saison Co., Ltd.

1

How
H a v e We
Been Doing?
Credit Saison’s growth up to now, and what lies ahead•

Credit Saison is aiming to become the number-one company in thecredit card business by establishing ideas for a new era in the cardbusiness as a leading-edge service provider.
With 15.87 million cardholders and approximately 80 alliancepartners as of March 31, 2004, Credit Saison has gained a position at
the top level among domestic credit card companies.
Credit Saison Group companies share a common philosophy of
pursing customer satisfaction, creating mutual benefits with business
partners, and building a creative, innovative company. By instillingthese concepts and putting them into practice, Credit Saison seeks to• Saison American Express Card
issued through an affiliation
with AMERICAN EXPRESS®.

1997

be the number-one company in the credit business.

1995• Started the affinity
card business.

1991

1988

• Began issuing Saison JCB International Cardin cooperation with JCB Co., Ltd.

• Began issuing Saison Visa Cardand Saison MasterCard.

• Began issuing the Saison Four Beat Card,a customer-oriented new concept card.
• Began “SAISONPASS” account aggregation
service for SAISON CARD holders.

• Began issuing credit cards
that incorporate bank cash
card functions.

2002

1999

• Began a program of bonus points thatnever expire (SAISON Permanent Points).
• Introduced SAISON CARD MAKER, a speedy,
automatic card issuing machine.

2003

To O u r
Stakeholders

Credit Saison views the accelerating pace of
reorganization in the Japanese credit card
industry as an opportunity. Our objective is tofurther increase corporate value by deploying
our competitive advantages as a leading
company in the credit card industry anddeveloping innovative strategies for adapting
to market change.

Hiroshi Rinno
President and CEO

To OurStakeholders

To O u r
Stakeholders

To O u r
Stakeholders

To O u r T o O u r
To O u r
S t a k e hSo t
l dae kr se h o l d e r s
Stakeholders
To OurStakeholders

2

Credit Saison Co., Ltd.

To O u r
Stakeholders

To OurStakeholders

To OurStakeholders➤ Performance during the Year to March 2004
A corporate culture that is intensely focused on customer satisfaction and astrategic emphasis on earnings, sustainability and reliability resulted inincreased revenue and earnings.
In fiscal 2003, the year ended March 31, 2004, total operating revenues increased 3.8
percent year-on-year to ¥220.3 billion, driven by firm growth in our core credit cardbusiness and strong performance in our leasing business. We steadily expanded ourrevenue base, with new credit card applicants totaling 2.1 million during the past fiscal
year. Moreover, as of March 31, 2004, total cardholders increased 970 thousand from ayear earlier to 15.87 million, and active cardholders increased 340 thousand from a year earlier
to 8.41 million. Operating income increased 3.0 percent year-on-year to ¥54.0 billion, as Credit
Saison offset a 32.3 percent year-on-year increase in allowance for losses on receivables andguarantees to ¥41.2 billion by reducing other operating expenses. Credit Saison recorded a loss
on impairment of fixed assets totaling ¥7.6 billion due to the early application of new
impairment accounting standards. Absent charges in the previous fiscal year in connection withthe rehabilitation of Seibu Department Stores, Ltd., however, income before income taxes andminority interest totaled ¥40.5 billion, compared to a loss of ¥10.3 billion for the previous fiscal
year. Net income recovered as well, totaling ¥22.4 billion compared to a net loss of ¥6.0 billion
for the previous fiscal year.

Credit Card Transactions
by Volume (Fiscal 2002)
Credit Saison
7.3%
Equity participation(LAWSON CS Card, Idemitsu Credit)
1.2%
Planned tie-up companies(Resona Card, Takashimaya Credit)
3.8%➤ Operating Environment in the Credit Card Industry
The credit card industry is undergoing a wave of reorganization. Credit Saison is
working to further expand market share by employing its innovative ideas andexpertise that other companies cannot match.
The pace of reorganization in Japan’s credit card industry has gained momentum, as
exemplified by the scheduled large-scale merger of UFJ Card Co., Ltd. and Nippon Shinpan Co.,
Ltd. With more than 500 participants in Japan’s credit card industry in segments includingbanking, consumer credit, retail and manufacturing, this wave of reorganization is projected
to intensify further. In this environment, Credit Saison is aiming to rapidly raise its market sharefrom the current 7 percent level to the 15 percent level, and ultimately to 30 percent, by
accelerating its strategy of alliances and acquisitions.
Credit Saison’s superiority will become even more clear as the pace of industry reorganization accelerates. This is because Credit Saison has its roots in the retail credit industry anddeveloped its services from a customer-centric perspective. As a result, Credit Saison has
unique expertise in stimulating customers to use its credit cards. Credit Saison stays intouch with customers through numerous channels, ranging from SAISON Counters inapproximately 160 locations nationwide to the telephone and the Internet. We constantly
listen to our customers, and our flexibility in developing products and services is a strength. Unlike
credit card companies affiliated with banks or consumer credit companies, Credit Saison

Other credit cardcompanies

Credit Saison is accelerating its strategy ofalliances and acquisitions to reach its long-term
market share target of 30 percent.

Card Transaction Volume and Total Number of Cardholders

Card transaction volume(Billions of yen)
Total cardholders(Millions)

2004

2003

2002

2001

2000

2,408.6

2,342.8

2,121.6

1,855.7

1,617.2

15.87

14.90

13.40

11.40

10.00
Credit Saison Co., Ltd.

3

does not charge annual credit card fees, yet we are consistently more profitable than suchcompetitors. This is compelling evidence of the value of our approach.
Factors such as reduced spending among consumers have blunted growth in the current
credit card industry, yet we see solid potential for expansion. Credit card use accounts for only
about 8 percent of personal consumption in Japan, which is no more than one-third the levelin the United States, a leader in credit card use. Moreover, the scope of credit card usage is
expanding from shopping to paying for cellular phone bills, communications, travel, utility bills,
medical costs and other expenses. With Japan’s credit card industry continuing to undergo majorchanges, Credit Saison is working to expand market share by providing innovative products andservices that leave conventional assumptions and practices far behind.

Composition of Cardholders
by Gender➤ Two Growth Strategies
Credit Saison is using two growth strategies to work toward new breakthroughs.

Composition of Cardholders
by Age(As of March 31, 2004)

Male
33.8%
Female66.2%(As of March 31, 2004)

Credit Saison aims to be a leading-edge service provider. We are promoting two growthstrategies as avenues to future growth.
The first strategy aims to generate steady growth by maximizing the expertise and brandstrength Credit Saison has created to date. Relentlessly pursuing customer satisfaction
requires Credit Saison to toss out conventional industry paradigms. Credit Saison charges noannual fee for its credit cards, a completely different approach than relying on annual fees togenerate earnings as other credit card companies do. The SAISON Permanent Point(“Eikyufumetsu Point” ) bonus point program has eliminated expiration dates. These kinds ofbreakthrough programs are the result of Credit Saison’s embrace of constant innovationand forward thinking that are not restrained by conventional business models.
Our second growth strategy entails aggressively developing strategic alliances to which we
contribute capital, people and expertise as a means of generating further growth. Deploying
our abilities in marketing and credit administration, we have concluded such alliances withapproximately 80 companies to date. In the past, these alliances primarily entailed card
issuance and the provision of new services. Today, however, we are promoting alliances in which
the capital, people and expertise we provide builds an even stronger partnership in jointly issuing
credit cards to our alliance partners’ customers. Progress in the reorganization of the credit card
industry is creating excellent opportunities, and we believe that the timing is perfect tobegin transforming these opportunities into dramatic future growth. This kind of strategic
alliance is based on linking improvement in our alliance partners’ corporate value toimprovement in the corporate value of the Credit Saison Group. We concluded one such alliancewith Takashimaya Co., Ltd. in April 2004. In tandem with prior alliances with The Seibu
Department Stores, Ltd. and Sogo Co., Ltd., this gives Credit Saison strategic alliances withthree of Japan’s five largest department store companies, thus enabling us to expand
opportunities to reach attractive customers. Looking forward, Credit Saison will work to
expand market share by adding partnerships with companies in a wide array of industries to ouralliances with firms in the retail business.
Moreover, we expect these strategic alliances to support our processing business, inwhich we provide commissioned credit card administration for our alliance partners’ credit
card operations. This processing business will form the core of our fee business, which will bea new source of earnings for Credit Saison. Building on relationships with Lawson, Inc. and
Mitsubishi Corporation initiated in 2000, during fiscal 2003 we concluded agreements with
Idemitsu Kosan Co., Ltd. and Resona Holdings, Inc. under which we provide commissioned
credit card administration for their group credit card companies’ operations. We expect4

Credit Saison Co., Ltd.

Early 20s
and under
4.4%
60s
and over19.0%

Late 20s
11.3%
Early 30s
15.1%

50s
17.7%
40s
19.6%

Late 30s
12.9%

Credit Saison’s Two Growth Strategies

Steady Growth

New Growth

Strength
Full deployment of our strengths

Alliance

Satisfaction

Aggressive expansion ofalliance strategy

Further pursuit ofcustomer satisfaction

New Revenue Sources

Innovation

Creation of new sourcesof revenue

Realization of newcompetitive advantages

these alliances to contribute several billion yen to earnings in the current fiscal year. Looking
ahead, we will further expand fee businesses to complement our credit card shopping andcash advance operations in building a well-balanced earnings structure that generates
dramatic growth.

➤ Achieving Sustainable GrowthBased on its original, innovative corporate culture, Credit Saison will use its
personnel as a core management resource in aiming for profitable growth.
In addition to proactively recruiting women and young people, Credit Saison has introduced an innovative personnel system that emphasizes and deploys the capabilities ofindividuals. This system includes allowing newly hired employees that have just graduatedfrom college to propose their initial salary level, and promoting part-time employees.
Approximately 20 percent of Credit Saison’s department managers in their 30s are women,
compared to an average of 6 percent for all Japanese companies. Moreover, we haveenergetically introduced other systems, such as internal interdepartmental projects and theopportunity for individual employees to propose ideas to management.
As a manager, I have been intent on creating an open, frank and innovative corporate culture
in which age and gender are irrelevant. Encouraging employees to improve themselves
through friendly rivalry is a critical asset in competing successfully, and the dynamic driving Credit
Saison’s progress.
Credit Saison will fully utilize its human and other resources in working to create
mutually beneficial relationships with cardholders and alliance partners as the means toincrease corporate value. This is intimately related to shareholder returns. Credit Saison willcontinue to devote itself to becoming a leading-edge service provider that creates new value forall of its stakeholders.
June 29, 2004

Hiroshi Rinno
President and CEO
Credit Saison Co., Ltd.

5

Q1
Five Questions
for Credit Saison?

How has Credit Saison
achieved such remarkable
growth to date?

Credit Saison’s brand power has been
built on personalized relationships
with individual customers.

Harumi Okada
Branch Manager, Tokyo Branch
Sales Division
6

Credit Saison Co., Ltd.

Credit Saison has constantly pursued customer satisfaction, drawing
on strengths including marketing and credit administration
capabilities to achieve growth unmatched in our industry.

A Powerful Customer Base

Building Unshakeable Brand Strength

Total cardholders as of March 31, 2004 increased 970
thousand from a year earlier to 15.87 million and active cardholders increased 340 thousand to 8.41 million, demonstrating ourcontinued solid progress. The SAISON CARD’s characteristics
reflect its origins in the retail industry, and Credit Saison has
acquired the overwhelming support of customer segments thatlead in consumption. For example, 66 percent of cardholders
are women, and by age, 44 percent of cardholders are in their
20s or 30s.
Credit Saison’s excellence in customer relationship management (CRM) has been key to its efforts to strengthen its relationships in these customer segments. Detailed analysis of customer
information including historical card use helps us achieve ourgoal of creating additional customer satisfaction and maintaining
and expanding the number of loyal customers.

Credit Saison is a strong, powerfully positioned brand. Young
female customers and customers in many other segments havepraised the SAISON CARD for its originality, numerous functions
and differentiating services. Moreover, since 2001 we have beenstrengthening our brand image through original advertising.
Advertising in 2003 used the theme of wine to highlight theappeal of the SAISON CARD’s diverse, international functionality.
During the current fiscal year we will introduce a new affinity
card design with the SAISON logo on the front. This will enhance
the SAISON CARD identity, while making a complete departure fromthe image of affinity cards as our partners’ in-house cards, thus
strengthening their image as versatile cards that customers can use
in a wide variety of situations.

Strength
Strength

Strength
CUSTOMER CUBE

Outstanding Credit Administration
Expertise
Concentrating on responding to changes in the credit market,
such as the highest level of personal bankruptcies in history,
Credit Saison is strengthening its credit risk management
system. From April 2004, we introduced the new HEART system tomake initial lending more stringent and rational. HEART shifts
our perspective from processing large quantities of data to credit
quality in controlling total risk, from initial lending to collection
administration. This change in emphasis offers greater flexibility inoperations to respond to changes in the business environment. In
addition, Credit Saison has stringent systems in place for dealing
with credit card fraud that encompasses ACE, an authorizationmonitoring system, and Falcon, a software package for detecting
credit card fraud.
Credit Saison’s credit card processing systems and knowhow have received wide acclaim in a variety of industries. Ourcommissioned operations business has been expanding eachyear, and strategic alliances will support further expansion. We also
expect the start of full-scale operation of the new Credit
Center slated for April 2005 to further raise the quality andefficiency of operations management.

TM

A

D

Preferred Customer

Fostered Customer[21][2] [3] [5] [6] [14][15] [23]Maintained as a loyal customer.
(Priority treatment for customers
likely to use other cards as well)To effectively raise status bymember mass approach

B

E

Reserve Preferred
Customers

Loan Controlled
CustomersHigh[11] [12] [20] [24]Fostered as Preferred Customers
by aggressive investment
for activation suitedfor customers[8] [9] [17] [18] [26] [27]High

SafetyContinuity

High

Fostering safe recovery byappropriate ongoing
management

Profitability
Low

C

F

New & Limited
Use Customer

Cost Controlled
Customers[1][4] [7] [10] [13] [16] [19][22] [25]Promotion for activation at timeof application, issuance andnew membership

Cost controlled by effective
measures

Customer CubeTM, Credit Saison’s original CRM model, comprehensively evaluates each customer
according to profitability, continuity and safety based on historical card use and other data. It
serves as a basis for developing up-to-date marketing tailored to various buyer segments.
Credit Saison Co., Ltd.

7

Q2
Five Questions
for Credit Saison?

How does Credit Saison
benefit from aggressively
promoting its alliancestrategy?

Credit Saison’s alliance strategy is an
important business scheme thatcreates corporate value.

Shinji Yasuda
Manager, Credit Card Dept.
Sales Division8

Credit Saison Co., Ltd.

Building a network through alliances allows us to not only acquire
loyal customers, but also to energize card use by providing theoutstanding services of alliance partners to Saison cardholders.

Building a Network throughAggressive Development of the
Alliance Strategy
During fiscal 2003, Credit Saison continued to promote expansion in its network of alliances. New card issuance agreementswith 10 companies raised the total of Credit Saison’s alliancepartners to approximately 80 companies. Credit Saison is aggressively promoting alliances with large-scale stores, outlet malls andother retailers because they are a robust platform for acquiring
new cardholders. Adding to our network of relationships withdepartment stores that hold dominant positions, Credit Saison
complemented alliances with The Seibu Department Stores, Ltd. andSogo Co., Ltd. by concluding an alliance with Takashimaya Co., Ltd.,the leader of Japan’s department store industry, in April 2004.
Our alliances now cover department stores with a combined share of
approximately 27 percent of their industry. Looking forward, we
will promote the addition of attractive customers to our franchise asa pillar of our customer strategy.
In addition to the above measures, Credit Saison concluded
comprehensive alliances with Idemitsu Kosan Co., Ltd. and Resona
Holdings, Inc. covering their credit card operations. These alliances
include investment in their affiliates and marketing support. As aresult of these alliances, Credit Saison issued new cards and alsoacquired important new bases for promoting card use. As a resultof aggressively implementing our alliance strategy to build our
network of relationships, Credit Saison has achieved dramaticchannel expansion to approximately 45,000 locations nationwide.

Jointly Developing Unique Products
and Services Creates Mutual Benefit
While strengthening its network of alliances, Credit Saison is
working to differentiate itself from competitors on the basis ofexcellence by constantly developing new products and services.
Financial and insurance-related services are an area of strength.
Credit Saison provides financial products and services includingbanking services, on-line trading and all types of insurance
through business alliances with partners including ORIX Trust andBanking Corporation, MONEX, Inc., AIG Edison Life InsuranceCo., Ltd., Sompo Japan Insurance Inc., and Saison Automobile
and Fire Insurance Co., Ltd. In October 2003, we launched an
optional service for the SAISON CARD, Super Value Plus, which
provides insurance for injuries in the course of everyday life andleisure, property theft and other events for a monthly premium of¥300. This breakthrough insurance product has received an
enthusiastic response from our cardholders. In addition, in March
2004 we began offering the Saison My Car Lease, which is an
automobile lease product we created for individuals through analliance formed with ORIX Corporation.
Credit Saison will continue to offer unique, value-added
services through alliances with strong, distinctive companies.

Alliance
Alliance

Alliance

Card Alliance Partners at a GlanceType of Business
Financial institutions

Commerce

Major Alliance Partners (Store Names)
Japan Post, Shonai Bank, Suruga Bank, Bank of Nagoya, Fukui Bank, Kyoto Shinkin Bank, Fukushima
Bank, Monex, etc.

Large retail stores

Sogo, Seibu Dept. Stores, Seiyu, Takashimaya, Meitetsu Dept. Store, Marui, Mitsukoshi, Tenmaya,
Sunny, Nagasakiya, Station buildings (Nagasaki, Kagoshima, Tennoji, Hamamatsu), etc.

