©J.LEAGUE PHOTOS/Starting players in the women’s representative team playing Australia in the Kirin Challenge Cup (July 11, 2012)

Credit Saison isa supporting companyof National Teams.

©J.LEAGUE PHOTOS/Starting players in the men’s representative team playing Azerbaijan in the Kirin Challenge Cup (May 23, 2012)

We will fulfill our corporate social responsibility by striving tomeet the expectations of all of our customers, shareholders,and business partners. We will compete successfully in themarket by promoting our three shared values: practicalimplementation of the principles of customer satisfaction as aleading-edge service company; mutual respect for ourinterests and those of our business partners; and developing
a corporate culture of creative innovation.

CONTENTS
01
02
04
06
07
08
13
14
16
17

51
52
54
56
57

To Our Stakeholders
Innovative Services Pioneered by Credit Saison
Collaborative Management
Six-year Summary of Select Financial Data
Review of Operations
Strategic Priorities
Corporate Social Responsibility (CSR)
Corporate Governance
Board of Directors and Auditors
Financial Section
17 Management’s Discussion and Analysis
24 Consolidated Balance Sheets
26 Consolidated Statements of Income /Consolidated Statements of Comprehensive Income
27 Consolidated Statements of Changes in Equity
28 Consolidated Statements of Cash Flows
29 Notes to Consolidated Financial Statements
Independent Auditors’ Report
Corporate History
Card Tie-ups / Social Contribution Activities / Donations Using Eikyufumetsu Points
Major Group Companies
Corporate Information

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

TO OUR STAKEHOLDERS

The credit card market in Japan today requires companies to transform their conventional
business models. Changes in the market such as regulatory tightening under the
Money-Lending Business Control and Regulation Law and the Installment Sales Law havechanged the earnings structure of businesses, while the sector as a whole has seen intensifiedcompetition due to the entry of players from other sectors and large-scale reorganization.
Meanwhile, the global settlement market has seen continued growth in Asia, which is achieving
rapid economic development. Moreover, in the U.S., the predominance of areas and brands
has become clear, with American Express now leading MasterCard in credit card settlements.
In this environment, Credit Saison will utilize the strategic advantages it has cultivated overmany years in a collaborative way. Our goal is to use our advantage of neutrality andindependence with respect to particular finance groups or capital sources in an approach wecall “Collaborative Management.” In doing so, we will promote the following medium to longterm growth strategies: build the No. 1 system for each credit card function on a consolidated basis; continue our attempt to develop the Internet business into a core operation;
continue to develop as a non-bank finance company by strengthening the finance business;and realize business expansion into Asia.
Fiscal 2011 was the 30th anniversary of the launch of Saison Card. Looking ahead at thenext 30 years, all employees of the Credit Saison Group will return to the original concept ofCredit Saison, “to create customer satisfaction as a leading-edge service company,” andwork through innovation to break the dominance of the cash market, which currently
represents around 60% of consumer settlements. In this way, we will advance our position
to become the leading company in the cashless settlement market.
I hope you will continue and increase your support for our efforts.

September 2012
Hiroshi Rinno, President and CEO

CREDIT SAISONANNUAL REPORT 201201

INNOVATIVE SERVICES PIONEERED BY CREDIT SAISON

Credit Saison issued its first credit card in 1982. In the 30 years since then, themarket environment has seen significant changes in economic conditions,consumption trends, regulations, and other factors. Amid these changes, we haveestablished a unique position in the industry as a leading-edge service company
by maintaining a thorough dedication to customers at all times, while producing
new and innovative products and services.

2007
2007
2006 Launched2006 Launched2004 Concluded a comprehensive
2002 Launched a new points program called
2002 Established a business model providing
1999 Under joint management with SONY established Entertain
1997 Entered into an alliance with American Express
1992 Started issuing Saison Postal Savings Cards
1990 Started first transactions in Japan not requiring signatures on the Seiyu food floors
1988 Entered into an alliance with VISA/MasterCard

1982

1985 Started credit guarantee business1982 Started lease business1982 Launched establishment of ATMs for cash advances
1982 Issued of “Seibu Card”, launch of national development of business bases for issuing cards (Saison counters)

Aiming to be the No. 1 company in the cashless
1990 Total transaction volume surpasses ¥1 trillion
1992 Total number of cardmembers surpasses 10 million
1998 Total transaction volume surpasses ¥2 trillion
2001 Became the top credit card issuer in Japan
2004 Total transaction volume surpasses
2005 Total transaction volume
2005 Total number of cardme
2006 Total trans
2007

02

CREDIT SAISONANNUAL REPORT 2012

2012

2012 Established a representative office in Hanoi, Vietnam

2011 Made possible the use of Eikyufumetsu Points for net shopping
2011 Entered into an alliance with China UnionPay for affiliated store operations in Japan
2011 Established “Judge Committee”
2010 Concluded a comprehensive business partnership agreement with Seven & i financial group2010 Issued Walmart Card SAISON (American Express brand)2010 Concluded an agreement with American Express on issue of cards with a new design featuring a drawing of centurion
2010 Undertook management of Akagi Nature Park (Gumma Prefecture) as one of our CSR activities
2009 Launched Credit Saison Flat 35 service (long-term fixed rate housing loans)
2008 Launched rental business in alliance with Yamada Denki
Established Qubitous, the first all-round processing service company in the industry
Established SAISON ASSET MANAGEMENT Co., Ltd. and launched wealth accumulation services
operations of Eikyufumetsu.com, an on-line shopping mall

30

services of the Thoroughbred Club Saison
alliance with Mizuho Financial Group
Saison Eikyufumetsu Points

capital, personnel, and know-how under a joint venture system (ex. Idemitsu Kosan, Resona Holdings, Takashimaya, Yamada Denki, Shizuoka Bank, Daiwa House Industry, Yamaguchi Financial Group)
ment Plus Co., Ltd., a company developing “e+”settlement market¥3 trillion
surpasses ¥4 trillion

mbers surpasses 20 million

action volume surpasses ¥5 trillion

Total transaction volume surpasses ¥6 trillionth
CREDIT SAISONANNUAL REPORT 201203

COLLABORATIVE MANAGEMENT

Becoming a non-bank finance company with
Credit Saison is determined to become No. 1 in the cashless settlement market by persistently
promoting “Collaborative Management.” This strategy combines, in a collaborative way, ourcustomer base of 35.2 million people built up over these past 30 years, our network of alliances
spanning a wealth of industries, and our unique strategic advantages including innovative
products and services.
Service Partners
Mileage services
Insurance
T&E services
Asset management

Strategic
Investment
Partners
Investment banks
securities companies

Settlement Platform
Partners
Mobile phones
Prepaid cards
E-money
Settlement services

Lease FinanceBusiness Partners
Retailers offering lease service
contracts
Credit guarantee service providers
Affiliated Flat 35 mortgage lenders
Non-recourse loans

04

CREDIT SAISONANNUAL REPORT 2012

Development of Saison
American Express® Card/
Customer Channel
Development Partners
Companies with affluent
customer basesmultiple income sources

Environmental
Conservation
Supporting environmental, sports andcultural activities
Environment: Akagi Nature Park
Sports: Japan Football Association
Culture: José Carreras

Group Management
Partners
Real estate
Cash advances
Loans
Servicing and temporary staffing
Systems
Processing
Entertainment

Credit Card Joint
Ventures
Idemitsu Kosan Co., Ltd.
Resona Holdings, Inc.
Takashimaya Company, Limited
Shizuoka Bank, Ltd.
Daiwa House Industry Co., Ltd.
Yamada Denki Co., Ltd.
Seven & i GroupInternet Business
Partners
Online shopping
Auctions
Research
Search and forums
Reservations
Online advertising
Open membership

Card IssuingPartners
Department stores
Supermarkets and specialty retailers
Developers
Consumer electronics stores
Convenience stores
Financial institutions
Corporations, telecommunications, broadcasting
Airlines, railways, automakers
TravelSportsEnvironment and culture
Education
BeautyCREDIT SAISONANNUAL REPORT 201205

SIX-YEAR SUMMARY OF SELECT FINANCIAL DATA
As of and for the years ended March 31

Millions of yen

Thousands of
U.S. dollars(Note 5)

2008

2007

2012

¥ 306,855
246,305
24,37736,173
18,680¥ 327,089 ¥ 345,586
268,658
265,493
23,882
22,901
34,54857,191(55,513)26,755¥ 333,683
242,149
16,33275,201
14,821$ 2,968,842
2,338,300
242,834
387,707
115,022¥ 347,916
2,231,247
1,657,832¥ 341,405
2,374,129
1,776,827¥ 320,595
2,407,064
1,893,017¥ 399,828
2,299,607
1,608,307$ 4,382,122
26,230,759
17,092,103

¥

¥

¥

¥

$

2012

CONSOLIDATED
For the year:
Operating revenues (Note 1)¥ 244,009
Selling, general and administrative expenses
192,185
Financial costs
19,958Operating income
31,866
Net income (loss)
9,454
At year-end:
Total equity¥ 355,727
Total assets
2,155,906
Interest-bearing debt (Note 2)
1,409,802
Per share data (in yen and U.S. dollars):
Net income (loss) per share¥
51.48
Equity per share
1,920.65
Key financial ratios (%):
Return on equity (ROE)
2.7
Return on assets (ROA)
0.4
Equity ratio
16.4
NON-CONSOLIDATED
For the year:
Operating revenues (Note 1)¥ 210,207
Selling, general and administrative expenses
153,505
Financial costs
18,809Operating income
37,893
Net income (loss)
5,613
At year-end:
Total equity¥ 322,502
Total assets
2,059,435
Interest-bearing debt (Note 2)
1,364,960
Key financial ratios (%):
Return on equity (ROE)
1.8
Return on assets (ROA)
0.3
Equity ratio
15.7
NON-CONSOLIDATEDTransaction Volume:
Card shopping
Cash advances (Note 3)
Specialty loans
Agency services (Note 4)
LeasesGuarantees
OthersTotal transaction volume¥3,402,494
266,904
34,597
2,112,431
96,852
92,837
20,482¥6,026,599

2011

2010

¥ 285,713
235,759
22,577
27,377
12,83069.86
1,879.98

102.48
1,845.82

3.8
0.6
15.5

5.7
0.8
14.3

¥ 239,657
194,194
19,97725,484
7,596

2009¥ 418,661
2,450,637
1,854,056(308.25) ¥ 148.78
1,766.95
2,147.04
—
—
13.2

82.79
2,077.69

0.63
23.37

7.1
1.1
15.8

4.0
0.7
16.2

¥ 257,924
205,042
22,221
30,661
16,137¥ 270,900 ¥ 277,741
220,708
223,815
21,53020,322
28,66133,603(44,972)
24,578¥ 270,275
204,765
14,06751,442
10,221$ 2,557,584
1,867,691
228,845461,044
68,302¥ 320,303
2,097,773
1,571,610¥ 319,712
2,200,459
1,645,206¥ 304,230
2,220,791
1,748,245¥ 361,519
2,066,513
1,554,629¥ 349,754
1,962,996
1,350,134$ 3,923,865
25,057,008
16,607,380

2.4
0.4
15.3

5.2
0.7
14.5

—
—
13.7

6.9
1.2
17.5

3.0
0.5
17.8

¥3,953,411
371,40336,514
1,362,275
92,70973,37522,894¥5,912,587¥3,844,670
604,347
43,7681,310,419
100,893
85,637
23,380¥6,013,118¥3,891,076
765,385
326,170
1,347,260
100,272
107,532
22,475¥6,560,174¥3,758,545
836,623
279,970
1,269,578
88,273103,302
22,278¥6,358,572¥3,433,872—
1,058,335
809,992
87,48885,431
16,393¥5,491,515$41,397,911
3,247,407
420,946
25,701,802
1,178,393
1,129,544
249,207$73,325,212

Notes: 1. Operating revenues do not include consumption taxes.
2. Interest-bearing debt includes asset-backed securities.
3. Transaction volumes for cash advances for 2007 are included under specialty loans.
4. Agency services show transactions handled on behalf of other companies’ cards.
5. Japanese yen amounts have been translated into U.S. dollars at the rate of ¥82.19 = U.S.$1, the approximate exchange rate on March 31, 2012, forthe convenience of the reader.