Chain stores and outlets

Mujirushi Ryohin, Loft, Parco, Toys “R” Us, Franc franc, LaOX, Mitsui Outlet Park, Karuizawa Prince
Shopping Plaza, etc.

Convenience stores

Lawson/Mitsubishi Corp.

Service and gas stations

Idemitsu Group (Service and LP gas stations)Credit Saison Co., Ltd.

9

Q3
Five Questions
for Credit Saison?

What are Credit Saison’s
core strategies forachieving steady growthin the future?

In structuring our credit business, weare always thinking about how to
improve customer satisfaction.

Daisaku Ohno
Manager, Credit Administration Dept.
Operations Division10

Credit Saison Co., Ltd.

Customer satisfaction is the most important issue in achieving
steady growth. We will continue to pursue customer satisfaction
with the goal of expanding transaction volume and the numberof cardholders.
Credit Saison’s Decision to Introduce
SAISON Permanent Points
The pursuit of customer satisfaction often requires Credit
Saison to defy conventional industry assumptions. Unlike othercredit card companies, which rely on annual credit card fees tosupport earnings, Credit Saison issues cards with no annual fee.
We have also initiated SAISON Permanent Points (“Eikyufumetsu
Point”), which never expire. The introduction of this revolutionary
program was a result of Credit Saison’s commitment to forward
thinking and innovation, unconstrained by conventional businessmodels. Customers can collect SAISON Permanent Points for as longas they choose and exchange them for the items they want at
any time. This program has attracted customer interest, and is a
motivation to become a cardholder that is also linked to active
card use.
Credit Saison is also working to expand opportunities for carduse. The scope of credit card use is expanding from shopping topaying for cellular phone bills, communications, travel, electronic
toll collection, utility bills, medical costs and other expenses.
Moreover, from April 2004 customers have been able to use
credit cards for purchasing beer from vendors and other purposes
at Seibu Stadium. Wherever customers use their cards, theyreceive SAISON Permanent Points. This initiative is therefore astrength is working to make Saison our cardholders’ main card.

Using Infrastructure and Marketing
Capabilities to Strengthen Customer
Relationships
Credit Saison has created SAISON Counters staffed by morethan 1,000 specialists at approximately 160 locations in key cities
throughout Japan. SAISON Counters initiate new cardholder
relationships and also have the important function of collecting direct
feedback on customer requests and needs, which Credit Saison uses
in developing new services.
Credit Saison has also worked to differentiate itself bycreating rapid card issuance systems that can issue a card in
30 minutes. This capability has become a significant strength.
We have installed SAISON STATION information terminals thatcan rapidly issue cards at major SAISON Counters nationwide.
Moreover, in addition to SAISON Counters and SAISON CARD
MAKER automated card issuance machines, customers can now
obtain their credit cards from the Shinjuku West Exit Store of
Zero First Co., Ltd., a Marui Group company. We have alsosignificantly expanded the varieties of cards that can be issued
rapidly in working to enhance our services.
Credit Saison’s infrastructure for satisfying customers will be a
key means of achieving steady growth in the future.

Satisfaction
Satisfaction

Satisfaction

Credit Saison Co., Ltd.

11

Q4
Five Questions
for Credit Saison?

How does Credit Saison
plan to leverage its
position as a leading
company in the credit
card industry for future
growth?

To achieve further growth, we are deploying
Credit Saison’s comprehensive strengths tocreate a new business model.

Teruhisa Aoyama
Manager, Treasury & Comptroller Dept.
Management Division

12

Credit Saison Co., Ltd.

We aim to aggressively develop strategic alliances to which we
contribute capital, people and expertise as a source of future growthin order to be a strong, successful company in the twenty-first century.

Expansion of the Processing Business
into a Key Fee Business

Construction of New Credit Center to
Improve Service Quality and Efficiency

Credit Saison is using its existing business infrastructure tocreate new sources of earnings that mitigate the risk of interest rate
fluctuations. We are concentrating on the processing businessas it allows us to maximize our use of the expertise we haveacquired over many years.
Under the comprehensive alliances we concluded with
Idemitsu Kosan and Resona Holdings during fiscal 2003, Credit
Saison will provide commissioned processing services to Idemitsu
Credit Co., Ltd. and Resona Card Co., Ltd. These services will
cover all aspects of the credit card businesses, from evaluating
creditworthiness prior to initial lending to extending credit andcollection administration. These alliances build on the large-scalecommissioned administration agreement we concluded for credit
cards issued by LAWSON CS Card, Inc. in 2002.
The processing business adds stability to Credit Saison’s
earnings base and will continue to grow. We expect thisbusiness area to expand substantially in the future. Credit
Saison will work to further expand its fee businesses, with the aimof generating dramatic growth by creating a profit structurebalanced among the credit card shopping, cash advance andfee businesses.

Credit Saison is now constructing a new Credit Center,
which will accommodate 2,000 operators. Our objective is toraise service quality and reduce the cost of handling 600,000
to 700,000 customer calls each month while also supporting
further smooth expansion in the processing business.
The Credit Center is projected to begin full-scale operationsin April 2005. It will place all employees handling phone callsfrom customers in one location, which will enable Credit Saison toefficiently provide excellent service. In addition, the Credit Center
will include training facilities for thorough operator education.
Credit Saison also recognizes that thorough and appropriate
management of customer information is a critical task. The Credit
Center’s security system has multiple access levels according toapplication, and employs a full complement of safety measures
based on integrated circuit (IC) card administration.

Ne w Re v e n u e S o u r c e

New Revenue Source

New Revenue Source

Fee Businesses
Field

Processing

Fee Business

Strategies and Services

Main Alliance Partners• Outsourcing certain administrative processes as well as
general credit card businesses such as initial screening,card issuance, billing and payment

Idemitsu Credit Co., Ltd.

LAWSON CS Card, Inc.
Resona Card Co., Ltd.

• Client support services such as creation of customer
databases, data analysis, ongoing credit management
and risk management

AIC CARD SERVICES, INC.

• Sending a variety of information to customers using credit
cards as a communication tool

Saison Automobile andFire Insurance Co., Ltd.

• Building the fee business and offering differentiatedmerchandise and service information to approximately
16 million cardholders

AIG Edison Life Insurance Company
Sompo Japan Insurance Inc.

Data Mining (Direct Mail Service)
Direct Marketing• Promoting active business by providing customers with
useful information sent by clients

Clients

Credit Saison Co., Ltd.

13

Q5
Five Questions
for Credit Saison?

What are the criticalissues in being a leadingedge service provider?

Credit Saison looks for highly motivatedpeople who can think flexibly.

Masako Takeda
Manager, Human Resources Dept.
Administration DivisionMarketing Dept., Sales Division

14

Credit Saison Co., Ltd.

An innovative corporate culture and measures that energize
employees will support Credit Saison’s unique strategies for creating
new markets and customers through business alliances.

A Sense of Urgency Drives Innovation to
Improve Our Competitive Advantages
Credit Saison believes that a healthy sense of urgency and astrong competitive spirit are essential to energizing its organization.
Customer trust and support form a crucial base for operations. To
further strengthen this base, Credit Saison must constantly differentiate itself from competitors through means including consistently
maintaining a sense of urgency in creating new customer services,
strengthening its network of alliances and issuing new cards.
Credit Saison aims to have an open, frank and innovative
corporate culture, and employs a merit-based personnel evaluation
system. Seniority and gender make no difference. Employees who
succeed at highly challenging jobs receive compensation commensurate with their achievements. Moreover, both managers andrank-and-file employees are included in a voluntary system ofcompetitive job rotation that serves to nurture motivated employees.

Credit Saison has innovative personnel strategies in place that emphasize thedeployment of the individual capabilities of employees. These include
interdepartmental projects and the opportunity for individual employees topropose ideas to management, and we continue to develop dynamic
measures for maintaining an organization that is consistently vital.

Innovation
Innovation

Inno vation
People Are a Critical Resource for
Credit Saison

Management Track Profile
Male/Female Ratio at Division
Manager Level(Age)
50 – 59

Male/Female Ratio at Section
Manager Level
2.3%

(Age)
50 – 59

4.1%

40 – 49

5.4%

30 – 39

80.5%

3.2%

Total

76.7%

8.7%

91.3%

20.7%
79.3%

5.3%

34.3%

19.0%
40 – 49

81.0%

30 – 39

88.9%

Total

86.8%

65.7%

4.8%

19.5%

11.1%

5.9%

23.3%

13.2%
0

20

40

60

80

0

100

20

Age of Employees at Supervisor Level and Higher
Female80

100(Number of employees)

3 0
60

Male

5

103

54
66

73
33

33
13
13

17
0

291

5.5%
60

Overall percentage of womenat Section Manager Level inJapanese companies

Overall percentage of womenat Division Manager Level inJapanese companies(Age)
20 – 24
25– 2930 – 34
35 – 39
40 – 4445 – 49
50 – 54
55 – 59
Total

40

32
29
243

Credit Saison consistently works to raise employee motivation, regardless of full-time, part-time or contract employment
status. In September 2003, we introduced a new monthly compensation system covering approximately 600 hourly employees at
SAISON Counters nationwide. Our objective in introducing thisnew system was to shift compensation standards from anhourly basis to a performance basis. At the same time, we revised
our mechanisms for job assignment and recruiting. The new
system has resulted in workplaces where employees can develop
their own capabilities and gain experience regardless of terms of
employment, which has created a spirit of unity between full-timeand contract employees.
Credit Saison also has a high ratio of women in middle
management positions. The branch managers at two of thetwelve branches nationwide that manage SAISON Countersand client sales are women.

(As of March 31, 2004)

Credit Saison Co., Ltd.

15

Card Tie-Ups
Credit Saison goes beyond the framework of equity ties by

Shopping

actively seeking card alliances with various companies
that are unique in their industries. To date, we haveformed alliances with approximately 80 companies.
In card alliances, our aim is not simply to gain more

Sogo Co., Ltd.

The Seibu Department Stores, Ltd.

Takashimaya Co., Ltd.

Mitsui Fudosan Co., Ltd.

Meitetsu Department Store Co.,
Ltd./Kanazawa Meitetsu Marukoshi
Department Store

L.L. Bean, Inc.

cardholders, but rather to build a relationship in which
both partners benefit and that contributes to our alliancepartner’s business development.
We are also expanding the processing business as a core
revenue source. Our focus is on consignment of generalcredit card business operations, including applicant screening, card issuance, billing and payment.

Travel & EntertainmentMori Kanko Trust Co., Ltd.

United Airlines, Inc.

SEIBU LIONS, Inc.

PADI, Inc.

Financial Institutions

JAPAN POSTMONEX, Inc.

Internet and Communications

NTT DoCoMo, Inc.

eAccess Ltd.

Automotive

Mazda Motor Corporation

16

Credit Saison Co., Ltd.

Japan Automobile FederationParco Co., Ltd.

The Loft Co., Ltd.

Ryohin Keikaku Co., Ltd.

Toys“R”Us-Japan, Ltd.

MARUI Co., Ltd.

BALS Corporation

LaOX Co., Ltd.

Mitsukoshi, Ltd.

Kokudo Co., Ltd.

Nagasaki Terminal Building Co., Ltd.

Senshukai General Service Co., Ltd.

POWER’S Co., Ltd.

YEBISU GARDEN PLACE Co., Ltd.

Katakura Industries Co., Ltd.

Social Contribution

NIPPON ANIMATION Co., Ltd.

TOHO Cinemas Ltd.

Yama-Kei Publishers Co., Ltd.

ThirdAgeStyle Corporation

Japan Football Association

Japan Leukaemia Research Fund

Fund for Great Hanshin Earthquake

Processing Business

The Shonai Bank, Ltd.

The Bank of Nagoya, Ltd.

The Kyoto Shinkin BankAIC CARD SERVICES, INC.

LAWSON CS Card, Inc.

Idemitsu Credit Co., Ltd.
NIFTY Corporation

WOWOW Inc.

Japan Highway Public Corporation

Credit Saison Co., Ltd.

17

Board of Directors and Statutory Auditors(As of July 31, 2004)

1

2

3

4

5

6

7

8

9

10

President and CEO

Senior Managing Directors

Managing Directors

Hiroshi Rinno* 10

Teruyuki Maekawa* 11

Toshiharu Yamamoto 12

General Manager of Sales Division
In charge of Public Relations Office

General Manager of Operations Headquarters

Terutaka Hasuda 7
Atsushige Takahashi 8
Executive Vice President

General Manager of Sales Headquarters

General Manager of Business Headquarters

Hiromichi Sato 13
Shiro Yanagihara* 9
General Manager of Strategy Headquarters
In charge of Audit Office

In charge of Credit Guarantee Business Divisionand Loan Division

Hidetoshi Suzuki 6
In charge of Card Division, Sales Planning Division
and Finance Division

Kazufusa Inada 14

Corporate Governance
Credit Saison realizes that strengthening supervisory
functions to increase transparency in management andachieve business objectives is extremely important. The
Company is taking various measures aimed at enhancing
corporate governance.
➤ Organizational Details and Internal Control System
The Board of Directors consists of sixteen members who set basic
policies for the Company’s business execution and supervise directors’
execution of their duties.
Credit Saison applies the auditor system with a board of auditors
consisting of four statutory auditors. In accordance with the auditing
policies and division of duties decided by the Board of Auditors, each
auditor conducts rigorous audits by methods including attending
meetings of the Board of Directors and other important meetings,

18

Credit Saison Co., Ltd.

General Manager of Administration Division
In charge of Takashimaya Card Dept.

listening to reports on business from directors and others, reviewing
documents containing important decisions, and examining thecondition of the Company’s business operations and assets.
Credit Saison also appoints one outside director and three outside
auditors to reinforce management check functions. They conduct
supervision and audits with an objective view of the Company’s
management.
In addition, the internal Audit Office conducts audits ofcompliance, risk management, internal control systems, governanceand other matters in the organizational operations and businessactivities of Credit Saison and its group companies, and makes
evaluations and recommendations based on these audits.
Credit Saison will continue to consider the most suitable
management structure, taking into consideration factors includinginternational trends and Commercial Code revisions concerning
corporate governance.

11

12

13

14

15

16

17

Directors

18

19

20

Standing Statutory Auditors

Shinji Hojo 5

Akira Kuramitsu 17

Toshio Sakai 2

In charge of Related Business Division

Isamu Sato** 19

Toshiyasu Suganuma 15

General Manager of Credit Guarantee Business
Division
In charge of Screening Division

In charge of Finance & Accounting Division andLease Business Division

Takayoshi Yamaji 3

Junichi Yamamoto** 1
General Manager of West-Japan Business Division

Kenzo Tada 4General Manager of East-Japan Business Division

Statutory Auditor
Yoshiro Yamamoto** 18
Atsushi Toki** 20

Hisayuki Kurata 16
General Manager of General Affairs Division* Representative Director** Outside director or auditor➤ Promotion of Highly Transparent Business➤ Promoting Compliance Awareness among Employees

Credit Saison has internal rules for corporate governance in the six
areas of personnel, crisis management, document management,
personal information management, work rules, and insider trading
management. As leakage of personal information is becoming an issueof public concern, Credit Saison has supplemented its information
management rules by devising and implementing a privacy policy inMarch 2002 for the control of personal information.
In addition, approximately one-third of Credit Saison’s employees
have received the highest certification from the Japan Consumer Credit
Industry Association for handling personal information. All employees
fully recognize the importance of protecting personal information as
managers and handlers of such information, and Credit Saison is
working to increase their awareness and skills in this regard.

Credit Saison has established the Compliance Committee to ensure
legal compliance, fairness and ethical conduct in its corporate activities.
A representative director (the executive vice president) serves as thecommittee chairman. The committee convenes several times each year,
and its secretariat meets more than 20 times annually, to carry out
initiatives such as drawing up a code of ethics and standards of conduct,and creating a unit to promote compliance. The committee also
produces and distributes a compliance handbook for employees andcontract employees.
A compliance consultation desk has been set up in the company,
and inquiries are also accepted through telephone and fax hotlines, acompany intranet, a special Internet address and postal mail. In
addition, the General Affairs Division sponsors compliance training
with outside guest lecturers for executives, which include directors anddivision managers, as well as for general employees. Employees incharge of compliance are assigned to each division and conduct
training programs at the division’s initiative.
Credit Saison Co., Ltd.

19

Major Group Companies(As of March 31, 2004)

Shopping loans andfinancial services

Credit Saison

Merchandise sales
Lease and other services

Credit &FinanceBusiness agency

Saison Fundex Corporation

Shopping loans andfinancial services

JPN Servicer Co., Ltd.

Mortgage securities

LAWSON CS Card, Inc.*

Loan collection(Servicer)

Atrium Co., Ltd.
Affiliation contracts

Atrium Servicing Co., Ltd.

Real estate sales

Saison Direct Marketing Co., Ltd.

Mail-order sales

Customers

Merchandise
Sales

House Planning Co., Ltd.

Vivre Co., Ltd.

T&E
(Travel &Entertainment)

NOA Planning Co., Ltd.

Real estate leasing

Amusement services

A&A Co., Ltd.

Lease

Other

Real estate leasing,information processing
services, affiliation contracts,
cardholder services

Information processing
services

Saison Information Systems Co., Ltd.*
Saison Automobile and Fire Insurance Co., Ltd.*
Health Park Co., Ltd. (Note 3)

Non-life insurance
Membership clubmanagement andother services

Performance of Major Group Companies (As of and for the year ended March 31, 2004)(Millions of yen)

Equity ownership(Note 2) (%)

Total assets

Operatingrevenues

Saison Fundex Corporation

100.0 (100.0)

128,681

14,876Loans and mortgage securities

JPN Servicer Co., Ltd.

90.8

(90.8)

1,709

3,107

Servicer (loan collection)

LAWSON CS Card, Inc.*

30.0(30.0)

15,5462,550

Credit and financial services

Atrium Co., Ltd.