06

CREDIT SAISONANNUAL REPORT 2012

REVIEW OF OPERATIONSResults for Fiscal 2011
The credit industry in Japan continued to experiencea severe business environment due to the effects ofrevisions to the Money-Lending Business Control
and Regulation Law and other laws and regulations.
Amid this environment, Credit Saison aspires to be a
non-bank finance company with multiple revenue
sources. During fiscal 2011, therefore, we built asettlement platform around our credit card businessand strengthened our finance business, including thelease business, credit guarantee business, and Flat
35 long-term, fixed-rate mortgage loan business. In
this way, we developed multiple core revenue
sources. At the same time, we focused on expanding our fee revenues by utilizing our cardmember
base, mainly our Internet members, while improving
the quality of receivables and restructuring costs for
greater operational efficiency. In this way, we worked
to create a foundation in preparation for new growth.
In the Credit Service Segment, the customer
base expanded steadily. The Group acquired 2.6

RESULTS BY BUSINESS SEGMENT(Billions of yen)

Operating revenues

Operating income (loss)

2012% change2012% change

Credit service

198.8

86.1

27.1

170.0

Lease
Finance
Real estate-related
Entertainment
Total
Intersegment transactions
Consolidated

14.6
15.7
3.0
12.9
245.3
(1.3)
244.0

101.5
100.9
24.8
93.3
85.4
–
85.4

5.0
7.7
(10.1)
2.0
31.9
(0.0)
31.8

101.2
114.5
–
118.9
116.7
–
116.4

(Year ended March 31)

KEY INDICATORS (NON-CONSOLIDATED)
Figures in parentheses are year-on-yearcomparisons.
2012% change

New applications (millions)
New cards issued (millions)

2.60
1.96

101.2
92.5

Total cardmembers (millions)24.75(3.59)
12.99(1.71)
3,669.3
3,402.4
266.9

87.3

Active cardmembers (millions)
Transaction volume (¥ billion)
Card shopping (¥ billion)
Cash advances (¥ billion)

88.4
84.8
86.1
71.9
(Year ended March 31)

CREDIT SERVICESEGMENT! Credit Card Shopping
Business! Cash Advance Business! Processing Agency
Business! Servicing Business

LEASE
SEGMENT! Lease Business! Rental Businessmillion new credit card applications, bringing the total
number of cardmembers to 24.75 million. Moreover,most of the new cardmembers applied for the Saison
American Express Card, which has a high usage
rate, increasing the number of active cardmembersby 130,000* year on year to 12.99 million.
In the credit card shopping business, transaction
volume grew 3.3%* year on year. The spread ofsmartphones has seen the use of credit cards to pay
communications service fees increase. There wasalso an increase in use at supermarkets, where salesof daily necessities such as food products andpower-saving products have expanded, and at
shopping centers catering to family needs. The
spread of Internet shopping also contributed to theoverall transaction volume.
In cash advances, the balance of cash advances
declined with the full enactment of the Money-Lending
Business Control and Regulation Law, which restricts
the total amount of loans per individual.
In the Lease Segment, we strengthened ties withexisting customers and stepped up sales efforts toacquire new partner merchants. In the rental business, we worked to expand LED lighting sales
channels in response to customers’ needs.
In the Finance Segment, we expanded profits
from our credit guarantee business, where we teamup with financial institutions to guarantee free-loans
for customers, and also from Flat 35 long-term,
fixed-rate mortgage loans.
As a result, operating revenues declined by
14.6% year on year to ¥244.0 billion.
In terms of costs, the cost of uncollectable receivables decreased 53.7% from the previous fiscal year
due to improved risk management. Improvements
included rigorous credit risk management, such as
strengthening the collection system, and a decreasein the number of new claims handled by lawyers andother proxies. Along with further progress in streamlining operations, ordinary income increased 14.3%
year on year to ¥38.5 billion.
Net income declined 26.3% to ¥9.4 billion. The
main factor in the decline was an extraordinary lossof ¥59.7 billion recorded for the business reorganization of Atrium Co., Ltd. On the positive side, webooked extraordinary income of ¥13.2 billion mainly
for a partial reversal of the allowance for losses froma natural disaster.
* Excluding the impact of the transfer of the affinity cardbusiness with Sogo & Seibu Co., Ltd. to Seven CS Card
Service Co., Ltd.

FINANCESEGMENTREAL ESTATE-RELATEDSEGMENT! Credit Guarantee Business! Loans collateralized byreal estate properties! Flat 35 (long-term, fixedrate mortgage loans)! Real Estate Liquidation
Business! Special Servicing Business! Real Estate Leasing
Business

ENTERTAINMENTSEGMENT! Amusement Business

CREDIT SAISONANNUAL REPORT 2012

07

STRATEGIC PRIORITIESBuilding the No. 1 System for Each Credit Card Function on a Consolidated BasisIn the credit card business, Credit Saison and its
group companies each make full use of their strategic advantages, aiming to lead the industry in termsof ability to acquire cardmembers, increase transaction volume, and grow their market shares.
In acquiring new cardmembers, we are strengthening our capabilities in growth areas such as
shopping center affiliations and communications fee
settlements. In tandem, we have established a new
Internet Branch as part of a full-scale effort to attract
new cardmembers in the Internet market, with theobjective of acquiring 3 million new cardmembers
per year. Among these, we will encourage acquisitionof premium cardmembers by expanding service
affiliations and cardmember acquisition channels
supported by customers of our high-status Saison
American Express Card. This will lead in turn tohigher profitability in the credit card business.
By fully commercializing our cards as products
and enhancing their associated services, we will

create a premium for them that will differentiate us
from our competition. For instance, the PARCO andWalmart cards will offer 5% discount services ataffiliated stores and eligibility for discount sales heldby affiliates and alliance partners. Meanwhile, we will
also introduce the Eikyufumetsu (“Never Expires”)
Wallet service, which allows users to pay for Internet
shopping using Eikyufumetsu Points that never expire,
along with other initiatives to increase the benefits
and convenience of credit cards and promote
greater use by cardmembers.
We have also been working to break the dominanceof the cash market by building a credit card-based
platform. In fiscal 2011, we launched NEO Money, aprepaid card for overseas travelers. Looking ahead,
we will continue to develop a cashless settlement
market by developing more new innovative products,
such as a virtual prepaid card for use on the Internet
and expanded service for settlements using mobile
phones and smartphones.

Provides entry to over 600
airport lounges in over 300
cities in over 100 countries
and regions worldwide

Priority Pass
Annual fees

21,000 yen*No annual fees for SAISON PLATINUM AMERICAN EXPRESS CARD
holders; annual fee of 10,500 yen (incl. tax) for SAISON GOLD AMERICAN
EXPRESS CARD holders. Usual annual fees: US$399(incl. tax)

Annual fees

Annual fees

Annual fees(incl. tax)(incl. tax)(incl. tax)

10,500 yen

08

CREDIT SAISONANNUAL REPORT 2012

3,150 yen

1,050 yenEfforts to Develop the Internet Business as a Core BusinessWe have positioned the Internet business as a strategic pillar because this field promises the highest
growth. We will strive to expand profits from thisbusiness while streamlining operations.
The number of Internet members reached 6.96
million as of March 31, 2012, a 25.0% year-on-yearincrease. This increase is attributable to efforts topromote simultaneous registration for Internet membership when customers sign up for a credit card. The
number of members registered to view Web-based
usage statements that enable them to easily checktheir usage statements at any time over the Internet
grew to 3.49 million as of March 31, 2012, up 49.8%
year on year.
Credit Saison operates Eikyufumetsu.com, an
online shopping mall where Internet members canreceive up to 20 times the number of Eikyufumetsu
Points when they use their cards to shop online. Fiveand a half years after opening, the website now hasover 500 tenants and 50,000 participating shops
and, in fiscal 2011, transaction volume grew to reachapproximately ¥48.0 billion, up 30% from the previous
year. We are promoting the ease with which points
can be accumulated at Eikyufumetsu.com, while atthe same time taking steps to make them easier touse by inaugurating the industry’s first service
enabling customers to use Eikyufumetsu Points topay for Internet shopping purchases. Through these
efforts we are working to make points more attractive to users. In fiscal 2012, we aim to make points
even more convenient, enable users to log in throughtheir browser toolbar, enhance the lineup of products
and services available, and increase exposure
through TV commercials and other mass media toboost recognition of the website. Through thesemeasures, we are targeting an increase in transaction volume.
We will also upgrade and enhance customer
information in an effort to capture revenues from a
new advertising and marketing business that utilizes
our customer base.
Going forward, we will continue to build systems
for generating revenues from various services on theInternet as we strengthen our initiatives in this new
business field. At the same time, we will increase
efficiency and profitability in this business to achieve
dramatic growth as we strive to establish the Internet
business as one of our core businesses.

Eikyufumetsu.com website

CREDIT SAISONANNUAL REPORT 201209

Further Progress in Development as a Non-bank Finance Company
Credit Saison’s medium-term management concept
is to become a non-bank finance company withmultiple revenue sources. Alongside the mainstay
credit card business, we are also growing our financebusiness, including lease and rental services, credit
guarantees, and Flat 35 mortgages, to develop
Credit Saison as a non-bank finance company.

Lease Business
Credit Saison has partnered with around 1,800
retailers offering lease service contracts throughout
Japan to develop a rental business providing vendor
leases of office equipment, such as photocopiers,
and communications equipment, such as telephones, to small and medium-sized enterprises. In
this business, we make full use of credit capabilities
and swift application review processes based on
individual screening know-how. In fiscal 2012, we will
deepen our relationships with retail sellers for major
equipment makers such as Canon, FujiXerox and
Ricoh, targeting transaction volume for the lease andrental business of ¥105.0 billion, an 8% year-on-yearincrease. In the LED lighting rental and medical

equipment fields, where we see rising demand, we
will take steps to develop new lease and rental products to meet market needs.

RENTAL TRANSACTIONS (e.g. LED Lighting)(Billions of yen)

60

50
40

20

22

0

2011

2.3 times
2012

(FY)

Credit Guarantee Business
Credit Saison partners with over 300 financial institutions to provide guarantee services for unsecured
free-loans to individuals. Using our strengths inindividual screening know-how and marketing, wehave aggressively promoted non-collateral loan
guarantee products that respond to the needs ofbusinesses. These products have been widely usedby regional financial institutions and customers. In
fiscal 2012, we will increase transaction volume with
our partners, as well as add approximately 45 additional partners, aiming to achieve a transaction
volume of ¥99.5 billion, up approximately 7% year on
year, and a guarantee balance of ¥171.3 billion, up
approximately 2% year on year.

GUARANTEE BALANCE AND
NUMBER OF ALLIED PARTNERS(Billions of yen)
200

(Allied partners)

172.0

Guarantee balance

157.8

165.5

600

171.3

150

450

100

218
50

0

265

308

350

300

150

Number of allied partners
2009

2010

2011

2012 (FY)0

Flat 35 Home Mortgage Loan
Our Flat 35 long-term, fixed-rate mortgage loanbusiness expanded strongly during fiscal 2011
thanks to special incentives we offered to credit card
users and a sense of trust and security instilled
through our credit card business experience. As of
March 31, 2012, the number of loans made since
the product was launched in March 2009 reached4,278, a transaction volume of ¥118.8 billion. From
April 2012, the system was revised so that Flat 35
loans may be used to finance only 90% of the purchase price of a property, down from 100% previously. We responded by launching “Flat 35 PLUS,” aCredit Saison home loan package that provides

10

CREDIT SAISONANNUAL REPORT 2012financing for the remaining 10% of the property value
not covered by Flat 35. Through these initiatives we
aim to increase the number of loans in fiscal 2012 by
2,000, for a ¥53.0 billion, or 13%, year-on-yearincrease in transaction volume.

Total Amount Paid fora Housing Loan
Flat 35

Flat 35
PLUS

90%

10%

Business Participation in Asian Markets
Credit Saison is working to create a business
scheme in the rapidly developing markets of Asia to
lay the foundations for sustainable growth in themedium to long term. From June 2011, we launcheda service counter for installment purchases as acontracted service at Yamada Denki’s Tianjin Store(China). As a next step, we aim to establish a local
corporation and acquire a business permit, enabling
us to develop our own loan business. Meanwhile, in
Vietnam, we set up a representative office in Hanoi
in June 2012, and we plan to acquire an affiliatedbusiness license to commercialize retail finance
operations with invested affiliate Petro Vietnam
Finance. In the future, we intend to develop installment
purchase and credit card businesses as well. We arealso examining options for utilizing a local subsidiaryin Singapore in order to realize the geographicaladvantages of this location.
Using the expertise we have developed in ouroperations in Japan and in collaboration with ourpartners, we will work to increase our brand value by
developing our business overseas.

Yamada Denki Tianjin Store

Hanoi City Street

To raise shareholder value, Credit Saison places highimportance on initiatives to reinforce our corporate
structure and to continuously expand our businesses.
In order to return profits to our shareholders, we willbuild the internal cash reserves that we need to
execute these plans, while following a policy of
paying appropriate, stable, and continuing dividends
to shareholders.

Return of Profits to Shareholders

CREDIT SAISONANNUAL REPORT 201211

Akagi Nature Park
Activities for Passing Nature’s Bounty on to
the Next Generation
In 2009, Credit Saisonbought and became theoperator of Akagi Nature
Park, an expansive forest
preserve of approximately 120 hectares on the southwest
foothills of Mount Akagi in Gunma Prefecture. The park is
a reclaimed forest that was once a man-made secondary
growth of haphazardly planted cedar seeds. The forest
was reclaimed over the course of more than 20 years,
taking pains to select flora for restoring the primal beautyof nature. Restoration took place under a policy of establishing a nurturing environment for flowers to grow, rather
than planting a garden. Today the park is home to avariety of insects, animals, wild flowers, trees, and rare
plants. It is a great place to encounter the beauty ofJapan’s four seasons firsthand.