56.7 (100.0)

64,817

7,867

Real estate transactions

0 (100.0)

10,776

1,554

Servicer (loan collection)

67.3 (100.0)

2,235

4,076

Mail-order sales

0 (100.0)

4,052

168

Company nameAtrium Servicing Co., Ltd.
Saison Direct Marketing Co., Ltd.
House Planning Co., Ltd.

Business

Real estate transactions

Vivre Co., Ltd.

35.3

(95.1)

23,23014,884

Amusement services

NOA Planning Co., Ltd.

78.5 (100.0)

7,886

2,573

Consultancy

0 (100.0)

1,124

537

A&A Co., Ltd.
Saison Information Systems Co., Ltd.*

46.8(46.8)

14,093

4,829

Saison Automobile and Fire Insurance Co., Ltd.*

19.4(36.2)

29,84520,703

Health Park Co., Ltd. (Note 3)

100.0 (100.0)

22,531

2,986

Notes: 1. * indicates affiliates accounted for by the equity method.
2. Figures in parentheses include indirect ownership.
3. Health Park Co., Ltd. changed its corporate name to Uraku Aoyama Co., Ltd. in August 2004.
20

Credit Saison Co., Ltd.

Amusement services
Information processing services
Non-life insurance
Membership club management / Real estate rental

Financial Section

CONTENTS
目 次

Management’s Discussion and Analysis ................................... 22
Six-year Summary of Selected Financial Data ..................... 22
Consolidated Balance Sheets .................................................... 30
Consolidated Statements of Income ........................................ 32
Consolidated Statements of Shareholders’ Equity.................. 33
Consolidated Statements of Cash Flows .................................. 34
Notes to Consolidated Financial Statements........................... 35
Report of Independent Accountants ....................................... 49

Credit Saison Co., Ltd.

21

Management’s Discussion and Analysis
Six-year Summary of Selected Financial Data
As of and for the years ended March 31
Thousands of
U.S. dollars(Note 5)

Millions of yen

2004
CONSOLIDATED (Note 1)
For the year:
Operating revenues (Note 2) .................. ¥ 220,332
Selling, general andadministrative expenses ...................
156,502
Financial cost.......................................
9,825
Operating income ...............................
54,005
Net income (loss).................................
22,420At year-end:
Total shareholders’ equity (Note 3) .......... ¥ 258,253
Total assets........................................... 1,352,710
Interest-bearing debt (Note 4) ................. 1,011,563
Per share data (in yen and U.S. dollars) (Note 3):
Net income (loss) per share .................. ¥ 130.55
Shareholders’ equity per share .............
1,519.13
Key financial ratios (%):
Return on shareholders’ equity (ROE) ...
9.1
Return on assets (ROA).........................
1.7
Shareholders’ equity ratio.....................
19.1
NON-CONSOLIDATED (Note 1)
For the year:
Operating revenues (Note 2) ................... ¥ 175,725
Selling, general andadministrative expenses ...................
123,746
Financial cost........................................
7,154
Operating income ................................
44,824
Net income (loss)..................................
24,396
At year-end:
Total shareholders’ equity (Note 3) .......... ¥ 261,792
Total assets........................................... 1,155,776Interest-bearing debt (Note 4) .................
828,638
Per share data (in yen and U.S. dollars) (Note 3):
Net income (loss) per share .................. ¥ 142.00
Shareholders’ equity per share .............
1,536.51
Dividends per share ..............................
18.00
Key financial ratios (%):
Return on shareholders’ equity (ROE) ...
9.8
Return on assets (ROA).........................
2.2
Shareholders’ equity ratio.....................
22.7
TRANSACTION VOLUME: NON-CONSOLIDATED
Credit-card-related shopping services ... ¥1,912,210
Shopping loans.................................
13,367
Guarantees.......................................
31,683
Cash advances and specialty loans....
555,984
Agency services ................................
328,119
Leases...............................................
73,665Merchandise sales.............................
2,763
Others ..............................................
6,604
Total volume of new contracts ............. 2,924,399

2003

2002

2001

2000

¥ 212,242¥ 214,838¥ 188,061¥ 177,603$ 2,085,883

147,018
12,81052,414(6,027)

141,795
13,37059,673
18,225

128,187
15,747
44,125
13,548123,074
14,91839,61016,995

1,481,602
93,014
511,267
212,247¥ 236,028
1,280,823
965,082¥ 242,594
1,256,899
885,270¥ 225,947
1,719,109
833,076¥ 212,933
1,769,690
876,708$ 2,444,887
12,806,114
9,576,474

¥

¥

$

¥

(36.57) ¥ 108.56
1,380.26
1,436.58

81.04
1,351.19

1999

102.81
1,274.06

2004

1.24
14.38

—
—
18.4

7.8
1.2
19.3

6.2
0.8
13.1

8.5
1.0
12.0

¥ 171,842¥ 154,204¥ 133,776¥ 126,030

121,111
7,607
43,123(5,026)

105,554
7,401
41,247
12,28587,371
8,604
37,80016,521

83,1199,347
33,563
14,275¥ 237,174
1,085,348
779,450¥ 243,491
1,057,840
698,509¥ 232,392
1,031,360
659,097¥ 220,284
931,518
603,599¥ 200,255 $ 2,478,387
851,610 10,941,740
551,251
7,844,722

¥

¥

¥

¥

(30.34) ¥72.50
1,383.04
1,436.80
18.00
18.00

97.49
1,371.30
18.00

85.21
1,299.85
18.00

—
—
21.9

5.2
1.2
23.0

7.3
1.7
22.5

6.8
1.6
23.6

¥1,808,624
17,36953,433
600,447
398,724
71,9609,445
9,788
2,969,794¥1,629,199
19,26756,316555,131400,025
51,7889,281
9,426
2,730,437¥1,420,243
20,771
14,646500,645
401,084
35,192
11,677
8,914
2,413,174¥1,278,719
24,25625,628414,660
400,495
23,91913,7298,331
2,189,740¥ 116,892 $ 1,663,590
74,354
10,89931,638
14,10684.45 $
1,198.09
18.00

1,171,504
67,727424,349
230,957

1.34
14.55
0.17

7.3
1.7
23.5

¥1,126,165 $18,102,906
29,749126,545
31,870299,943
395,685
5,263,505
388,578
3,106,305
21,743
697,387
21,18926,157
7,572
62,5202,022,553 27,685,307

Notes: 1. The Company started presenting consolidated financial statements from the year ended March 31, 2000.
2. “Operating revenues” does not include consumption taxes.
3. Treasury stock is deducted from capital. In addition, treasury stock is subtracted from the total number of shares outstanding in computing per share data.
4. “Interest-bearing debt” includes asset-backed securities.
5. Japanese yen amounts have been translated into U.S. dollars at the rate of ¥105.63=U.S.$1, the approximate exchange rate on March 31, 2004, for the convenience ofthe reader.
22

Credit Saison Co., Ltd.

The Credit Saison Group generates operating revenues in fivesegments: Credit and Finance, Merchandise Sales, T&E (Travel andEntertainment), Lease and Other. Credit and Finance is the largest of thesesegments. It consists primarily of the consumer credit businesses ofcredit cards and loans to individuals, and accounted for approximately 80
percent of operating revenues in the year ended March 31, 2004. The
Credit Saison Group began reporting Lease as a separate segment
beginning with the year ended March 31, 2004 because of its
increasing importance in consolidated results.
Operating revenues consist primarily of fees from affiliated stores
generated by credit card and installment purchases, and customer fees
generated by revolving accounts, card cash advance transactions andvarious loans.
Operating expenses consist primarily of advertising expenses, losseson accounts receivable, personnel expenses, fees and financial costs.
Advertising and personnel expenses represent a significant percentage of
operating expenses. These costs are directly related to acquiring new
cardholders to generate future revenue growth.

Changes in the Scope of Consolidation
During the year ended March 31, 2004, the Credit Saison Group
added two companies to the scope of consolidation — Health Park
Co., Ltd. and Atrium Servicing Co., Ltd. — and removed two companies, bringing the number of consolidated subsidiaries to 10. Health Park
Co., Ltd. was created as a separate company on April 1, 2003. Credit
Saison Co., Ltd. transferred the assets and liabilities associated with its realestate leasing business to the new company. Atrium Servicing Co.,
Ltd. is a servicing agent that specializes in buying non-performing
mortgage-backed loans and buildings used to collateralize loans,adding value to these assets and then selling them. A special meeting ofshareholders on May 15, 2003 resolved to dissolve United Vacations Japan
Inc., which operated in the travel business. The liquidation wascompleted as of March 31, 2004. In addition, Vivre Co., Ltd. merged with
Lira Corporation on March 31, 2004.

Analysis of Income Statements
During the year ended March 31, 2004, although mild deflationary conditions continued, the decline in personal income halted, andthe employment situation and consumer sentiment rallied. Amidthese conditions, signs of recovery in personal consumption became
apparent from the third quarter, reflecting the improvement in
employment conditions and consumer attitudes. On the other hand, in thecredit card industry, the Credit Saison Group’s core area of business, thereorganization of the retail financial services industry began in earnest andcontributed to a challenging competitive environment.
Operating revenues increased 3.8 percent year-on-year to¥220,332 million. Operating income increased 3.0 percent year-onyear to ¥54,005 million. As a result, net income totaled ¥22,420
million, compared to a net loss of ¥6,027 million for the previous
fiscal year.

credit cards and loans to individuals in the Credit and Finance segment.
Operating revenues also increased in the Lease and Other segments.
Total Operating Revenues(Millions of yen)04

220,332

03

212,24202

214,83801

188,06100

177,603(Years ended March 31)

Operating Income and Expenses
Operating expenses increased 4.1 percent, or ¥6,499 million,
compared with the previous fiscal year to ¥166,327 million. The
primary factor was an increase in the cost of uncollectible receivables
included in selling, general and administrative (SG&A) expenses, whichreflected growth in credit card installment accounts receivable and theimpact of the historically high level of personal bankruptcies in Japan.
SG&A expenses other than cost of uncollectible receivables
decreased 0.5 percent year-on-year to ¥115,294 million. Programs to
reduce costs, including advertising expenses, compensated for a loss on
disposal of amusement facilities in the T&E segment totaling ¥1,865
million that the Credit Saison Group recorded as part of operating
expenses rather than as a loss.
Breakdown of Selling, General and
Administrative (SG&A) Expenses
Years ended March 31

Cost of uncollectible receivables
Included in above:
Allowance for losses on
accounts receivable
Losses on accounts
receivable
Allowance for losses on
guarantees
SG&A expenses excluding costof uncollectible receivables
Included in above:
Advertising expenses
Personnel expenses
Fees paid
Total SG&A expenses(Millions of yen / %)

2004

2003

¥ 41,207 ¥ 31,137% change

32.3%

32,176

27,649

16.4

8,096

2,608

210.4

934

879

6.3

115,295

115,881(0.5)

21,726
31,56324,123

23,34331,78824,960

(6.9)
(0.7)
(3.3)

¥156,502 ¥147,018

6.5%

Financial cost decreased 23.3 percent year on year to ¥9,825
million. While the balance of interest-bearing debt increased, theCredit Saison Group worked to reduce fund procurement costs bylowering the interest rate on funds raised by subsidiaries.
As a result, operating income for the year ended March 31, 2004
increased 3.0 percent, or ¥1,591 million, compared to the previous
fiscal year to ¥54,005 million.

Operating Revenues
Operating revenues increased 3.8 percent, or ¥8,090 million,
compared with the previous fiscal year to ¥220,332 million. Expansion in
operating revenues centered on the consumer credit businesses of

Non-Operating Expenses and Net Income
Non-operating loss decreased to ¥13,496 million from ¥62,728
million for the previous fiscal year. Non-operating revenues decreased 67.4

Credit Saison Co., Ltd.

23

percent year-on-year to ¥1,992 million because the Credit Saison
Group reduced proceeds from sales of investment securities. Nonoperating expenses decreased 77.5 percent year-on-year to ¥15,488
million, due largely to substantial decreases in loss on evaluation of
investment securities and in other non-operating expenses, bothprimarily in connection with the rehabilitation of The Seibu Department
Stores, Ltd. The Credit Saison Group, however, implemented new
impairment accounting standards during the past fiscal year, which
resulted in impairment loss of property and equipment, other assets
totaling ¥7,570 million.
Income before income taxes totaled ¥40,509 million, compared to aloss before income taxes totaling ¥10,314 million for the previous
fiscal year. Provision for income taxes increased to ¥18,022 million
from ¥4,107 million for the previous fiscal year. Consequently, net
income totaled ¥22,420 million, compared to a net loss of ¥6,027
million for the previous fiscal year. Net income per share totaled¥130.55.

Shareholder Returns Policy
Dividend Policy
The Credit Saison Group considers strengthening its corporate
structure and working to achieve sustainable growth in its businesses
to be critical to increasing shareholder value. The Credit Saison
Group’s fundamental policy regarding distribution of profits is tosecure sufficient internal capital resources for the above purposes
while providing appropriate, stable and sustainable dividends toshareholders.

Dividends per Share

1. Credit Card BusinessIn the core credit card business, the Credit Saison Group
continued to further promote its aim of being thoroughly customer
oriented, which is the foundation of its corporate activities. The Credit
Saison Group also emphasized improving the quality of its businesses asrepresented by profitability, sustainability and safety in managing
operations. The soundness of receivables and receivable risk management remained a core focus. The Credit Saison Group revised
standards for credit evaluation and outstanding receivables, andundertook collection according to the characteristics of specificreceivables. Additionally, the Credit Saison Group categorizedreceivables according to their status in making accurate and sufficient
provisions to the allowance for losses on receivables.
As a result, the Credit Saison Group issued 1.86 million newcards during the past fiscal year. As of March 31, 2004, the numberof cardholders increased 970 thousand compared to a year earlier
to 15.87 million. The number of active cardholders, defined ascustomers who use their cards at least once per year, increased 340
thousand to 8.41 million.
In addition, card shopping transaction volume increased 5.7
percent year-on-year to ¥1,912.2 billion. Cash advance transaction
volume decreased 6.6 percent year-on-year to ¥539.3 billion due tomore stringent credit controls. The volume of shopping-related
revolving credit contracts increased 5.3 percent year-on-year to ¥164.7
billion. The Credit Saison Group liquidated ¥40.0 billion of thesecontracts, resulting in a balance of revolving credit contracts receivabletotaling ¥124.7 billion as of March 31, 2004. Cash advance and Cash Plus
Loan receivables totaled ¥377.6 billion, an increase of 4.6 percent
from a year earlier.

Based on the above dividend policy, cash dividends totaled ¥18.00 per
share for the year ended March 31, 2004, unchanged from theprevious fiscal year. In addition, the Credit Saison Group distributed
SAISON Permanent Points to shareholders who are SAISON CARD
cardholders in proportion to the number of shares held.

Operating Revenues and Operating Income from
Credit Sales and Financial Services

Review of Operations by Segment
Credit & FinanceThis segment consists of the credit, lending and servicing (credit
collection) businesses. Segment operating revenues increased 3.5
percent year-on-year to ¥182,005 million. Segment operating income
increased 4.6 percent year-on-year to ¥46,800 million.

04

46,80003

44,73202

44,06001

36,33500

32,042(Millions of yen)

182,005
175,880
158,932
137,921130,191
Operating revenues(Years ended March 31)

Operating Revenues and Operating Income by Segment

Credit & Finance

Merchandise Sales
T&E
Lease
Other
Total
Eliminations or corporate
Consolidated

24

Credit Saison Co., Ltd.

Operating income(Millions of yen)

2004

Operating Revenues
2003% change¥182,005
12,355
16,196
5,610
7,821
223,987(3,655)¥220,332¥175,880
12,624
16,292
4,166
6,359
215,321(3,079)¥212,242

3.5%
(2.1)
(0.6)
34.7
23.0
4.0
—
3.8%

2004

Operating Income
2003% change¥46,800
1,574
1,014
1,930
5,831
57,149(3,144)¥54,005¥44,732
1,340
3,602
1,123
5,315
56,112(3,698)¥52,4144.6%
17.5(71.8)
71.9
9.7
1.8
—
3.0%

Key Initiatives in the Credit Card Business during the Fiscal Year
Ended March 31, 2004
Alliance Network Expansion and Acquisition of Cardholders◆ Alliance Network Expansion
The Credit Saison Group added 10 companies as alliancepartners during the past fiscal year, bringing the total number ofalliance partners to 76 companies.
◆ Brand Awareness and Diffusion
The third generation of advertisements featuring a wine motifthat expresses the diverse, international functions of the SAISONCARD ran during the fiscal year.
◆ Measures to Stimulate Card Usage
We changed the name of our point program that allows
customers to collect points that never expire and use themwhenever they want from SAISON Dream to SAISON Permanent
Points (“Eikyufumetsu Point” ). We also substantially changed
the selection of items customers can obtain by redeeming
points. In connection with this initiative, we placed further stresson presenting the message “SAISON CARD: Use It Forever” tostimulate card use.
◆ Alliance with JTB Corp.
We concluded an alliance with JTB Corp. and created a new tour
catalog, Saison Tabimonogatari, to add further to the travel
services we offer to cardholders.
Strengthening Our Business Foundation◆ Building a System for Rapidly Issuing the SAISON CARD
The Credit Saison Group installed SAISON STATION information
terminals that permit rapid application and issuance of cards at key
SAISON Counters nationwide. In addition to SAISON Counters and
SAISON CARD MAKER automated card issuing machines, we
increased the number of locations at which people can obtain cards
by starting to issue the SAISON CARD at the Shinjuku Station West
Exit store of Zero First Co., Ltd., a group company of Marui Co.,
Ltd. In addition, we enhanced service by significantly expanding thetypes of cards that can be issued rapidly.
◆ IT Network Implementation and Expansion
The Credit Saison Group invested in the transition to a front-end
processor (FEP) that connects to an external network operated
jointly by four large credit card companies, the introduction of a new
credit evaluation system, and higher speed and bandwidth forthe network linking operating locations.
◆ Enhancing Customer Management Systems
To handle expansion in the credit business, the Credit Saison
Group revised its customer management system to strengthen
scalability, flexibility and efficiency.
New Developments and Initiatives◆ Comprehensive Alliance with the Card Division of Idemitsu
Kosan Co., Ltd.
The Credit Saison Group took a 50 percent equity stake in
Idemitsu Credit Co., Ltd., a joint venture established on October 1,
2003. The Credit Saison Group has been commissioned tohandle the card administration operations, which represents a
new source of earnings in the fee business. The Credit Saison
Group will provide its know-how and make full use of thelinkage with Idemitsu Kosan’s 6,000 service stations nationwide to
expand the number of cardholders and stimulate card use.
◆ Strategic Capital and Operating Alliance with Resona
Holdings, Inc.
The Credit Saison Group and Resona Holdings moved to further
strengthen the credit card operations of both companies byconcluding a strategic capital and operating alliance. The Resona
Group holding company will merge its three credit cardcompanies, and the Credit Saison Group plans to take an equity
stake in the new company that will result from the merger. The
Credit Saison Group will jointly develop the cards the newcompany will issue, and has been commissioned to handle its
card administration operations, which will contribute to expansion in fee business.

2. Card Loan Business
The Credit Saison Group provides card loans through the C-Plan Cardand Cash Reserve Card dedicated loan cards. The number of loancards issued increased 10.3 percent year-on-year to 170 thousand,and the balance of card loans receivable increased 17.7 percent year-onyear to ¥53,925 million.

3. Other Consumer Loans
In addition to card loans, the Credit Saison Group provides avariety of unsecured consumer loans. These include the Member’s
Loan for SAISON CARD cardholders. Other consumer loans receivable
increased 24.4 percent year-on-year to ¥49,386 million.

4. Credit Guarantee Business
The Credit Saison Group uses close relationships spanning sales
and administration in alliances with financial institutions to concentrateon acquiring quality contracts. Credit guarantee transaction volume,
however, decreased 40.7 percent year-on-year to ¥31.7 billion due to thechallenging business environment.

5. Servicer (Credit Collection) Business
Licensed by the Minister of Justice, the Credit Saison Group
provides commissioned collection services for a broad spectrum ofdebt receivables ranging from those in initial delinquency to those thathave been written off. This business has been expanding steadily, and theCredit Saison Group has been working to raise the efficiency of credit
collection operations in ways such as installing a new credit collection
administration system to maintain a high collection rate.

Merchandise Sales
This segment principally comprises real estate distribution andmail-order sales operations. Segment operating revenues decreased
2.1 percent year-on-year to ¥12,355 million as a result of higher prices forreal estate purchased and reduced sales in the mail-order sales
business. Segment operating income increased 17.5 percent year-on-yearto ¥1,574 million as a result of efforts to reduce costs and the addition ofsubsidiary Atrium Servicing Co., Ltd. to the scope of consolidation.

1. Real Estate Distribution Business
The Credit Saison Group renovates real estate assets acquired at
auction, and adds value to them in other ways such as providing afive-year warranty against defects. We also specialize in the servicing
business, which entails acquiring nonperforming loans collateralized by real
Credit Saison Co., Ltd.

25

estate and real estate that collateralized such loans, adding value tothem and then selling them. The Credit Saison Group also focuseson building and marketing properties in central Tokyo, where theproperty turnover rate is high.
2. Mail-Order Sales Business
The Credit Saison Group issued new catalogs eight times during the
fiscal year and enhanced programs for promoting sales to SAISONCARD cardholders while also working to improve the profit structure ofthis business by reducing expenses. Sales decreased year-on-year,
however, because intense price competition reduced unit sales prices.
Operating Revenues andOperating Income from Merchandise Sales
04

1,574

03

1,340

02

(Millions of yen)

12,355

14,673

01

2,604

00

2,597

16,352
13,942
Operating revenues(Years ended March 31)

The Credit Saison Group began reporting Lease as a separate
segment beginning with the year ended March 31, 2004 because of its
increasing importance in consolidated results. Lease operations wereformerly included in the Other segment.
While the overall leasing market continued to contract during the pastfiscal year, lease transaction volume increased 2.4 percent year-onyear to a record ¥73.6 billion. Segment operating revenues increased
34.7 percent year-on-year to ¥5,610 million, and segment operating
income increased 71.9 percent year-on-year to ¥1,930 million. Amid
the increasing popularity of mobile communications and broadband,
the Credit Saison Group emphasized small-ticket vendor leases,
particularly in the communication and business equipment sectors.

Other

12,624

1,838

Lease

Operating income

T&E
This segment comprises the travel business and the amusementbusiness. Segment operating revenues decreased 0.6 percent year-on-yearto ¥16,196 million, and segment operating income decreased 71.8
percent year-on-year to ¥1,014 million. During the fiscal year ended
March 31, 2004, the Credit Saison Group dissolved the subsidiary that
handled the travel business, United Vacations Japan Inc., and incurred
increased expenses in the amusement business for the construction of
new facilities. In addition, the Credit Saison Group reclassified loss on
disposal of amusement facilities as part of operating expenses rather
than as a loss.

This segment includes real estate leasing and other operations.
The Credit Saison Group continued to achieve performance gains inthis segment. Segment operating revenues increased 23.0 percent
year-on-year to ¥7,821 million, and segment operating income
increased 9.7 percent year-on-year to ¥5,831 million.
In the real estate leasing business, Health Park Co., Ltd. wasestablished as a separate company on April 1, 2003. Credit Saison
Co., Ltd. transferred the assets and liabilities associated with the real estateleasing business to the new company in working to create a more
efficient management structure for the real estate leasing business.
Operating Revenues andOperating Income from Other Businesses04

A special meeting of shareholders on May 15, 2003 resolved todissolve United Vacations Japan Inc. Dissolution was completed as ofMarch 31, 2004.

2. Amusement Business
The amusement industry is moving toward larger, higher-grade
facilities and competition is intensifying. In this challenging environment, theCredit Saison Group promoted cost reductions and worked to createsound, safe and comfortable amusement facilities that meet local needs.

(Years ended March 31)

7,821
10,525

6,438

02

00

1. Travel Business

5,831

03

01

(Millions of yen)

9,306

5,552

9,061

3,816
7,611

4,083

Operating revenues

Operating income

Note: The Lease segment is reported separately from the Other segment starting from the year
ended March 31, 2004. As a result, operating revenues and operating income in the Other
segment for the year decreased ¥5,610 million and ¥1,930 million, respectively.

* The Credit Saison Group does not present geographic segment
information because no consolidated subsidiaries or branches arelocated outside Japan.

Liquidity and Financial Position
Fund Procurement and Liquidity Management

Operating Revenues and Operating Income from T&E
04

16,196

1,014

03

16,292

3,602

02

3,121

01

3,364

00

3,673

(Years ended March 31)

26(Millions of yen)

Credit Saison Co., Ltd.

15,32815,076
13,368Operating revenues

Operating income

The Credit Saison Group emphasizes low cost and stability inprocuring funds, and works to diversify fund procurement methods.
The Group primarily procures funds from banks, farming- and forestryrelated financial institutions, life insurance companies and non-life
insurance companies. In addition, the Credit Saison Group procures
funds indirectly through syndicated loans and committed lines ofcredit. The Group also procures funds directly by issuing corporate
bonds, including private offerings, convertible bonds and commercial
paper (CP), and also liquidates card shopping receivables and leasereceivables.

As of March 31, 2004, interest-bearing debt, including ¥90.0
billion in asset-backed securities accounted for as off-balance-sheettransactions, totaled ¥1,011,563 million. Of this total, loans accounted for63.9 percent, bonds accounted for 16.6 percent, CP accounted for 7.0
percent, and asset-backed securities accounted for 12.5 percent.
Composition of Interest-Bearing Debt
63.9%

04

59.4

03

01

12.5% 7.0%
10.8

14.9

Loans

14.9

13.0

17.5

62.2 2.5

19.6

15.7

63.6

00

16.6%

7.6

61.9

02

(Years ended March 31)(Billions of yen)

Asset-backed securities

22.7

13.7

Commercial paper

1,011.6
965.1
885.3

sales of investment securities, including foreign bonds held bysubsidiaries, generated cash totaling ¥22,618 million.

Net Cash Provided by Financing Activities
Net cash provided by financing activities decreased 82.4 percent
year-on-year to ¥10,814 million. As a result of the Credit Saison
Group’s emphasis on stable medium- and long-term fund procurement, proceeds from long-term debts totaled ¥68,795 million andproceeds from issuance of bonds totaled ¥64,724 million. Decrease incommercial paper used cash totaling ¥73,000 million, and repayment ofbonds used cash totaling ¥40,200 million.

833.1
876.7
Bonds

While continuing to maintain relationships with existing lenders,the Credit Saison Group is working to lower refinancing risk andreduce costs in ways such as initiating relationships with new lenders todiversify funding sources. In addition, the Credit Saison Group is also
reducing liquidity risk and lowering costs by employing new directfund procurement methods other than bonds and CP. These methods
include liquidating receivables, an approach that is not influenced by theGroup’s financial condition.
Credit Saison Co., Ltd. has obtained credit ratings to support
smooth fund procurement. Rating and Investment Information, Inc., aJapanese credit rating agency, maintains an A+ credit rating on Credit
Saison’s unsecured corporate bonds, and a credit rating of a-1 on
Credit Saison’s domestic CP.
Receivables, primarily associated with the credit card business,account for 68.2 percent of the Credit Saison Group’s assets. With anaverage annual receivables turnover rate of 3 times, the Credit Saison
Group maintains a high level of liquidity.

Cash Flow
As of March 31, 2004, cash and cash equivalents decreased¥2,934 million from a year earlier to ¥73,421 million. During the year
ended March 31, 2004, the subsidiaries Health Park Co., Ltd. andAtrium Servicing Co., Ltd. were added to the scope of consolidation inlight of the increased materiality of these companies to overall Group
results. This increased cash and cash equivalents by ¥630 million.

Net Cash Provided by Operating Activities
Net cash provided by operating activities increased 337.1 percent
year-on-year to ¥55,046 million. The Credit Saison Group’s solid
performance resulted in income before income taxes of ¥40,509
million, which was supplemented by ¥30.0 billion in cash from theliquidation of card shopping single-payment receivables. Depreciation andamortization totaled ¥37,501 million. Increase in trade receivables
resulting from growth in transaction volume in the credit card business
reduced net cash provided by operations by ¥88,980 million.

Assets, Liabilities and Shareholders’ Equity
As of March 31, 2004, total assets increased ¥71,887 million, or 5.6
percent, from a year earlier to ¥1,352,710 million.
Current assets increased ¥54,989 million, or 5.6 percent, from a year
earlier to ¥1,040,275 million, primarily due to an increase in tradereceivables resulting from the increase in credit card transaction
volume. The Credit Saison Group liquidated ¥50.0 billion in card
shopping single-payment receivables and ¥40.0 billion in revolving
credit receivables, which moved them off the balance sheet.
Property and equipment increased ¥16,897 million, or 11.6
percent, from a year earlier to ¥162,711 million. The primary factor
was an increase of ¥20,928 in lease assets compared to the previous
fiscal year-end.
As of March 31, 2004, total liabilities increased ¥50,110, or 4.8
percent, from a year earlier to ¥1,094,026 million.
Current liabilities decreased ¥22,598 million, or 3.3 percent, from ayear earlier to ¥657,411 million. The Credit Saison Group moved toreduce interest rate risk and redemption risk by reducing commercial
paper by ¥73,000 million compared to the previous fiscal year-end.
Long-term liabilities increased ¥72,708 million, or 20.0 percent,from a year earlier to ¥436,615 million. Long-term debt increased¥68,932 million, or 19.6 percent, from a year earlier to ¥420,626
million.
As a result, interest-bearing debt on the balance sheet increased¥16,482 million, or 1.8 percent, from a year earlier to ¥921,563
million. Including ¥90.0 billion in asset-backed securities accounted
for as off-balance-sheet transactions, interest-bearing debt totaled¥1,011,563 million.
Shareholders’ equity increased ¥22,225 million, or 9.4 percent,from a year earlier to ¥258,253 million. The ratio of shareholders’equity to total assets increased to 19.1 percent from 18.4 percent a year
earlier. Return on average total shareholders’ equity (ROE) was 9.1
percent.
Total Shareholders’ Equity and Equity Ratio
04(Millions of yen / %)258,25319.1

03

236,028
18.4

02

Net Cash used in Investing Activities

01

Net cash used in investing activities increased 3.8 percent year-on-yearto ¥68,703 million. Payments for purchases of property and equipment
and other assets used cash totaling ¥74,047 million. Proceeds from00

242,59419.3

225,947
13.1(Years ended March 31)

12.0

212,934
Total shareholders’ equity

Equity ratio

Credit Saison Co., Ltd.

27

Credit Risk

Risk Information

Trade receivables overdue by more than 90 days increased 18.3
percent compared to a year earlier to ¥33,277 million. The allowance forlosses on receivables increased 11.4 percent from a year earlier to¥34,612 million. Consequently, the ratio of allowance for losses onreceivables to receivables overdue by more than 90 days (excluding
the collateralized portion) included in current assets was 111.5
percent, compared to 115.0 percent at the previous fiscal year-end.

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, 2004.

Comparison of Overdue Receivables and Allowance for Losses on(Millions of yen / %)Receivables to Receivables
2004

As of March 31(1) Receivables(2) Receivables overdueby more than 90 days
(3) Collateralized portion
included in (2)(4) Allowance for losses onreceivables included incurrent assets(5) Receivables overdue by
more than 90 days as apercentage of receivables[(2) ÷ (1)]Ratio of allowance of losses onreceivables to receivables
overdue by more than
90 days [(4) ÷ ((2) – (3))](Reference) Receivables overdueby more than 90 days
excluding collateralized
portion as a percentage ofreceivables [((2) – (3)) ÷ (1)]2003

% change¥1,249,508 ¥1,146,356

9.0%

33,27728,139

18.3

2,237

1,100

103.3

34,61231,084

11.4

2.7%

2.5%

—

111.5%

115.0%

—

2.5%

2.4%

—

Overview of Allowance for Losses on Receivables (Millions of yen / %)As of March 31

Allowance for losses onreceivables at the
beginning of the year
Increase
Decrease (Reversal)
Allowance for losses onreceivables at theend of the year
(Reference) Losses
on receivables

2004

2003

% change¥35,677
33,47829,909¥31,482
28,22024,025

13.3%
18.6
24.5

39,24635,677

10.0

8,096

2,608

210.4

Delinquency Ratio (More than 90 Days) and Write-off Ratio:
Non-consolidated

2.12
2.54
1.64

02
01

2.15
1.31

00
(Years ended March 31)

28

Credit Saison Co., Ltd.

2. Changes in Cost of Fund Procurement
Changes in financial conditions and in the Credit Saison Group’s credit
rating may increase interest rates on funds the Group procures andhave the potential to negatively impact operating revenues and otherresults as well as financial position. Changes in interest rates on loans andother instruments are impacted by a wide array of considerations.
These include the maximum interest rates and fees as prescribed by
the Law Concerning the Regulation of Receiving of Capital
Subscription, Deposits and Interest on Deposits (the Capital
Subscription Law) and other regulations, which may mandate that theCredit 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 toreflect higher interest rates on the capital it procures, which would
have the potential to reduce the Group’s interest margin.

3. Competitive Environment
3.51

03

Results and financial position in the Credit Saison Group’s primaryCredit and Finance 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 affecttransaction volume and repayment in Group businesses including
credit cards, loans and credit guarantees, and therefore have thepotential to negatively impact Group operating revenues and cost of
uncollectable receivables. Recently, an increasing number ofindividuals have assumed substantial loan and credit card obligations frommultiple financial institutions. This problematic economic situation also has
the potential to affect Group results.
The mail-order business within the Merchandise Sales segment issubject to the same economic conditions described above, which have thepotential to negatively impact operating revenues and other results as wellas financial position.
Small and medium-sized companies are the principal customer
group of the Lease segment. Factors contingent upon economic
conditions, including contraction in capital expenditures anddeteriorating corporate performance, have the potential to negatively
impact operating revenues, losses on receivables and other results as wellas financial position.

(%)

2.04

04

1. Operating Conditions

2.17
1.57
2.35
Delinquency ratio (more than 90 days)

Write-off ratio

Japan’s financial system has undergone substantial deregulation inrecent years, which has resulted in full-scale restructuring of the retailfinancial services industry. Large mergers in the credit card industry
and other events have caused competition to intensify. The results andfinancial position of the Credit Saison Group may be negatively
impacted if the Group is unable to maintain its competitive position in thisenvironment.

4. Unfavorable Performance among Primary AlliancePartners
In the credit card business, the Credit Saison Group has
agreements including affinity card and member store contracts withnumerous companies and organizations. Unfavorable performance
among these alliance partners has the potential to negatively impact theCredit Saison Group’s performance and financial position. For
example, the Credit Saison Group acquires approximately 70 percent of
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 anumber of its alliance partners. Unfavorable performance among suchalliance partners has the potential to incur impairment losses oninvestment securities in the Credit 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 card 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 tonegatively impact the Credit Saison Group’s performance and financial
position. These situations include Group and counterparty system
inoperability resulting from temporary system overload due to factors suchas system errors or spikes in access caused by Group or counterparty
hardware or software problems; breakdown in communication
networks resulting from factors including natural disasters andaccidents; 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, incidents such asleakage or illegal use of this information would damage the Credit
Saison Group’s credibility and cause other problems that would have thepotential to negatively impact the Credit Saison Group’s performance andfinancial position.