The park operated for 156 days and attracted
about 27,000 visitors in the second year under Credit
Saison’s management in fiscal 2011. Through various
programs including guided tours of the grounds, natureobservation events, and eco-craft activities using the nuts
from trees, we offered park visitors the opportunity toappreciate the wonder of nature and the importance ofenvironmental conservation.
Credit Saison operates Akagi Nature Park in the hopeof providing children a chance to visit and enjoy thewonder of nature firsthand; an increasingly rare opportunity in today’s modern world. We hope that through preservation of the park, we can contribute in a small way topassing on the abundant natural treasures of Japan to
future generations. With the help of other companies who
support our efforts, we look to continue our patronage ofthis activity on a long-term basis.

Akagi Nature Park Profile

Plants and Animals Found in Akagi Nature Park

Area: Approximately 120 hectares, of which about 60
hectares is open to the public
Elevation: 600 to 700m

Animals: 1,810 species of insects, 77 species of birds and
15 species of mammals
Plants: 152 species of trees and 510 species of grasses

The following companies support
our activities to preserve nature at
Akagi Nature Park.
(As of August 31, 2012)

Donations to the Great East Japan Earthquake Recovery and a Report on the Final Donated Amount
Donations collected through Eikyufumetsu Points(“Saison Permanent Points” in English) or by credit card
payment, up until March 31, 2012, were donated to theJapan Red Cross Society and prefectural governments to
help people affected by the Great East Japan
Earthquake.
Credit Saison would like to thank all the cardmembers
who so kindly donated to this cause. We sincerely hopethat the areas affected by the disaster will recover assoon as possible.
Donated Amount¥637,500,000

Japanese Red Cross Society¥591,792,500

Aomori prefecture¥

3,656,000

Iwate prefecture¥

8,576,000

Miyagi prefecture¥ 12,654,000

Fukushima prefecture¥ 20,821,500* Total of donations from Eikyufumetsu Points, credit card
payments, and Credit Saison

12

CREDIT SAISONANNUAL REPORT 2012

CORPORATE SOCIAL RESPONSIBILITY (CSR)

Our vision is to become a leading-edge service company. Under a framework in which we regard our customers, business
partners, employees and society at large as our stakeholders, we aim to fulfill our social responsibilities, deemed vital to ourmanagement philosophy, by providing returns to our shareholders through activities that satisfy customers, based on mutual
respect for our interests and those of our business partners, and instill shared ideals and goals in our employees. We will alsobuild a reputation for reliability by adapting flexibly to a changing business environment, and ensuring regulatory compliancein all business activities.

The Credit Saison Approach to CSR
Our concept of CSR is not limited simply to regulatory complianceIndustry Association. This qualification is now basically compulsory

and the creation of profit. We believe that CSR also meansfor employees who handle personal information. Security measures

responding to the needs of citizens, communities and society, andhave also been strengthened, with the use of leased lines, limited

developing business methods and activities that meet and surpass

access authorization, encryption, and restricted access to data

these needs. This concept guides our CSR activities, which areterminals.

based on three perspectives:

In May 2006, Credit Saison was authorized to use the Privacy
Mark, a certification given to businesses with appropriate systems(1) Activities that are essential to our corporate survival and thefor handling personal information. Since then, we have continued

interests of our customers, employees, shareholders andour efforts to maintain and enhance the protection level of personal

stakeholders

information.

Our corporate mission is to conduct our business activities in asound, appropriate and timely manner. Through continual effort, we! Preventing excessive indebtedness

will improve management transparency and strengthen the systems

We recognize the risks of credit cards and strive to prevent exces-used to monitor the achievement of management targets.

sive borrowing by monitoring borrowers’ credit status after loans
have been issued. Assistance for customers includes changes to(2) Activities that contribute to society and the fulfillment of ourcontract terms and repayment amounts.

responsibilities through our core business activities in theareas of credit cards and financing
In addition to being convenient, credit cards drive economic activity(3) Activities that contribute to society in ways that are uniqueto Credit Saisonas extremely effective tools for settlements. Our priority is to prevent

Tens of thousands of people, including our employees and theirexcessive use leading to heavy indebtedness, while ensuring thatfamilies, depend on the Credit Saison Group. We recognize ourcredit cards help to enrich the lives of our customers and contributeresponsibilities as an employer and work constructively to resolve

to economic development. As a finance company, we are entrusted

any employment issues.

with personal credit information. We carefully manage this informa-

As a distribution sector credit card company, we aim to use ourtion in accordance with the Private Information Protection Law, andbusiness activities to provide services exceeding customer expecta-

use it to prevent excessive indebtedness through the prudent provi-tions in attention to detail and contribution to society.

sion of credit and appropriate monitoring after credit is provided.
! Resolving employment issues! Appropriate management of personal information

Credit Saison aims to provide amenable working environments for

We manage personal information in accordance with laws, regula-

all employees, regardless of age or gender. We have made several

tions and other requirements, including guidelines and industry

workplace improvements in response to changes caused byrules. We have established internal corporate rules, and give ourJapan’s falling birthrate and aging population. These include sys-

employees training in ethics. Our efforts to raise awareness of infor-

tems to help enable female employees to continue working after

mation management include the use of the “private information

marriage and childbirth, as well as more flexibility for employees

manager” qualification established by the Japan Consumer Credit

caring for older relatives. We also actively employ retirees.

CREDIT SAISONANNUAL REPORT 201213

CORPORATE GOVERNANCE

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

Corporate Governance System
The Board of Directors consists of 15 directors, including 1 outside
director. It decides important management matters and supervises the
directors’ performance. The Company aims to maintain and improve theefficiency of management by having the outside director attend Board of
Directors meetings and other important meetings and offer advice andproposals to ensure that decision making in management is appropriate
and correct.
To ensure that business is conducted properly and soundly and tostrengthen corporate governance, the Board has developed effective
internal control systems and established and maintained a framework toensure Group-wide compliance with laws, regulations and the Articles ofIncorporation. To ensure that directors perform their duties appropriately, the Board operates in accordance with the Board of Directors
Regulations. Moreover, each director performs his or her duties in accordance with the Corporate Law, and properly manages the divisions
under his or her control in accordance with the Organizational and
Segregation of Duties Regulations to ensure that business activities are
executed appropriately and efficiently.
Directors serve a one-year term of office. This policy allows us tobuild a flexible management structure capable of adapting to a changing business environment, while also requiring management to earn theconfidence of shareholders every year.
The Company has introduced a statutory auditor system. The Boardof Corporate Auditors consists of four statutory auditors, three being
independent executives from outside the company who are not likely tohave a conflict of interest with general shareholders. The statutory
auditors conduct rigorous audits by attending Board of Directors

meetings and other important meetings, reading important resolution
documents, and examining the conduct of business and the state of theCompany’s assets.
The Board of Corporate Auditors also audits the effectiveness andfunctioning of internal control systems and strives to ensure the early
detection of problems and improvement of accuracy.
To assist the statutory auditors in their duties, the Company has
established the Auditors’ Secretariat, which retains independence fromthe operating divisions (members serve concurrently in the Internal
Control Division).
The Company plans and implements compliance measures including
education and awareness-raising activities, and engages in risk management. To that end, the Company has established the ComplianceDepartment as a dedicated department to ensure the observance oflaws, regulations and corporate ethics; the Corporate Risk Management
Office of the Corporate Planning Department as the dedicated risk
management department; and the Compliance Committee and Risk
Management Committee as dedicated organizations to ensurecompliance and risk management.
The Internal Audit Office audits compliance, risk management,internal control systems and corporate governance in the organizational
operations and business activities of Credit Saison and its affiliates, andmakes evaluations and recommendations based on the results.
We will continue to expand information sharing among Group
Companies and strengthen our Group management systems, and study
approaches to management that meet the needs of the Credit Saison
Group and contribute to the improvement of consolidated value.

Corporate Governance StructureManagement Monitoring System

General Shareholders’ Meeting
Election

Auditors

Board of Corporate Monitoring/
Auditors
Inspection(Including 3 outside auditors)

Board of Directors(Including 1 outside director)
Election/
Delegation/
Supervision

Cooperation
Guidance

Important Committees(Risk Management Committee,
Compliance Committee,
Disclosure Committee, etc.)

Audit
Delegation ofManagement
Authority

Departments
Monitoring

14

CREDIT SAISONANNUAL REPORT 2012

Corporate Planning Department/
Compliance Department/
Corporate Risk Management Office

Guarantee of effectivenessInternal Audit Office

Representative
Directors

Timely disclosure and provision of materials

Management
Function

Election

Election

Remuneration for Directors and Statutory Auditors
To clarify their responsibility for business execution and results and increase
the independence of statutory auditors, the Company has eliminatedthe previous retirement bonus system and unified compensation for the
performance of duties, including directors’ bonuses, and worked toincrease awareness of the importance of business performance.
Remuneration, etc., paid to directors and statutory auditors in fiscal
2011 was as follows:<Details of Remuneration for Directors and Statutory Auditors>
Position

Directors(Excluding
outside directors)
Statutory auditors(Excluding outside
statutory auditors)
Outside executives

Total
remuneration
amount(Millions of yen)

Total amount of
remuneration by type(Millions of yen)

Numberof persons

Basicremuneration

Bonuses

496

342

153

15

6
42

6
42

–
–

1
6

Notes 1. The total amount of remuneration paid to directors does not include the employee
salary amount in the case of employees who serve concurrently as directors.
2. As of March 31, 2012, the Company had 14 directors and 4 statutory auditors.

<Remuneration for Independent Auditors>
Remuneration based on duties performed pursuant to Article 2,
Paragraph 1 of the Certified Public Accountants Law:
¥109 million

Overview of Internal Control Systems
As per the Corporate Law, the Board of Directors has set basic policies
for directors to build a system that ensures adequacy and efficiency ofthe company’s business and compliance with laws, regulations and the
Articles of Incorporation.
These policies are based on the philosophy to “always realize profitable growth and maximize the satisfaction of customers and otherstakeholders by pursuing innovative ideas and strategies.”
With regard to internal control over financial reporting, (known as“J-SOX”), our efforts centered around the Corporate Risk Management
Office, through which we coordinate the development of internal control
systems by the Company and companies included in the consolidation.
Independent monitoring is carried out by specialist staff from the Internal
Audit Office. On this basis, we are able to report to the authorities that
our internal control systems are working effectively.
In building our internal control systems, we aim to build highly efficient and effective systems that will help to maximize the benefits for our
stakeholders by maintaining appropriate business processes while
increasing business results and strengthening earnings.

Rigorous Implementation and Enhancementof Compliance
Based on this reinforcement of corporate governance and internal
controls, the Compliance Committee and Compliance Department are
taking the lead in ensuring compliance with laws and regulations andfairness and morality in business activities.
A Managing Director chairs the Compliance Committee, which
reports to the Board of Directors. To discuss compliance-related
matters, the Committee convenes several times a year.
To ensure familiarity and observance with Company rules, regulations
and ethics, we have published these standards and guidelines in Our
Compliance, a pamphlet distributed to regular and contract employees.
The Company is working to prevent misconduct and scandals by
publicizing its compliance consultation desk. The consultation desk strives

to create a user-friendly environment by maintaining systems inside andoutside the Company for accepting inquiries, including dedicatedaddresses on the Company intranet and the Internet. When a report isreceived, the Compliance Department cooperates closely with an attorney and aims to quickly resolve the matter, reports to the Compliance
Committee, and then takes action to prevent reoccurrence.
In addition, the Compliance Department invites outside lecturers to
conduct compliance training for executives and training for senior management including division managers. The Company appoints compliance officers and compliance coordinators in each division, and thedivisions take the initiative in conducting compliance training in cooperation with the Compliance Department.
In addition, our compliance officers and compliance coordinators
also play a role in controlling the Company’s administrative risks.

Security and Reliability of Information Systems
As the use of IT grows, maintaining the security and stability of information systems is becoming increasingly important to ensure that
customers can rely on the Company’s credit cards.
Here, we have implemented countermeasures against system disruptions, which may be caused by a wide variety of factors, including
natural disasters, accidents or computer viruses, and higher systemefficiency was achieved by centralizing clerical work. Credit Saison willcontinue efforts to keep its systems secure, reliable and efficient.