7. Regulatory Changes
The Credit Saison Group operates in accordance with current
regulations and the risks that result from these regulations. The
Group’s businesses are subject to the Installment Sales Law, theMoney-Lending Business Control and Regulation Law, the Capital
Subscription Law and other laws. Amendments to or changes in theinterpretation of these laws in the future would have the potential tonegatively impact the Credit Saison Group’s operations, performance andfinancial position. The type, content and degree of potential regulatory
revisions are difficult to predict, and the Credit Saison Group has nocontrol over their potential impact on its operations.
Recently, regulatory changes have had a material impact on theCredit Saison Group’s performance. Issues include, but are not limited to,amendments to the Civil Rehabilitation Law, the Practicing Attorney
Law and the Judicial Scrivener Law as well as changes in small-claims

receivership proceedings resulting from revisions to bankruptcy
proceedings. Amendments to related statutes and proceedings haveincreased the options available for restructuring debt, and are directly
related to increased losses on receivables in the credit and financial
industries. In addition, the number of cases has been increasing inwhich debtors paying a rate of interest in excess of the upper limit
specified by the Interest Rate Restriction Law file claims seeking
recovery of excessive profit from lenders. While this trend has not had amaterial impact on the operations of the Credit Saison Group,
increased ease of access to legal recourse may exert a material impact in
the future. A related phenomenon is the increasing number ofattorneys that is resulting from reform of the legal system, and thismay have a material impact of the Credit Saison Group’s performance inthe future.

8. Impairment Loss of Property and Equipment
and Revaluation 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 theCredit Saison Group’s results and financial position. Moreover, amaterial decline in the fair value of investment securities andinvestments and loans to affiliates, or unfavorable performance
among investees, has the potential to incur revaluation 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 tonegatively impact the Credit Saison Group’s results and financial
position.

Outlook for the Year Ending March 31, 2005
The Credit Saison Group is working to increase the services it
provides to support various customer lifestyles, and is stimulating
customer card use by energetically promoting innovation based on athorough commitment to customer satisfaction. The Group is also
developing strategies for adapting to market changes in working toincrease corporate and shareholder value.
Based on the above, the Credit Saison Group’s consolidated
performance objectives for the year ending March 31, 2005 areoperating revenues of ¥237.0 billion, operating income of ¥58.0 billion andnet income of ¥31.5 billion. Credit Saison Co. Ltd.’s non-consolidated
performance objectives for the year ending March 31, 2005 areoperating revenues of ¥189.0 billion, operating income of ¥46.5 billion andnet income of ¥27.0 billion.

Credit Saison Co., Ltd.

29

Consolidated Balance Sheets
CREDIT SAISON CO., LTD. and Consolidated Subsidiaries
As of March 31, 2004 and 2003
Thousands of
U.S. dollars (Note 2)

Millions of yen

2004

2003

2004

ASSETS
Current Assets:
Cash and deposits ...........................................................................................

¥

73,421¥75,725$695,081

Receivables:
Notes and installment accounts receivable (Note 4)......................................

922,262

867,548

Short-term loans..........................................................................................

10,51928

8,731,060
99,580Less: Allowance for losses on receivables .....................................................

(34,613)(31,085)(327,679)
8,502,961................................................................................................................

898,168

836,491

Inventories.......................................................................................................

37,76531,489357,524Deferred income taxes (Note 10) .....................................................................

15,613

12,908147,805

Prepaid expenses and other current assets .......................................................

15,30828,673

144,920

Total current assets..........................................................................................

1,040,275

985,286

9,848,291

Equipment for lease (Note 7) ...........................................................................

199,361

165,796

1,887,356

Buildings and improvements............................................................................

33,76730,778319,670

Fixtures and equipment ...................................................................................

25,89625,184245,158

Property and Equipment, at Cost:................................................................................................................

259,024

221,758

2,452,184

Less: Accumulated depreciation.......................................................................

(103,344)(86,622)(978,358)
1,473,826................................................................................................................

155,680

135,136

Land................................................................................................................

7,031

10,67866,560Total property and equipment .........................................................................

162,711

145,814

1,540,386

Investments and Other Assets:
Investment securities (Note 8) ..........................................................................

68,46964,135648,192

Long-term loans ..............................................................................................

36,98728,252

350,159

Lease deposits .................................................................................................

8,915

8,269

84,399Deferred income taxes (Note 10) .....................................................................

7,808

8,074

73,916

Other .............................................................................................................

32,17945,586

304,643

Less: Allowance for losses on receivables .........................................................

(4,634)(4,593)(43,872)

Total investments and other assets ..................................................................

149,724

149,723

1,417,437

Total assets......................................................................................................

¥1,352,710¥1,280,823$12,806,114

The accompanying notes are an integral part of these statements.

30

Credit Saison Co., Ltd.

Thousands of
U.S. dollars (Note 2)

Millions of yen

2004

2003

2004

Short-term loans (Note 6) ................................................................................

¥ 377,293¥ 346,668$ 3,571,834

Current portion of long-term debt (Note 6) .....................................................

52,64462,719498,385

LIABILITIES AND SHAREHOLDERS’ EQUITYCurrent Liabilities:

Commercial paper ...........................................................................................

71,000144,000

672,158

Notes and accounts payable ............................................................................

94,22896,456

892,060

Accrued taxes on income ................................................................................

23,530434

222,757

Unearned income ............................................................................................

3,446

3,429

32,624

Allowance for bonuses ....................................................................................

1,734

1,667

16,411

Deferred income taxes (Note 10) .....................................................................

—

1

—

Accrued expenses and other current liabilities..................................................

33,536

24,635

317,484

Total current liabilities......................................................................................

657,411680,009

6,223,713

Long-term debt (Note 6)..................................................................................

420,626

351,694

3,982,069
70,044Long-Term Liabilities:
Accrued pension and severance costs (Note 9).................................................

7,399

6,470

Accrued retirement benefits to directors and statutory auditors .......................

645

704

6,105

Allowance for losses on guarantees .................................................................

934

879

8,842

Allowance for losses on warranty of defects ....................................................

33

—

308

Consolidated adjustments ...............................................................................

746

485

7,058

Other .............................................................................................................

6,232

3,675

59,010Total long-term liabilities .................................................................................

436,615363,907

4,133,436

Minority Interests in Consolidated Subsidiaries ............................................

431

879

4,078

Commitments and Contingent Liabilities (Note 14)
Shareholders’ Equity:
Common stock................................................................................................

63,66863,337602,743

Additional paid-in capital.................................................................................

67,134

66,788635,556

Retained earnings............................................................................................

126,719

107,687

1,199,652

Unrealized gains (losses) on other securities .....................................................

4,686

(938)

44,362................................................................................................................

262,207236,874

2,482,313

Less: Treasury stock, at cost .............................................................................

(3,954)(846)(37,426)

Total shareholders’ equity................................................................................

258,253

236,028

2,444,887

Total liabilities and shareholders’ equity ...........................................................

¥1,352,710¥1,280,823$12,806,114

Credit Saison Co., Ltd.

31

Consolidated Statements of Income
CREDIT SAISON CO., LTD. and Consolidated Subsidiaries
For the years ended March 31, 2004, 2003 and 2002
Thousands of
U.S. dollars (Note 2)

Millions of yen

2004

2003

2002

2004

Financing and administration fees.........................................

¥174,963¥166,193¥151,753$1,656,380

Operating Revenues (Note 12):
Income from merchandise sales ............................................

12,333

12,595

14,555

116,754

Income from insurance business ...........................................

——

20,599—

Income from T&E business....................................................

16,18816,283

15,319153,250

Income from lease business ..................................................

5,526

4,104

3,413

52,313

Other income .......................................................................

4,751

3,868

3,122

44,980Financial income...................................................................

6,571

9,199

6,077

62,206

Total operating revenues ......................................................

220,332

212,242

214,838

2,085,883

156,502

147,018

141,795

1,481,602

Operating Expenses:
Selling, general and administrative expenses.........................
Financial cost........................................................................

9,825

12,81013,37093,014

Total operating expenses ......................................................

166,327

159,828

155,165

1,574,616

Operating Income..................................................................

54,00552,41459,673

511,267

Non-Operating Revenues .....................................................

1,992

6,112

2,076

18,859999

42,616

5,331

9,462

Non-Operating Expenses:
Loss on evaluation of investment securities ...........................
Impairment loss of property and equipment, other assets (Note 11)...

7,570

—

—

71,660

Other ...................................................................................

6,919

26,224

24,81165,502

Total non-operating expenses...............................................

15,48868,84030,142

146,624(127,765)

Non-Operating Income (Loss)...............................................

(13,496)(62,728)(28,066)

Income (Loss) before Income Taxes .....................................

40,509(10,314)31,607

383,502

Provision for income taxes (Note 10)..........................................

(18,022)(4,107)

12,286(170,616)

Income (Loss) before Minority Interests..............................

22,487(6,207)

19,321

212,886

Minority interests in income (loss) of consolidated subsidiaries..

67

(180)

1,096

639

Net Income (Loss) ..................................................................

¥ 22,420¥ (6,027)¥ 18,225$ 212,247

Yen

U.S. dollars (Note 2)

2004

2003

2002

2004

Net assets.............................................................................

¥1,519.13¥1,380.26¥1,436.58$14.382

Net income (loss), primary ....................................................

130.55(36.57)108.56

1.236

Net income, fully diluted.......................................................

127.79—104.291.210

Dividends .............................................................................

18.00

18.00

18.00

0.170

Per Share Data

The accompanying notes are an integral part of these statements.

32

Credit Saison Co., Ltd.

Consolidated Statements of Shareholders’ Equity
CREDIT SAISON CO., LTD. and Consolidated Subsidiaries
For the years ended March 31, 2004, 2003 and 2002
Millions of yen
Number ofshares ofcommon stock
issued (thousands)

Commonstock

Additional
paid-in capital

Retainedearnings

Unrealized
gains (losses) onother securities

Balance at March 31, 2001.......................................
Net income for the year ended March 31, 2002 ..........
Increase resulting from exclusion of subsidiaries
from the scope of consolidation ................................
Cash dividends............................................................
Directors’ and statutory auditors’ bonuses...................
Accumulated changes in fair value ..............................

169,469—¥61,303—¥64,717—¥101,206
18,225¥ 2,432
—

—
—
—
—

—
—
—
—

—
—
—
—

650
(3,010)
(136)
—

—
—
—
(1,886)

Balance at March 31, 2002.......................................
Net loss for the year ended March 31, 2003................
Cash dividends............................................................
Directors’ and statutory auditors’ bonuses...................
Decrease resulting from inclusion ofsubsidiaries in the scope of consolidation .................
Decrease resulting from inclusion of affiliatedcompanies accounted for by the equity method ........
Gain on sale of treasury stock .....................................
Conversion of convertible bonds .................................
Accumulated changes in fair value ..............................

169,469———

61,303———64,717———

116,935(6,027)(3,041)
(145)

546
—
—
—

—

—

—

(34)

—

—
—
1,941
—

—
—
2,034
—

—
40
2,031
—

(1)
—
—
—

—
—
—
(1,484)

Balance at March 31, 2003.......................................
Net income for the year ended March 31, 2004 ..........
Cash dividends............................................................
Directors’ and statutory auditors’ bonuses...................
Decrease resulting from inclusion ofsubsidiaries in the scope of consolidation ..................
Gain on sale of treasury stock .....................................
Conversion of convertible bonds .................................
Accumulated changes in fair value ..............................

171,410———

63,337———

66,788———

107,687
22,420(3,076)
(160)

(938)
—
—
—

—
—
315
—

—
—
331
—

—
16
330
—

(152)
—
—
—

—
—
—
5,624

Balance at March 31, 2004.......................................

171,725¥63,668¥67,134¥126,719¥ 4,686

Thousands of U.S. dollars (Note 2)
Number ofshares ofcommon stock
issued (thousands)

Commonstock

Additional
paid-in capital

Retainedearnings

Unrealized
gains (losses) onother securities

Balance at March 31, 2003.......................................
Net income for the year ended March 31, 2004 ..........
Cash dividends............................................................
Directors’ and statutory auditors’ bonuses...................
Decrease resulting from inclusion ofsubsidiaries in the scope of consolidation ..................
Gain on sale of treasury stock .....................................
Conversion of convertible bonds .................................
Accumulated changes in fair value ..............................

171,410———$599,612———$632,285———$1,019,474
212,247(29,116)(1,516)$ (8,876)
—
—
—

—
—
315
—

—
—
3,131
—

—
144
3,127
—

(1,437)
—
—
—

—
—
—
53,238

Balance at March 31, 2004.......................................

171,725$602,743$635,556$1,199,652$44,362

The accompanying notes are an integral part of these statements.

Credit Saison Co., Ltd.

33

Consolidated Statements of Cash FlowsCREDIT SAISON CO., LTD. and Consolidated Subsidiaries
For the years ended March 31, 2004, 2003 and 2002
Thousands of
U.S. dollars (Note 2)

Millions of yen

Cash Flows from Operating Activities:
Income (loss) before income taxes......................................................
Adjustments to reconcile income (loss) before income taxes to net
cash provided by (used in) operating activities:
Depreciation and amortization ...................................................
Allowance for losses on accounts receivable...............................
Accrued pension and severance costs.........................................
Allowance for other reserves......................................................
Interest and dividends receivable................................................
Interest expenses .......................................................................
Equity in earnings (losses) of affiliated companies.......................
Foreign currency exchange (gain) loss ........................................
Realized (gain) loss on investment securities ...............................
Unrealized loss on investment securities .....................................
Impairment loss of property and equipment, other assets .................
Loss on disposal of property and equipment, other assets ..............
Changes in operating assets and liabilities:(Increase) decrease in trade receivables ......................................
Proceeds from liquidation of trade receivables............................
(Increase) decrease in inventories ...............................................
(Increase) decrease in other assets..............................................
Increase (decrease) in payables...................................................
Increase (decrease) in other liabilities..........................................
Directors’ and statutory auditors’ bonuses..................................
Subtotal.................................................................................
Interest and dividends received ..................................................
Interest paid...............................................................................
Income taxes paid ......................................................................
Net Cash Provided by (Used in) Operating Activities...........
Cash Flows from Investing Activities:
Payments for purchases of investment securities ........................
Proceeds from sales of investment securities ..............................
Payments for purchases of property and equipment, other assets...
Proceeds from sales of property and equipment, other assets.........
Payments for short-term and long-term loans ............................
Proceeds from short-term and long-term loans ..........................
Proceeds from the purchase of securities of a newly
consolidated subsidiary ............................................................
(Increase) decrease in other assets..............................................
Net Cash Provided by (Used in) Investing Activities ............
Cash Flows from Financing Activities:
Increase (decrease) in short-term loans.......................................
Increase (decrease) in commercial paper.....................................
Proceeds from long-term debts ..................................................
Repayment of long-term debts...................................................
Proceeds from issuance of bonds ...............................................
Repayment of bonds..................................................................
Proceeds from issuance of payables under securitized lease receivables....
Repayment of payables under securitized lease receivables.........
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 (Used in) 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 ..................
Decrease in Cash and Cash Equivalents Resulting from
Exclusion of Subsidiaries from the Scope of Consolidation ......
Increase in Cash and Cash Equivalents Resulting from
Addition of Subsidiaries to the Scope of Consolidation............
Cash and Cash Equivalents at the End of Year.............................
The accompanying notes are an integral part of these statements.
34

Credit Saison Co., Ltd.