Risk Management
To prevent and appropriately respond to risk, the Company has
formulated Risk Management Regulations and Regulations Concerning
Management of Risk of Loss and, through the Risk Management
Committee and the Corporate Risk Management Office of the Corporate
Planning Department, works to prevent risks from materializing andminimize the effect on the Company when risks become apparent. To
this end, the Company conducts periodic internal education and training
for people working with the Risk Management Regulations, Regulations
Concerning Management of Risk of Loss and Crisis Management
Regulations, and the Board of Directors periodically examines theregulations and issues revisions and improvements. In this way, theCompany strives to maintain its risk management systems.
We strive to ensure the stability of our management base in theevent of a large-scale disaster or other emergency. To this end, we have
prepared countermeasures to ensure the continuity of critical operations
and reduce the risk of operational interruption as much as possible. We
maintain control over factors within the Credit Saison Group that havethe potential to create serious risks by monitoring the operations ofGroup companies under the Affiliated Company Regulations, which areadministered primarily by the Group Strategy Office of the Corporate
Planning Department. Our risk management systems are further enhanced
through information-sharing with the management organizations ofGroup companies.
Moreover, in the event that a risk occurs, the Company works to
respond swiftly based on the Crisis Management Regulations, mainly
administered through the Crisis Management Committee.

Proactive Disclosure of Information
The Company proactively discloses financial information throughmanagement reports, investment conferences, IR meetings and otherevents, and strives to ensure highly transparent management by
posting financial result summaries, IR activities and other information
on its website.
URL for corporate and IR information:
http://corporate.saisoncard.co.jp/en

CREDIT SAISONANNUAL REPORT 201215

BOARD OF DIRECTORS AND AUDITORS(As of June 30, 2012)

16

Hiroshi Rinno

Teruyuki Maekawa

Naoki Takahashi

President and CEO

Executive Vice President

Senior Managing Director

Head of the Audit Office and Credit Card
Division

Head of the Public Relations Office,General Affairs Dept., Human Resources
Dept. and System Planning Dept.

Head of the Corporate Planning Dept.,
Strategic Investment Dept., Credit Division
and Internet Business Division
General Manager, Credit Division

Haruhisa Kaneko

Takayoshi Yamaji

Hiroshi Yamamoto

Masahiro Yamashita Junji Kakusho

Kazuhiro Hirase

Managing Director

Managing Director

Managing Director

Managing Director

Director

Director

Head of the Customer
Satisfaction Promotion Officeand Overseas Business Dept.

Head of the Sales
Development Division

Head of the Compliance Dept.
General Manager, Credit Cardand Finance Division
Division and Alliance
General Manager, Finance Division Development Dept.

General Manager, Business
Planning Dept. and Internet
Business Division

T&E/Service Business Dept.
and Leasing & Rental Business
Dept.

Sadamu Shimizu

Akihiro Matsuda

Teruhisa Aoyama

Yoshihisa Yamamoto Tatsunari Okamoto

Yasuhisa Ueno

Director

Director

Director

Director

Director

Director (External)

General Manager, Sales
Development Division

Web Branch and Card Finance
Dept.

Head of the Treasury &Account Dept.

System Planning Dept.

Retail Business Dept. No. 1,
Retail Business Dept. No. 2 andFinancial & Corporate
Business Dept.

Masaru Sakurai

Yoshitaka Murakami Yoshiro Yamamoto

Atsushi Toki

Standing Auditor(External)

Standing Auditor(External)

Auditor (External)

CREDIT SAISONANNUAL REPORT 2012

Auditor

FINANCIAL SECTION

MANAGEMENT’S DISCUSSION AND ANALYSIS

I. THE CREDIT SAISON GROUP

In fiscal 2011, the Japanese economy was heavily impacted by theGreat East Japan Earthquake. However, there were also signs of a
gradual revival in corporate production activity and consumer
spending on the back of recovery and restoration efforts. Despite
these encouraging signs, the economic outlook remains clouded byconcerns of a slowdown in economies overseas given the sovereign
debt crisis in Europe and the yen’s protracted strength.
The non-bank industry continued to face a severe businessenvironment, with full implementation of the Money-Lending BusinessControl and Regulation Law weighing down operating revenues
from cash advances on credit cards, making it necessary to reformbusiness models.

ratio, and by increasing the benefits of credit card use for cardholders. For the latter, the Company strengthened its service allianceswith prominent companies such as Seven & i Holdings Co., Ltd.
and Yahoo Japan Corporation by linking IDs and points, among
other measures. The Company also focused on strengthening
earnings power by expanding fee-based businesses throughimprovements to the functionality of Internet services. The Company promoted use of the Internet to achieve timely collection andbuild up of the shopping-related revolving credit balance, expanded
the number of Internet members and launched a service enablinguse of Eikyufumetsu Points (“Saison Permanent Points” in English)
for making Internet shopping payments. Nevertheless, operating
revenues from cash advances decline due to total lending restrictions following the revision to the Money-Lending Business Control
and Regulation Law. Furthermore, the transfer of the affinity card
issuance business operated with Sogo & Seibu Co., Ltd. to Seven
CS Card Service Co., Ltd. resulted in year-on-year declines in thenumber of new cardmembers acquired, the shopping transaction
volume, the shopping-related revolving credit balance, and the card
cash advance balance. As a result, the segment saw lower operating revenues year on year.
In the Lease Business, operating revenues rose year on year as aresult of efforts to strengthen ties with existing customers and toacquire new partner merchants. In the Finance Business, operating
revenues increased, mainly through growth in the balance of credit
guarantees in the credit guarantee business. In the Real Estaterelated Business, operating revenues decreased as consolidated
subsidiary Atrium recorded a loss on reappraisal of its assets. In theEntertainment Business, suspension of operations and reduced
operating hours at stores due to the Great East Japan Earthquake
contributed to lower operating revenues year on year.

2. Operating Revenues

3. Operating Expenses and Operating Income

In fiscal 2011, operating revenues declined by 14.6% year on yearto ¥244,009 million. In the mainstay Credit Service Business, theCompany worked to increase shopping transaction volume bystepping up efforts to acquire new members for premium cards,
such as the Saison American Express® Card, that have a high active

During fiscal 2011, the Credit Saison Group saw operating
expenses decline 17.9% year on year to ¥212,143 million. The costof uncollectible receivables declined as the Group continued to
improve the quality of its receivables by strengthening the management of receivables, and the number of receivables handled by third

The Credit Saison Group has five business segments: Credit Service
Business, Lease Business, Finance Business, Real Estate-related
Business and Entertainment Business. The Credit Service Businesssegment is the Credit Saison Group’s most important segment, andgenerated approximately 80% of total consolidated operating
revenues in fiscal 2011.
The Credit Saison Group’s operating revenues are generated
primarily in the mainstay Credit Service Business. These consist offees from affiliated stores generated via credit cards and interestand fees from customers generated via revolving credit, cash
advances, specialty loans and other transactions.
Operating expenses mainly comprise advertising expenses, point
redemption costs, costs of uncollectible receivables, personnel
expenses, fees and financial costs.