2004

2003

2002

2004

¥ 40,509¥(10,314)¥ 31,607$ 383,502

37,5013,510
929
43(5,978)
9,892
1,069
(22)
92
999
7,570
13,92031,285
4,078(3,302)337(6,377)
11,102
2,360
2,042
(107)
42,617—
9,862

27,485
854
1,422
338
(2,600)11,854(175)(2,681)(7,119)5,531—
12,654355,023
33,2298,798
410(56,599)
93,650
10,115
(207)
871
9,462
71,660131,784(88,980)
30,000(6,065)
10,945(2,305)
6,738(163)
60,204
5,962(10,026)(1,094)55,046(48,480)
20,000(3,986)(8,519)(22,968)
2,167
(149)
21,648
6,378(11,120)(4,313)
12,593(55,617)40,000(2,654)(4,647)
16,049(32,175)(138)
39,988
2,787(11,752)(17,464)
13,559(842,374)
284,010(57,417)
103,616(21,824)
63,789(1,545)569,953
56,439(94,914)(10,359)
521,119(7,965)22,618(74,047)
1,937(9,761)679(5,470)10,913(72,076)
3,235(3,252)—(391,778)
416,002(54,805)
2,113——(75,406)
214,124(700,999)
18,338(92,410)
6,429—(2,164)(68,703)

63
413(66,174)—(5,630)(34,098)—(20,490)(650,414)

30,764(73,000)
68,795(26,059)
64,724(40,200)—(8,217)62
110(3,089)(3,076)—
10,814(91)(2,934)75,725(3,069)29,00077,187(47,989)
5,801(13,945)
33,000(15,696)—180(16)(3,040)(4)
61,409(131)
7,697
67,742

12,824(48,000)
58,939(43,863)
39,774(15,000)
21,580(15,753)
—
4,550
(101)
(3,010)(16)
11,924(26)(8,641)
175,555

291,242(691,092)
651,283(246,705)
612,738(380,574)—(77,793)589
1,042(29,240)(29,116)—
102,374(855)(27,776)
716,893——(99,172)—630¥ 73,421

286¥ 75,725—¥ 67,742

5,964$ 695,081

Notes to Consolidated Financial Statements
CREDIT SAISON CO., LTD. and Consolidated Subsidiaries

1. BASIS OF PREPARATION OF 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 (the “Companies”) in accordance with the provisions set forth in theCommercial Code of Japan and the Securities and Exchange Law, and in conformity with accounting principles and practices generally
accepted in Japan and Financial Statement Regulations (ordinances promulgated by the Ministry of Finance), which are different fromInternational Accounting Standards in certain respects as to application and disclosure requirements.
Certain items presented in the consolidated financial statements filed with the Ministry of Finance have been reclassified in theseaccounts for the convenience of readers outside Japan. The consolidated financial statements are not intended to present theconsolidated financial positions, results of operation and cash flows in accordance with accounting principles and practices generally
accepted in countries and jurisdictions other than Japan.
2. U.S. DOLLAR AMOUNTSJapanese yen amounts have been translated into U.S. dollars at the rate of ¥105.63=U.S.$1, the approximate exchange rate on March
31, 2004, for the convenience of the reader. These translations should not be construed as representations that Japanese yen amounts
actually represent, have been or could be converted into, U.S. dollars at this or any other rate.
3. SIGNIFICANT ACCOUNTING POLICIES(a) Basis of consolidation and accounting for investments in affiliated companies
As at March 31, 2004, the consolidated financial statements include the accounts of the Company and its ten (ten for 2003) material
subsidiaries. Effective from the beginning of the year ended March 31, 2004, Atrium Servicing Co., Ltd. and Health Park Co., Ltd. havebeen included in the scope of consolidation in light of the increased materiality to the overall group results of these companies. United
Vacations Japan Inc., previously consolidated, has been excluded from the scope of consolidation at the year-end as this company has
now been liquidated. Lira Corporation, previously consolidated, has been excluded due to its merger with consolidated subsidiary Vivre
Co., Ltd.
All significant intercompany accounts and transactions and unrealized profit among the Companies, if any, have been eliminated on
consolidation. Unconsolidated subsidiaries would have no material effect on the consolidated financial statements of the Companies
and have therefore been excluded from consolidation.
The investments in three (three for 2003) material affiliates are accounted for by the equity method. Investments in unconsolidated
subsidiaries and affiliates not accounted for by the equity method are stated at cost, due to their immaterial effect on the consolidated
financial statements of the Companies.
The full portion of the assets and liabilities of the consolidated subsidiaries is marked to fair value as of the acquisition of control,
and any differences between net assets at fair value and the investment amounts are recognized as goodwill (consolidated
adjustments), which is amortized equally over five years on a straight-line basis.
(b) Financial instruments
The Company and its consolidated subsidiaries adopted Japanese accounting standards for financial instruments.
i. Derivatives
All derivatives are stated at fair value, with changes in fair value included in net profit or loss for the period in which they arise, except
for derivatives that are designated as “hedging instruments” (see iii. Hedge accounting).
ii. Securities
Securities held by the Company and its consolidated subsidiaries are classified into four categories:
Trading securities, which are held for the purpose of generating profits on short-term differences in prices, are stated at fair value,with changes in fair value included in net profit or loss for the period in which they arise.
Held-to-maturity debt securities that the Company and its consolidated subsidiaries intend to hold to maturity are stated at cost after
accounting for premiums or discounts on acquisition, which are amortized over the period to maturity.
Investments of the Company in equity securities issued by unconsolidated subsidiaries and affiliates are accounted for by the equity
method. Exceptionally, investments in certain unconsolidated subsidiaries and affiliates are stated at cost.
Securities not included in the above categories are defined as “other securities.” Other securities that have market prices are stated
at fair value, and the cumulative change in fair value is not credited or charged to income, but net unrealized gains or losses on thesesecurities are reported as a separate item in shareholders’ equity at a net-of-tax amount.
Other securities that do not have market prices are stated at cost using the moving-average method, except as stated in theparagraph below.
In cases where the fair value of held-to-maturity debt securities, equity securities issued by unconsolidated subsidiaries and affiliates,or other securities has declined significantly and such impairment of the value is not deemed temporary, those securities are written
Credit Saison Co., Ltd.

35

down to fair value, and the resulting loss is included in net profit or loss for the period.
All other securities are presented as “non-current.”
iii. Hedge accounting
The derivatives designed as hedging instruments by the Company are principally interest rate swaps and currency swaps. The related
hedged items are bank loans and debt securities issued by the Company.
The Company has a policy to utilize the above hedging instruments to reduce the Company’s exposure to the risk of interest rate
fluctuation and foreign currency exchange rate fluctuation. Thus, the Company’s purchases of the hedging instruments are limited to,
at maximum, the amounts of the hedged items.
Interest rate swap contracts are used as a hedge and meet certain hedging requirements. The amount to be paid or received under
the interest rate swap contract is added to or deducted from the interest on the assets or liabilities for which the swap contract was
executed.
The Company evaluates the effectiveness of its hedging activities by reference to the accumulated gain or loss on the hedging
instruments and the related hedged items from the commencement of the hedges.
(c) Inventories
Merchandise is stated at cost determined principally by the specific identification method.
Supplies are stated at cost determined principally by the latest purchase cost method.
(d) Depreciation of property and equipment
Depreciation of property and equipment is computed principally by the straight-line method over the estimated useful lives of theassets, except for equipment for lease, which is depreciated over the lease term.
Buildings on leased land subject to limited-term lease agreements for business purposes are required to be demolished and the land
required to be returned as vacant lots upon the expiration of terms under the lease agreements. Accordingly, effective from the year
ended March 31, 2003, the Company changed the useful life of said buildings from that prescribed by the tax laws of Japan to thatprescribed by the said agreements. As a result, depreciation expenses for the year ended March 31, 2003, increased by the ¥523
million, resulting in a decrease of ¥75 million in operating income and an increase ¥523 million in a loss before income taxes, ascompared with the amounts in which a loss would have been reported if the same useful lives had been applied consistently. Resultant
effects on segment information are described in the relevant sections of this report.
(e) Leased properties
Finance leases are accounted for as operating leases, except where the lease is deemed to transfer ownership of the leased property to
the lessee at the end of lease term.
(f) Allowance for losses on accounts receivables
Receivables are classified into four risk categories: bankrupt, doubtful, substandard and normal.
The Companies individually provide a specific reserve for bankrupt and doubtful 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.
(g) Allowance for losses on guarantees
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 Company’s loss experience to the balance ofguarantees outstanding at each year-end.
(h) Allowance for losses on warranty of defects
Allowance for losses on warranty of defects is provided for the potential repair costs on sold real estate (detached houses and storecombined houses) due to the Companies‘ warranty of defects. The allowance is provided at the amount estimated based on the pastexperience of repair costs.
( j ) Allowance for bonuses
The Company records the amount that it expects to pay for employee bonuses for the year in the allowance for bonuses.
(k) Accrued pension and severance costs
The Companies have funded contributory pension plans which provide for a lump-sum payment or pension payments for life after theage of 60, at the option of retiring employees with at least 20 years of participation in the plan. Those employees retiring with morethan 5 years but less than 20 years of participation are entitled to a lump-sum payment.

36

Credit Saison Co., Ltd.

Unfunded past service cost and actuarial differences of the plans are being amortized over a period of nine to eleven years for the
fiscal years ended March 31, 2004 and 2003 (four to eleven years for the fiscal year ended March 31, 2002), within the averageremaining service period at the time of occurrence. Amortization of unfunded past service cost and amortization of actuarial
differences start from occurrence and from the following fiscal year, respectively.
( l ) Accrued retirement benefits to directors and statutory auditors
Directors and statutory auditors customarily receive lump-sum payments upon termination of services, subject to shareholders’ approval.
The Companies provide for retirement allowances in an amount equal to the total benefits calculated based on the unfunded
retirement plan for the directors and statutory auditors.
(m) Income taxes
The Company adopted deferred tax accounting in conformity with Japanese accounting standards. As required by the standards,
deferred tax assets and liabilities are recorded based on the temporary differences between the financial statements and the tax basesof assets and liabilities.
(n) Appropriation of retained earnings
Cash dividends and bonuses to directors and statutory auditors are recorded in the financial year that a proposed appropriation ofretained earnings is approved by the General Meeting of Shareholders of the Company.
(o) Changes in presentation of loss on disposal of property and equipment, other assets
Formerly, loss on disposal of casino machines held by the consolidated subsidiary operating T&E business was included in nonoperating expenses in the consolidated statements of income. Considering recent frequent occurrence of replacement of the machines,
the loss is included in selling, general and administrative expenses in the consolidated statements of income, effective from the year
ended March 31, 2004. As a result, operating income decreased by ¥1,865 million (US$17,658 thousand) for the year ended March
31, 2004, but had no effect on income before income taxes.
(p) Impairment loss of property and equipment, other assets
Effective from the year ended March 31, 2004, the Companies adopted “Accounting Standard for Impairment of Fixed Assets.” The
standard requires that fixed assets be reviewed for impairment whenever events or changes in circumstances indicate material change
in the carrying amount of an asset. Impairment loss on property and equipment and other assets amounted to ¥7,570 million(US$71,660 thousand) for the year ended March 31, 2004 and was recorded as a non-operating expense.
(q) Treasury stock and reversal of capital and legal reserves
Effective from the year ended March 31, 2003, the Companies adopted the Statement of Financial Accounting Standard No. 1,“Accounting for Treasury Stock and Reversal of Capital and Legal Reserves,” issued by the Accounting Standards Board of Japan.
However, the effect on net losses for the year of adopting this new statement was immaterial.
In accordance with the revisions to the regulations concerning consolidated financial statements, shareholders’ equity and theconsolidated statements of shareholders’ equity for the 2003 and 2004 consolidated financial years were prepared pursuant to therevised regulations. As a result, the portion corresponding to the parent company’s interest (422,047 shares, ¥636 million) of thetreasury stock held by subsidiaries (537,640 shares, ¥810 million), which was deducted from shareholders’ equity in the 2002
consolidated financial year, is included in treasury stock and deducted from shareholders’ equity, and the portion corresponding tominority shareholders’ interest (115,593 shares, ¥174 million) of the same is deducted from minority shareholders’ interest, bothfrom 2003.
The portion corresponding to the reporting company’s interest (90,453 shares, ¥189 million) of its stock held by the companies
accounted for by the equity method (190,950 shares, ¥401 million at the end of 2003) is included in treasury stock and deducted fromshareholders’ equity.
(r) Net income per share
Effective from the year ended March 31, 2003, the Company adopted the Statement of Financial Accounting Standard No. 2,“Earnings per Share,” issued by the Accounting Standards Board of Japan. Prior to adopting the new statement, net income (loss) per
share was calculated based on the net income (loss) shown on the consolidated statements of income. The net income (loss) per sharecalculation, therefore, excluded bonuses to directors and statutory auditors, since under the Japanese Commercial Code, these wererecognized as an appropriation of retained earnings in the consolidated statements of shareholders’ equity, rather than as expenses in
the consolidated statements of income. However, the new statement requires that net income (loss) should be adjusted by deducting
bonuses paid to directors and statutory auditors as well as the payment of dividends to shareholders of preferred stocks to berecognized as an appropriation of retained earnings, from net income shown in the consolidated statements of income, and thecalculation of net income (loss) per share be made on that adjusted net income (loss) basis. Net loss per share for the year ended March
31, 2003, calculated using the previous method and under the new statement is ¥36.65 and ¥36.57, respectively.

Credit Saison Co., Ltd.

37

(s) Supplementary cash flow information
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 low risk of fluctuation in value that are scheduled to mature within three months from acquisition.
The balances of cash and cash equivalents as of March 31, 2004, 2003 and 2002 are reconciled with the respective consolidatedbalance sheets as follows:
Thousands of
U.S. dollars

Millions of yen

2004

2003

2002

2004

Consolidated balance sheet:
Cash and deposits ...........................................................................................
Short-term loans .............................................................................................
Less: Time deposits with maturities exceeding three months ............................
Money in trusts managed by each customer ....................................................

¥73,421———¥75,725———¥58,103
9,999
(10)
(350)

$695,081———

Cash and cash equivalents at end of year ........................................................

¥73,421¥75,725¥67,742$695,081

The following table shows the assets and liabilities at the time of commencement of consolidation of companies newly consolidated throughthe purchase of shares and the relationship between the acquisition cost of the shares and the proceeds from acquisition of the shares.
Millions of yen

Share acquisition:
Lira Corporation (as of February 28, 2002)
Current assets..........................................................................................................................................................
Fixed assets..............................................................................................................................................................
Consolidated reconciliation......................................................................................................................................
Current liabilities......................................................................................................................................................
Fixed liabilities..........................................................................................................................................................

¥ 150
133
(14)
(235)
(4)

Acquisition cost of Lira Corporation’s share .................................................................................................................
Cash and cash equivalents of Lira Corporation.............................................................................................................

30
93

Proceeds from acquisition of Lira Corporation’s share ..................................................................................................

¥

63

The main items of assets and liabilities of subsidiaries excluded from the scope of consolidation in the year ended March 31, 2002
through share exchange or transfer are as follows:
Millions of yen

Share exchange:
Saison Securities Co., Ltd. (as of March 31, 2001):
Current assets..........................................................................................................................................................
Fixed assets..............................................................................................................................................................
Total assets..........................................................................................................................................................
Current liabilities......................................................................................................................................................
Fixed liabilities..........................................................................................................................................................
Total liabilities......................................................................................................................................................
Share transfer:
Saison Life Insurance Co., Ltd. (as of March 31, 2002):
Total assets..........................................................................................................................................................
Total liabilities......................................................................................................................................................

38

9,837
260
10,097
8,323
9

¥

8,332

¥487,442¥477,520

Thousands of
U.S. dollars

Millions of yen

Non-cash financing activities are as follows:
Conversion of convertible bonds
Common stock increased due to conversion of convertible bonds.................
Additional paid-in capital increased due to

¥

2004

2003

2002

2004

¥ 331

¥2,034—$ 3,131

conversion of convertible bonds ...............................................................

330

2,032

—

3,127

Convertible bonds decreased due to conversion............................................

661

4,066

—

6,258

Acquisition of investment securities by debt to equity swaps ...........................

¥9,772¥—$92,512Credit Saison Co., Ltd.

—(t) Reclassification
Certain reclassifications of previously reported figures have been made to conform with the current classification.
4. NOTES AND INSTALLMENT ACCOUNTS RECEIVABLE
The Companies sold a portion of the single-payment card-shopping receivables of installment receivables and received a part of thetotal proceeds, amounting to ¥50,000 million (US$473,350 thousand) and ¥20,000 million in years ended March 31, 2004 and 2003,
respectively.
The outstanding balance of notes and installment accounts receivable includes receivables generated from such liquidation of theoperating receivables, amounting to ¥93,628 million (US$886,374 thousand) and ¥100,847 million as of March 31, 2004 and 2003,
respectively.
In the year ended March 31, 2002, the Company placed in trust some revolving receivables of ¥51,662 million from card shopping
included in notes and installment accounts receivable. The Company has sold ¥40,000 million of the trust beneficiary rights to First
Saison Card Funding, a special-purpose company.
The outstanding balance of notes and installment accounts receivable includes trust beneficiary rights generated from suchliquidation, amounting to ¥15,267 million (US$144,536 thousand) and ¥11,182 million as of March 31, 2004 and 2003, respectively.
5. LOAN COMMITMENTS
The Company and its consolidated subsidiaries 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:
Thousands of
U.S. dollars

Millions of yen

2004

2003

2004

Total loan limits .....................................................................................................
Loan executions .....................................................................................................

¥5,474,846
439,215¥5,055,413
408,037$51,830,409
4,158,057......................................................................................................................

¥5,035,631¥4,647,376$47,672,352

Most of the contracts for the above loan commitments were for cashing services supplementary to credit card services furnished to theCompany’s cardholders, such that not all unexecuted loans will be exercised.
6. 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 0.76% as of March 31,
2004.
Long-term debt as of March 31, 2004 and 2003 consisted of the following:Thousands of
U.S. dollars

Millions of yen

2004

2003

2004

Average 1.55% mortgage or secured loans from banks, insurance companies
and other financial institutions, due in installments through 2012 ........................
0.60% domestic convertible bonds, due on March 31, 2005..................................
0.42% to 2.175% bonds, due in installments through 2013..................................
Average 0.62% payables on under-securitized lease receivables*...........................

¥269,359
6,784
161,000
36,127¥226,623
7,445
136,000
44,345$2,550,023
64,224
1,524,188342,019

Subtotal.............................................................................................................
Less: Current portion .............................................................................................

473,270(52,644)414,413(62,719)

4,480,454(498,385)......................................................................................................................

¥420,626¥351,694$3,982,069*Payables on under-securitized lease receivables are incurred under the regulation for securitization of specific credit.

The aggregate annual maturities of long-term debt subsequent to March 31, 2004 are as follows:
Years ending March 31

Millions of yen

Thousands of
U.S. dollars

2005.....................................................................................................................................................
2006.....................................................................................................................................................
2007.....................................................................................................................................................
2008.....................................................................................................................................................
2009 and thereafter .............................................................................................................................

¥ 52,644
96,45476,206
88,791¥159,175$ 498,385
913,130
721,442
840,585$1,506,912

Credit Saison Co., Ltd.

39

The following is a summary of the terms of convertible bonds as of March 31, 2004:
0.60% domestic convertible bonds due 2005

Exercise price per share ......................................................................................................
..................................................................................................................................

¥2,094.8
US$19.83

Number of shares of common stock issuable as of March 31, 2004....................................

3,238,495

The exercise prices are subject to adjustments for subsequent stock splits and shares issued at less than market value to be made in the
future.
As is customary in Japan, short- and long-term bank loans are made under general agreements which provide that additional
security and guarantees for present and future indebtedness will be given upon request of the bank under certain circumstances, andthat any collateral so furnished will be applicable to all indebtedness to that bank. To date, the Companies have not received any such
requests from their banks.
7. LEASE TRANSACTIONS(a) Finance leases (lessee)
Finance leases as of March 31, 2004 and 2003 and for the years then ended are summarized as follows:i. Pro forma capitalization of leased items
Thousands of
U.S. dollars

Millions of yen

2004

2003

2004

Buildings:
Acquisition cost .................................................................................................
Accumulated depreciation .................................................................................

¥ 1,576(511)¥1,560(346)$ 14,918(4,838)Net book value ..................................................................................................

1,065

1,214

10,080Software:Acquisition cost .................................................................................................
Accumulated depreciation .................................................................................

98
(36)

98
(16)

933
(342)

Net book value ..................................................................................................

62

82

591

Other (fixtures and equipment):
Acquisition cost .................................................................................................
Accumulated depreciation .................................................................................

2,611
(839)

2,280
(564)

24,719(7,946)

Net book value ..................................................................................................

1,772

1,716

16,773

Total:
Acquisition cost .................................................................................................
Accumulated depreciation .................................................................................

4,285(1,386)

3,938
(926)

40,570(13,126)

Net book value ..................................................................................................

¥ 2,899¥3,012$ 27,444

ii. Minimum future lease payments
Millions of yen

Thousands of
U.S. dollars

2004

2003

2004

Due within one year...............................................................................................
Due after one year .................................................................................................

¥ 825
2,146

¥ 941
2,120

$ 7,813
20,314

Total ......................................................................................................................

¥2,971¥3,061$28,127

iii. Lease payments, depreciation equivalent and interest equivalentMillions of yen

Lease payments......................................................................................................
Depreciation equivalent..........................................................................................
Interest equivalent..................................................................................................

Thousands of
U.S. dollars

2004

2003

2004

¥1,057
981
94

¥985
927
104

$10,003
9,289
891

Depreciation equivalent is computed by the straight-line method under the assumption that the lease term equals the useful life, andthat there is no residual value.

40

Credit Saison Co., Ltd.

Interest equivalent, which represents aggregate lease payments less the acquisition cost equivalent, is allocated over the lease term
based on the interest method.
(b) Equipment for lease (lessor)
Equipment for lease as of March 31, 2004 and 2003 and for the years then ended is summarized as follows:i. Acquisition cost and accumulated depreciation
Thousands of
U.S. dollars

Millions of yen

2004

2003

2004

Equipment:
Acquisition cost .................................................................................................
Accumulated depreciation .................................................................................

¥199,361(72,026)¥165,796(59,389)$1,887,356(681,871)

Net book value ..................................................................................................

127,335

106,407

1,205,485

Software:Acquisition cost .................................................................................................
Accumulated depreciation .................................................................................

2,445
(570)

811
(408)

23,142(5,393)

Net book value ..................................................................................................

1,875

403

17,749Total:
Acquisition cost .................................................................................................
Accumulated depreciation .................................................................................

201,806(72,596)

166,607(59,797)

1,910,498(687,264)

Net book value ..................................................................................................

¥129,210¥106,810$1,223,234

ii. Minimum future lease revenue
Millions of yen

Thousands of
U.S. dollars

2004

2003

2004

Due within one year...............................................................................................
Due after one year .................................................................................................

¥ 29,281
105,345¥ 23,834
86,816$ 277,203
997,303

Total ......................................................................................................................

¥134,626¥110,650$1,274,506

The above amounts include lease obligations which were sold under the Regulation for Securitization of Specific Credit.
iii. Lease revenue, depreciation equivalent and interest equivalentMillions of yen

Lease revenue ........................................................................................................
Depreciation equivalent..........................................................................................
Interest equivalent..................................................................................................

Thousands of
U.S. dollars

2004

2003

2004

¥34,315
28,668
7,279¥27,519
23,2195,835$324,863
271,399
68,910Interest equivalent, which is aggregate lease revenues less acquisition cost, is allocated over the lease term based on the interest
method.
(c) Operating leases (lessee)
Minimum future lease payments as of March 31, 2004 and 2003 are as follows:
Millions of yen

Thousands of
U.S. dollars

2004

2003

2004

Due within one year...............................................................................................
Due after one year .................................................................................................

¥325
258

¥260
112

$3,0702,446

Total ......................................................................................................................

¥583

¥372

$5,516

Credit Saison Co., Ltd.

41

8. OTHER SECURITIESAs of March 31, 2004 and 2003 acquisition cost amounts on the consolidated balance sheets of other securities that have market
prices are summarized below:
Millions of yen

Balance sheet amountexceeding acquisition cost:
Equity shares....................................
Bonds
Corporate ....................................
Other ...........................................
Subtotal...................................
Balance sheet amount notexceeding acquisition cost:
Equity shares....................................
Bonds
Corporate ....................................
Other ...........................................

Thousands of U.S. dollars

2004

2003

2004

Acquisition
cost

Balancesheet
amountDifference

Acquisition
cost

Balancesheet
amountDifference

Acquisition
cost

Balancesheet
amount¥ 5,777¥14,605¥8,828¥547 ¥ 1,570¥ 1,023$ 54,684 $138,263 $ 83,579

—
21

—
23

—
2

18,431—

19,780
—

1,349
—

—
203

—
217

—
14

5,798

14,6288,830

18,97821,3502,372

54,887

138,480

83,593

8,704

8,361

(343)

11,267

7,775(3,492)82,40379,156(3,247)

31
4,954

28
4,172

(3)
(782)

—
4,407

—
3,913

—
(494)

292
46,900261
39,500(31)(7,400)118,917(10,678)

Difference

Subtotal...................................

13,68912,561(1,128)15,674

11,688(3,986)

129,595

Total........................................

¥19,487¥27,189¥7,702¥34,652 ¥33,038¥(1,614)$184,482 $257,397 $ 72,915

9. RETIREMENT BENEFIT PLANSOn April 23, 2002, the Company and certain consolidated subsidiaries obtained governmental approval of exemption from theobligation for benefits related to future employee service under the substitutional portion of the Saison Group Employees’ welfare
pension fund from the Ministry of Health, Labour and Welfare. As permitted by Article 47-2 of “Practical Guidelines on Accounting for
Postretirement Benefits (Interim Report)” issued by the JICPA, the Company adopted the transitional treatment of separation of thesubstitutional portion. This allows that the elimination of the substitutional portion of the benefit obligation and related assets
transferred to the Japanese government is recorded on the date of the approval. As a result, a one-off profit resulting from theseparation of the substitutional portion of the Saison Group Employees’ welfare pension fund amounting to ¥3,898 million wasrecognized in the year ended March 31, 2003. The fair value of the plan assets assumed to be transferred to the Japanese government
was ¥9,632 million as at March 31, 2003.
Upon governmental approval of exemption from the obligation for benefits related to past employee service under the substitutional
portion of the Saison Group Employees’ welfare pension fund on October 1, 2003, the funded contributory pension plan wastransformed to the defined benefit corporation pension plan under the Defined Benefit Corporate Pension Law.
In the year ended March 31, 2004, prior service obligation was incurred due to a change in the method of payment of basic
retirement benefits as a result of the change from a contributory trusteed employee pension plan to a defined benefit corporate
pension plan.
(a) Accrued pension and severance costs
Accrued pension and severance costs as of March 31, 2004 and 2003 are as calculated below:
Millions of yen

Retirement benefit obligations ...............................................................................
Plan assets .............................................................................................................
Funded status ........................................................................................................
Unrecognized actuarial differences.........................................................................
Unrecognized prior service obligations ...................................................................
Accrued pension and severance costs.....................................................................

42

Credit Saison Co., Ltd.

Thousands of
U.S. dollars

2004

2003

2004

¥(16,006)
5,004(11,002)
5,400(1,797)(7,399)¥(18,162)
5,778(12,384)
6,091
(177)
(6,470)$(151,525)
47,372(104,153)
51,124(17,015)(70,044)(b) Retirement benefit expenses
Retirement benefit expenses for the year ended March 31, 2004, 2003 and 2002 are as stated below:
Thousands of
U.S. dollars

Millions of yen

2004

2003

2002

2004

Service costs ..................................................................................
Interest costs .................................................................................
Expected return on plan assets ......................................................
Actuarial difference recognized as expense....................................
Prior service obligations recognized as expenses ............................

¥ 965
362
(86)
678
(119)

¥

915
371
(169)
486
(21)

¥1,669
1,223
(848)
758
(38)

$ 9,142
3,425
(818)
6,418
(1,129)Retirement benefit expenses..........................................................
Gains on reimbursement of substitutional portions of
welfare pension fund.................................................................

1,800

1,582

2,764

17,038—(3,898)——

Total .............................................................................................

¥1,800¥(2,316)¥2,764$17,038

The principal assumptions used in determining retirement benefit obligations and other components for the Companies plans arecalculated below:
Discount rate .........................................................................................................
Expected return on plan assets ...............................................................................
Period of recognition of prior service obligation......................................................
Period of recognition of actuarial differences..........................................................

2004

2003

2002

2.0%
1.5%
9–11 years
evenly9–11 years
evenly2.0%
2.0%
9–11 years
evenly9–11 years
evenly2.0%
3.5%
4–11 years
evenly4–11 years
evenly10. DEFERRED TAX ASSETS AND LIABILITIES(a) Effective tax rate
The effective income tax rates of the Companies differ from the statutory tax rates for the years ended March 31, 2004, 2003 and2002 for the following reasons:
2004
2003
2002
Statutory tax rate ...................................................................................................
Reconciliation:
Expenses not deductible for tax purposes ...........................................................
Non-taxable dividend income.............................................................................
Inhabitants taxes per capita................................................................................
Amortization of consolidated reconciliation........................................................
Equity in net earnings (losses) of affiliated companies.........................................
Loss on investments in affiliated companies .......................................................
Increase of evaluation allowance ........................................................................
Adjustment for sales of consolidated subsidiaries ...............................................
Reduction of deferred tax assets resulting from tax rate revision.........................
Other .....................................................................................................................

42.05%

42.05%

42.05%

0.22(1.17)
0.34(0.19)
1.11
—
1.30
—
1.33
(0.50)(1.02)
0.06(1.36)
0.54(9.62)
12.37
1.22—(3.03)(1.39)

0.35(0.03)
0.50
1.76(0.23)—
2.35(5.29)—(2.59)

Effective tax rate ....................................................................................................

44.49%

39.82%

38.87%

Credit Saison Co., Ltd.

43

(b) Deferred income taxes
Deferred income taxes as of March 31, 2004 and 2003 comprised the following:Thousands of
U.S. dollars

Millions of yen

2004

2003

171
360
3,081
5,774
6,063
2,155
2,987
1,334
4,041
293
1,333

¥ 3,610
254
—
4,770
3,395
62
2,579
1,199
4,255
997
1,054

$

Subtotal .................................................................................................................
Less evaluation allowance ......................................................................................

27,592(517)

22,175(56)

261,213(4,893)

Total deferred tax assets.........................................................................................
Deferred tax liabilities:
Accrued refundable enterprise taxes ..................................................................
Capital gains deferred for tax purposes ..............................................................
Unrealized gains on other securities ...................................................................
Other.................................................................................................................

27,075

22,119256,320—(212)(3,418)
(47)

(492)
(219)
(362)
(65)

—
(2,004)(32,362)(441)

Deferred tax assets:
Investment securities ..........................................................................................
Inventories .........................................................................................................
Accumulated impairment losses of property and equipment, other assets ..........
Allowance for losses on receivables ....................................................................
Accrued expenses .............................................................................................
Accrued enterprise taxes ....................................................................................
Accrued pension and severance costs.................................................................
Other allowance ................................................................................................
Tax loss carryforwards ........................................................................................
Unrealized losses on other securities ..................................................................
Other.................................................................................................................

¥

2004
1,615
3,412
29,16654,66557,396
20,402
28,276
12,62538,261
2,773
12,622

Total deferred tax liabilities.....................................................................................

(3,677)(1,138)(34,807)

Net deferred tax assets...........................................................................................

¥23,398¥20,981$221,513

On March 31, 2003, the Japanese National Diet approved various changes to the calculation of the statutory local enterprise tax,
effective April 1, 2004. As a result of this amendment, for years commencing April 1, 2004, income tax rate for enterprise taxes will be
reduced as a result of introducing the assessment by estimation on the basis of the size of business.
In the year ended March 31, 2003, the tax rate to be applied to deferred tax assets and liabilities for the expected future tax
consequences of temporary differences between the carrying amounts and tax bases of assets and liabilities, that were expected toreverse in the year beginning April 1, 2004 or later was revised. This resulted in a reduction in deferred tax assets at March 31, 2003 of¥350 million, compared with the assets that would have been recognized if a conventional tax rate had been fully applied to all
temporary differences. Net loss for year ended March 31, 2003 also increased by ¥312 million as a result of these changes in statutory
local enterprise tax regulations.
For calculation of deferred income tax assets and liabilities as of March 31, 2004, the Company and its consolidated subsidiaries
used the revised tax rate.The effect of the change was to decrease deferred tax assets, net of deferred tax liabilities, by ¥565 million(US$5,347 thousand) and to increase provision for deferred income taxes and unrealized gains on other securities by ¥539 million(US$5,098 thousand) and ¥26 million (US$249 thousand), respectively.
11. IMPAIRMENT LOSS OF PROPERTY AND EQUIPMENT, OTHER ASSETSThe Companies wrote down the book value of real estate for lease, real estate beneficiary rights, and non-operating properties.
Moreover, the Companies wrote down the book value of operating facilities and amusement facilities from which operating income
had deteriorated and was not expected to recover in the short term.
The Companies recorded impairment losses for the following assets:
Asset
Real estate for lease
Interests in real estate trusts
Operating facilities
Certain amusement facilities
Idle assets

44

Credit Saison Co., Ltd.

Balance Sheet Item
Land, Buildings
Investments and other assets
Buildings, Other (Fixtures, furniture, other)
Buildings, Other (Fixtures, furniture, other)
Land, Buildings, Other

Location
Tokyo
Osaka
Tokyo
Kanto regionTokyoAccumulated impairment losses were subtracted directly from individual assets. Impairment loss of property and equipment, otherassets recognized for the year ended March 31, 2004 are as follows:

Property and equipment:
Buildings and improvements .............................................................................................................
Land .................................................................................................................................................
Other (fixtures and equipment, other assets) .....................................................................................
Investment and other assets:
Other................................................................................................................................................
Total .....................................................................................................................................................

Millions of yen

Thousands of
U.S. dollars¥3,125
2,114
601$29,578
20,015
5,691

1,730

16,376¥7,570$71,660

Regarding real estate for rent, real estate beneficiary rights, managing facilities and non-operating properties, the recoverable
amount is measured at the net selling price, which is principally determined by real estate appraisers or other independent third parties.
Regarding a part of amusement facilities, the recoverable amount is measured at value in use, which is the present value of net cash
flows discounted at 5.0 percent.
The assets of the Companies are grouped by the operation unit that is able to control income efficiently. Real estate for rent andnon-operating properties are grouped by physical unit, and managing facilities and amusement facilities are grouped by facility unit.

12. OPERATING REVENUES
Operating revenues for the years ended March 31, 2004, 2003 and 2002 comprised the following revenues and expenses:
Thousands of
U.S. dollars

Millions of yen

2004

2003

2002

2004

Financing and administration fees..................................................
Merchandise sales:
Net sales....................................................................................
Cost of sales..............................................................................

¥174,963¥166,193¥151,753$1,656,380

59,62247,28960,16547,57065,50950,954564,440
447,686

Income from merchandise sales .................................................

12,333

12,595

14,555

116,754

Insurance business:
Revenues...................................................................................
Costs and expenses ...................................................................

—
—

—
—

108,551
87,952——

Income from insurance business ................................................

——

20,599

—T&E business:
Net sales....................................................................................
Costs and expenses ...................................................................

94,502
78,31485,81969,53678,791
63,472894,651
741,401

Income from T&E business.........................................................

16,18816,283

15,319153,250

Lease business:
Net sales....................................................................................
Cost of sales..............................................................................

46,33240,80635,17931,076

26,61323,200438,619
386,306

Lease income............................................................................

5,526

4,103

3,413

52,313

Other business:
Net sales....................................................................................
Cost of sales..............................................................................

8,378
3,627

6,062
2,193

5,360
2,238

79,31634,336

Other income ............................................................................

4,751

3,869

3,122

44,980Financial income............................................................................

6,571

9,199

6,077

62,206

Total operating revenues ...............................................................

¥220,332¥212,242¥214,838$2,085,883

Credit Saison Co., Ltd.

45

13. DERIVATIVES
Contractual values or notional principal amounts and unrealized profits (losses) on derivative transactions as of March 31, 2004 and2003 are summarized below:(a) Interest rate transactions
Millions of yen

2004
Contractual value or
notional principal amount
Total

Over 1 year

Over-the-counter interest rate swaps:
Floating-rate receipt / Fixed-rate payment .................
Fixed-rate receipt / Floating-rate payment .................

¥49,3153,000¥27,315—

Total ............................................................................

¥52,315¥27,315

2003
Unrealized
profit (loss)

Contractual value or
notional principal amount

Unrealized
profit (loss)

Total

Over 1 year¥(1,117)40¥47,8133,000¥47,1133,000¥(1,848)165¥(1,077)¥50,813¥50,113¥(1,683)

Thousands of U.S. dollars

2004
Contractual value or
notional principal amount

Unrealized
profit (loss)

Total

Over 1 year

Over-the-counter interest rate swaps:
Floating-rate receipt / Fixed-rate payment .................
Fixed-rate receipt / Floating-rate payment .................

$466,865
28,401$258,591—$(10,577)
383

Total ............................................................................

$495,266$258,591$(10,194)

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

(b) Foreign exchange transactions
Millions of yen

2004
Contractual value or
notional principal amount
Total

Over 1 year

Currency swaps:
Yen received/U.S. dollars paid ......................................

¥1,199¥—Total ............................................................................

¥1,199¥—2003
Unrealized
profit (loss)

Contractual value or
notional principal amount

Unrealized
profit (loss)

Total

Over 1 year

¥141

¥11,905¥11,905¥(512)¥141¥11,905¥11,905¥(512)

Thousands of U.S. dollars

2004
Contractual value or
notional principal amount

Unrealized
profit (loss)

Total

Over 1 year

Currency swaps:
Yen received/U.S. dollars paid ......................................

$11,351$—$1,338

Total ............................................................................

$11,351$—$1,338Notes: 1. Fair value at year-end is calculated based on prices and other information presented by financial and other institutions with which theCompany has concluded derivatives agreements.
2. Foreign exchange forward contracts created for foreign currency denominated monetary assets and liabilities, from which yen amounts are
excluded and shown in the consolidated balance sheets, are excluded from the scope of above disclosure.
3. Hedged derivatives transactions are excluded.

46

Credit Saison Co., Ltd.

14. COMMITMENTS AND CONTINGENT LIABILITIESAs of March 31, 2004, the Companies were contingently liable as credit guarantee for customers borrowing from the alliance banks andLawson CS Card Inc., amounting to ¥82,381 million (US$779,900 thousand) and ¥3,990 million (US$37,773 thousand), respectively.
15. SEGMENT INFORMATION(a) Business segments
Segment information by business segment for the years ended March 31, 2004, 2003 and 2002 is as follows:
Millions of yen
Operating revenues
Year ended March 31, 2004

Outsidecustomers

Intersegment

Total

Operatingexpenses

OperatingincomeCredit & Finance .....................
Merchandise Sales...................
T&E ......................................
Lease ......................................
Other ......................................

¥181,534
12,333
16,188
5,526
4,751

¥ 471
22
8
84
3,070

¥182,005
12,355
16,1965,610
7,821¥135,205
10,781
15,182
3,680
1,990¥46,800
1,574
1,014
1,930
5,831

¥1,002,827 ¥ 3,468
73,875
109
26,2802,699
134,738 29,468
22,958792¥3,879
—
536
—
3,155

¥ 6,345274
5,734
61,810492

Total ......................................
Eliminations or corporate ........

220,332—

3,655(3,655)

223,987(3,655)

166,838(511)

57,149(3,144)

1,260,678
92,03236,536
144

7,570
—

74,655137

Consolidated...........................

¥220,332¥¥220,332¥166,327¥54,005¥1,352,710 ¥36,680¥7,570¥74,792—

AssetsDepreciation

Impairment
Capitalloss
expenditures

Thousands of U.S. dollars
Operating revenues
Year ended March 31, 2004

Outsidecustomers

Intersegment

OperatingexpensesCredit & Finance.......................
Merchandise Sales....................
T&E ........................................
Lease ........................................
Other ........................................

$1,718,586
116,754
153,250
52,31344,980$ 4,462212
75
791
29,060$1,723,048 $1,279,988
116,966
102,065
153,325
143,729
53,104
34,841
74,04018,835$443,060 $ 9,493,774 $ 32,832
14,901
699,375
1,031
9,596
248,791
25,556
18,263
1,275,562 278,970
55,205
217,3427,501$36,720—
5,069—
29,871$ 60,069
2,595
54,286585,156
4,653

Total ........................................
Eliminations or corporate.........

2,085,883—

34,600(34,600)

2,120,483 1,579,458(34,600)(4,842)541,025(29,758)

345,890
1,360

71,660—706,759
1,294

Consolidated ............................

$2,085,883$$2,085,883 $1,574,616$511,267 $12,806,114 $347,250$71,660$708,053

Total—

OperatingincomeAssetsDepreciation

11,934,844
871,270

Impairment
Capitalloss
expenditures

Millions of yen
Operating revenues
Year ended March 31, 2003

Outsidecustomers

Intersegment

Total

Operatingexpenses

OperatingincomeAssetsDepreciation

Capitalexpenditures

Credit & Finance........................
Merchandise Sales.....................
T&E ........................................
Lease ........................................
Other ........................................

¥175,392
12,595
16,283
4,104
3,868

¥ 488
29
9
62
2,491

¥175,880
12,624
16,292
4,166
6,359¥131,148
11,284
12,6903,043
1,044¥44,732
1,340
3,602
1,123
5,315

¥ 999,811
53,88523,482
111,586
23,869¥ 3,536
144
1,853
23,804
1,075¥ 5,251
147
4,898
60,528165

Total ........................................
Eliminations or corporate...........

212,242—

3,079(3,079)215,321(3,079)159,209
619

56,112(3,698)1,212,633
68,19030,412
109

70,98914

Consolidated.............................

¥212,242¥¥212,242¥159,828¥52,414¥1,280,823¥30,521¥71,003—

Credit Saison Co., Ltd.

47

Millions of yen
Operating revenues
Year ended March 31, 2002

Outsidecustomers

Intersegment

Total

Operatingexpenses

OperatingincomeAssetsDepreciation

Capitalexpenditures

Credit & Finance........................
Merchandise Sales.....................
Insurance ..................................
T&E ........................................
Lease ........................................
Other ........................................

¥157,830
14,555
20,59915,3193,413
3,122¥1,102
118
52
9
93
2,678

¥158,932
14,673
20,651
15,3283,506
5,800¥114,872
12,835
11,00012,2072,599
1,155¥44,060
1,838
9,651
3,121
907
4,645

¥ 967,329
51,168—22,39280,63018,895¥ 3,890
179
383
1,746
18,310615¥ 5,929271—
4,511
43,589365

Total ........................................
Eliminations or corporate...........

214,838—

4,052(4,052)

218,890(4,052)

154,668497

64,222(4,549)1,140,414
116,484

25,123
128

54,665345

Consolidated.............................

¥214,838¥¥214,838¥155,165¥59,673¥1,256,898¥25,251¥55,010—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 & finance: Shopping loans and finance(b) Merchandise sales: Sales of real estate, mail-order sales, sales of automobiles and retail sales at department stores(c) Insurance: Life insurance (2002)(d) T&E: Travel and entertainment(e) Lease: Equipment leasing(f) Other: Real estate leasing
3. Significant components of “Eliminations or corporate” are as follows:
Thousands of
U.S. dollars

Millions of yen

Non-allocable operating expenses .............
Corporate assets .......................................

2004

2003

2002

2004

¥ 2,560
109,987¥ 3,351
90,465¥ 4,154
137,918$ 24,240
1,041,251

Non-allocable 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. Change in presentation of loss on disposal of properties:
As described in Note 3 (o), formerly the loss on disposal of casino machines held by the consolidated subsidiary operating T&E business was
included in non-operating expenses in the consolidated statements of income. Considering recent frequent occurrence of replacement of themachines, the loss is included in selling, general and administrative expenses in the consolidated statements of income, effective from the year
ended March 31, 2004. This change caused operating income of T&E business to decrease by ¥1,865 million (US$17,658 thousand) for the year
ended March 31, 2004.
5. Accounting standards for impairment of fixed assets
As described in ‘Note 3 (p) Impairment loss of property and equipment, other assets,‘ the Companies adopted “Accounting Standard for
Impairment of Fixed Assets” effective from the year ended March 31, 2004. The effect of the adoption was to recognize impairment losses on
the credit and finance business, T&E business and other business, amounting to ¥3,879 million (US$36,720 thousand), ¥536 million (US$5,069
thousand) and ¥3,155 million (US$29,871 thousand), respectively. Operating assets of these business decreased by ¥3,879 million (US$36,720
thousand), ¥503 million (US$ 4,762thousand) and ¥3,155 million (US$29,871 thousand), respectively.
6. Change in useful life of property and equipment
As detailed above in the “Significant Accounting Policies” section, buildings on leased land subject to limited-term lease agreements forbusiness purposes are required to be demolished and the land required to be returned as vacant lots upon the expiration of terms under thelease agreements. Accordingly, effective from the year ended March 31, 2003, the Company changed the useful lives of said buildings fromthat prescribed by the tax laws of Japan to that prescribed by said agreements. As a result, operating expenses for other business in the year
ended March 31, 2003 increased by ¥75million, resulting in a decrease of the same amount in operating income.
7. As a result of the transfer to GE Edison Life Insurance Co., Ltd. of the shares of Saison Life Insurance Co., Ltd. (insurance business) effected in
the year ended March 31, 2002, the life insurance business segment has been eliminated.

(b) Geographic information
The Company is not required to prepare information for geographic segment since no consolidated subsidiaries or branches are locatedoutside Japan.
(c) Overseas sales
The Company is not required to prepare information for overseas sales since the aggregated amounts of overseas sales of theCompanies are not material (less than 10% of consolidated sales).

48

Credit Saison Co., Ltd.

Report of Independent Accountants

To the Board of Directors and Shareholders of
CREDIT SAISON CO., LTD.
We have audited the accompanying consolidated balance sheets of CREDIT SAISON CO., LTD. and its
consolidated subsidiaries as of March 31, 2004 and 2003, and the related consolidated statements ofincome, shareholders’ equity, and cash flows for the three years in the period ended March 31,2004, allexpressed in Japanese Yen. These consolidated financial statements are the responsibility of the Company’s
management. Our responsibility is to express an opinion on these consolidated financial statements basedon our audits.
We conducted our audits in accordance with auditing standards generally accepted in Japan. Thesestandards require that we plan and perform the audit to obtain reasonable assurance about whether the
consolidated financial statements are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit
also includes assessing the accounting principles used and significant estimates made by management, as
well as evaluating the overall consolidated financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects,
the consolidated financial position of CREDIT SAISON CO., LTD. and its consolidated subsidiaries as ofMarch 31, 2004 and 2003, and the consolidated results of their operations and their cash flows for the three
years then ended in conformity with accounting principles generally accepted in Japan.
As described in Note 3, the consolidated subsidiary operating T&E business changed the classification ofloss on disposal of casino machines from non-operating expenses to selling, general and administrative
expenses in the consolidated statements of income, effective from the year ended March 31, 2004.
As described in Note 3, CREDIT SAISON CO., LTD. and its consolidated subsidiaries have adopted the newJapanese accounting standards for impairment of fixed assets from the year ended March 31, 2004.
The amounts expressed in U.S. dollars, which are provided solely for the convenience of the reader, havebeen translated on the basis set forth in Note 2 to the accompanying consolidated financial statements.

ChuoAoyama PricewaterhouseCoopers
Tokyo, Japan
June 29, 2004

Credit Saison Co., Ltd.

49

Corporate History
1951
May

1976
Mar.

1980
Aug.

1983
Mar.

1988
July

1989
Oct.

1991
Jan.

1995
June

1997
Oct.

The Company was established as a retailer specializing ininstallment sales

Seibu Department Stores and the Company established ashareholding relationship and developed a consumer credit
system for the Saison GroupThe Company name was changed from Midoriya Department
Stores to Seibu Credit Co., Ltd.

The name of Seibu Card was changed to SAISON CARD

Reached agreements with VISA and MasterCard and began
issuing Saison Visa Card and Saison MasterCard

The Company name was changed to Credit Saison Co., Ltd.

Started the affinity card business

Began issuing Saison JCB International Card in cooperation
with JCB Co., Ltd.

Saison American Express Card issued through an affiliation
with AMERICAN EXPRESS®

Mar.

Started Saison Postal Savings Global Service, with a cardoffering credit, debit, and cashing functions in Japan andoverseas
Sept. Began issuing combined credit/cash cards with regional banks

July

Aug.
Nov.

2001
Apr.

May
June
Oct.
Nov.
Dec.

Jan.

Reached agreement to establish LAWSON CS Card, Inc., jointlywith LAWSON, Inc., and Mitsubishi Corporation
Feb. Started new membership service “SAISON Dream” (currently“Eikyufumetsu Point,” or “SAISON Permanent Points” in English)
Mar. Introduced SAISON CARD MAKER, a speedy, automatic card
issuing machine
Apr. Began issuing JAPAN Card Saison, officially approved by theJapan Football Association
May Formed business alliance with Saison Automobile and Fire
Insurance Co., Ltd. and The Yasuda Fire & Marine InsuranceCo., Ltd. (currently Sompo Japan Insurance Inc.)
Aug. Began issuing Saison DoCoMo Card in cooperation withNTT DoCoMo, Inc.
Sept. Began issuing Saison Japanese Postal Savings Check Card,
which allows users to set their own usage limits
Oct. Saison Life Insurance Co., Ltd., merged with GE Edison Life
Insurance Co., Ltd.
Nov. Began using IC chips for three brands (VISA, MasterCard, andJCB) for newly issued SAISON CARDs and Gold SAISON CARDs
Dec. Began issuing Saison Club On Card in cooperation with The
Seibu Department Stores, Ltd.

2003

1999

2000

2002

Started the ORIX/Credit Saison Banking Service in cooperation
with ORIX Trust & Banking Corporation
Started Net Answer, a web site for cardholders
Overseas travel services expanded through an alliance with
U.K. travel and financial service company Travelex(Thomas Cook G&FS)

Began issuing Akai Card Saison in cooperation withMARUI Co., Ltd.
Began issuing Sogo Millennium Card Saison in cooperation
with Sogo Co., Ltd.
Began issuing MONEX Saison Card in cooperation withMONEX, Inc.
Began issuing Saison Toys “R” Us Card in cooperation with
Toys “R” Us-Japan, Ltd.
Concluded a supporting company contract for the Japannational soccer team
Began issuing Saison Loft Card in cooperation with
The Loft Co., Ltd.

Feb.
Mar.

Began issuing Saison Four Beat Card
Began “SAISONPASS” account aggregation service for Saison
Card holders
May Began electricity bill credit card payment service for
Kansai Electric Power Co., Inc.
July Began publishing tour catalog, Saison Tabimonogatari, in
cooperation with JTB Corp.
Aug. Began issuing Mazda m’zPLUS Card Saison in cooperation with
Mazda Motor Corporation
Aug. Reached agreement on a comprehensive alliance with the card
division of Idemitsu Kosan Co., Ltd.
Sept. Start of SAISON STATION
Sept. Began issuing Super Value Plus, a product exclusively for
cardholders, through a business alliance among Credit Saison,
Saison Automobile and Fire Insurance Co., Ltd. and Sompo
Japan Insurance Inc.
Sept. Began issuing the Cinemileage Card Saison through an alliancewith Toho Cinemas
Oct. Established Idemitsu Credit Co., Ltd., a joint venture in which
Credit Saison holds a 50 percent share, to handle the credit
card business of the Idemitsu Group.
Nov. Acquired priority negotiation rights for alliances with cardcompanies in the Resona Group
Dec. Enhanced Gold SAISON CARD preferred services

2004
Feb.
Feb.

Mar.
Mar.
Apr.
Apr.
June

50

Credit Saison Co., Ltd.

Decided to form a strategic equity and business tie-up withResona Holdings, Inc.
Expanded locations of SAISON CARD Express for speedy online
card issuance. Began same-day card issuance at Marui Group’s
Zero First stores
Formed alliance with JR Kyushu Group Kagoshima Terminal
Building Co., Ltd. and began issuing AMU CLUB Card SAISONFormed business alliance with ORIX Corporation in automobile
leasing business for individuals
Formed alliance with Seibu Dome enabling card payment tobeer vendors at baseball stadium
Reached basic agreement with Takashimaya Co., Ltd. on
strategic alliance in card business
Launched SAISON Housing Information, a Web-based realestate information service

Corporate Information(As of March 31, 2004)

CREDIT SAISON Co., Ltd.

Number of Shareholders:

Head Office:Composition of Shareholders: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:¥63,668 million

Individuals and Others 4.72%
40.50%

Foreign Investors

42.22%

Other Corporations

10.49%

Securities Companies

2.07%

Major Shareholders:Consolidated: 2,364
Non-consolidated: 1,568

Closing of Accounts:

March 31

Stock Listing:Tokyo Stock Exchange, First Section

Ticker No.:

8253

Number of
Shares(Thousands)

The Master Trust Bank of Japan, Ltd.
(trust account)
13,857
Japan Trustee Services Bank, Ltd. (trust account) 12,412
The Seibu Department Stores, Ltd.
11,600Mizuho Corporate Bank, Ltd.
8,175
State Street Bank and Trust Company
5,969
OM04 SSB Client Omnibus
4,495
Mizuho Bank, Ltd.
4,478
The Nomura Trust & Banking Co., Ltd.
(mutual fund account)
3,492
Mellon Bank Treaty Clients Omnibus
3,067
Morgan Stanley & Co. International Ltd.
2,844

Independent Auditor: ChuoAoyama PricewaterhouseCoopers
Transfer Agent:

The Sumitomo Trust & Banking Co., Ltd.
Stock Transfer Agency Department
1-1-4, Marunouchi, Chiyoda-ku, Tokyo

Common Stock
Authorized:

171,725 thousand shares

Monthly Stock Price Range:

3.48
2.62
2.61
2.03
1.79
1.66

Number of
Shares(Thousands)

Percentage ofOwnership(%)

Nomura Asset Management Co., Ltd.
Fidelity Investments Japan Ltd.

12,000
6,577

6.99
3.83

Common stock price range (Left scale)Tokyo stock price index (Right scale)

2,500

2,000

2,400

1,500

1,600

0

8.07
7.23
6.75
4.76

Name

3,200

800

Percentage ofOwnership(%)

Note: During the year under review, the following companies filed reports of major
shareholdings, stating that they held shares as below. We were not able toconfirm the numbers of shares that these companies actually held in their own
names as of the close of the term; thus, they are not included in the above list ofmajor shareholders.

300,000 thousand shares

Common Stock
Outstanding:(Yen)

Financial Institutions

Name

Number of
Employees:

4,000

6,068

1,000
High
High
Opening
Closing

500

Closing
Opening
Low
Low

1/99

1/00

1/01

1/02

Yearly High and Low Prices:

1/03

1/04

0

(Yen)

2000

2001

2002

2003

2004

High

2,820

3,100

3,320

2,680

3,600

Low

1,450

2,125

1,821

1,881

2,420

Note: Stock prices for 2004 are for the period from January 1 to July 31.

Credit Saison Co., Ltd.

51

CREDIT SAISON Co., Ltd.
Annual Report 2004

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

TM

Printed in Japan with soy ink on recycled paper.