II. ANALYSIS OF INCOME STATEMENTS
1. Market Environment

BREAKDOWN OF SELLING, GENERAL AND ADMINISTRATIVE (SG&A) EXPENSES(Millions of yen)

Cost of uncollectible receivables
Included in the above:
Allowance for losses on accounts receivable
Losses on accounts receivable
Provision for losses on interest repayment
Allowance for losses on guarantees
SG&A expenses excluding cost of uncollectible receivables
Included in the above:
Advertising expenses
Provision for point program
Personnel expenses
Fees paid
Total SG&A expenses

2012

2011

% change

30,672

66,217(53.7)

20,736
2
6,974
2,958
161,512

44,115
5
18,445
3,651
169,540(53.0)(53.2)(62.2)(19.0)(4.7)

13,58011,71940,68649,197
192,184

14,557
13,72942,76747,564
235,758(6.7)(14.6)(4.9)
3.4(18.5)(Years ended March 31)

CREDIT SAISONANNUAL REPORT 201217

IV. REVIEW OF OPERATIONS BY SEGMENT
1. Credit Service Business Segment

parties such as attorneys and certified judicial scriveners continued
to fall. Moreover, the Company has achieved a leaner cost structure
by making efforts to control various costs through improvements tooperational efficiency, and by increasing the number of Internet
members registering for Web-based usage statements, bringing adecrease in communications costs. Web-based usage statementsallow users to check their usage statements online at any time,
and the Company has been promoting them as being both
environmentally considerate and convenient.

This segment consists of the credit card shopping business,
servicing (loan collection agency) business and other businesses.
Segment operating revenues for fiscal 2011 declined by 13.9% year
on year to ¥198,875 million, while segment profit increased by
70.0% to ¥27,161 million.

1) Credit Card Shopping BusinessIn the Credit Service Business Segment, the areas in which people
are using credit cards continue to expand each year. There is an
ongoing shift in the mainstream from cash to cashless settlement as
people increasingly use credit cards for spending related to everyday
life, such as settlements of small amounts, public utility bills, hospital and medical clinic bills, as well as for the growing area of online
shopping. On the other hand, the credit card sector continues toface a difficult business environment despite two years having
passed since the introduction of total lending restrictions following
the revision of the Money-Lending Business Control and Regulation
Law which caused a contraction in the cash advance market.
In this business climate, Credit Saison worked to reinforce its
operating revenue base by expanding cashless settlement services
through initiatives to break the dominance of the cash market,
mainly through credit cards and efforts to expand the Internet business and fee-based businesses. At the same time, the Groupfocused on improving operational efficiency, mainly by strengthening
measures to deal with credit risks and revising the cost structure
based on a cost-benefit analysis.
However, full enforcement of the Money-Lending Business Control
and Regulation Law brought restrictions on total lending into effectthat greatly reduced cash advance revenues. Moreover, the Company transferred the affinity card issuance business operated with
Sogo & Seibu to Seven CS Card Service. As a result of these factors, the number of new cards issued for fiscal 2011 was 1.96
million, and the total number of cardmembers as of March 31, 2012
was down 12.7% from the previous fiscal year-end at 24.75 million.
The card shopping transaction volume was ¥3,402,400 million,
down 13.9% year on year, and the shopping-related revolving credit
balance was ¥262,100 million, down 12.6%. The number of active
card members for the year was 12.99 million, down 11.6% from theprevious year, and cash advances on cards was ¥321,900 million,
down 28.1%.

4. Non-operating Revenues and Expenses andNet Income
Total non-operating revenues increased 191.0% year on year to¥20,219 million. The main factors behind the change in non-operating
revenues were a gain on sales of investments in subsidiaries andaffiliates of ¥7,140 million, following the transfer of 51% of theshares of Seven CS Card Service to Seven Financial Service Co.,
Ltd., and a gain on reversal of allowance for losses from a natural
disaster of ¥5,492 million after reversing part of the provision tocover losses resulting from the Great East Japan Earthquake. Total
non-operating expenses increased 388.0% from the previous fiscal
year to ¥62,799 million. The main factors in the change in nonoperating expenses were a loss on business restructuring of subsidiaries of ¥59,796 million, due to a valuation loss on inventory
assets of real estate holdings and a provision of allowance for
doubtful accounts following the business restructuring of Atrium,
and a loss on revision of retirement benefit plan of ¥1,658 million.
As a result of the above, the Credit Saison Group posted net
income of ¥9,454 million.

III. POLICY FOR RETURN TO SHAREHOLDERS
To raise shareholder value, Credit Saison places high importance on
initiatives to reinforce our corporate structure and to continuously
expand our businesses. Our fundamental policy for shareholder
returns calls for steady enlargement of internal reserves to realize
the initiatives described above, while delivering appropriate, stable
and continuous dividend payments to our shareholders.

1. Dividend per Share
Based on its dividend policy, Credit Saison declared annual dividendsof ¥30 per share for fiscal 2011.

OPERATING REVENUES AND OPERATING INCOME BY SEGMENT(Millions of yen)
Operating Revenues

Credit Service
Lease
Finance
Real Estate-related
Entertainment
Total
Eliminations or corporate
Consolidated

Operating Income (Loss)

2012

2011

% growth

2012

2011

% growth

198,875
14,67015,715
3,059
12,999245,318(1,309)244,009230,873
14,451
15,58012,322
13,940287,166(1,453)285,713(13.9)
1.5
0.9(75.2)(6.8)(14.6)–(14.6)

27,161
5,099
7,781(10,174)
2,066
31,933(67)
31,866

15,973
5,038
6,796(2,182)
1,737
27,362
15
27,377

70.0
1.2
14.5
–
18.9
16.7
–
16.4

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

18

CREDIT SAISONANNUAL REPORT 2012

(Years ended March 31)

■ Key Initiatives in the Credit Card Shopping Business

During Fiscal 2011
Enhancing Cashless Settlement Services Through Credit Cards
One of Credit Saison’s priority strategies is to focus on premium
cards offering prospects for high utilization and high spending pertransaction. Accordingly, we continued to strengthen cardmember
enrollment activities for the Saison American Express® Card series,
which features a lineup of four high-status premium cards.
One of these enrollment activities involves forming alliances withvarious kinds of companies involved in business, travel or services.
By offering cardmembers service-based perks, Credit Saison andits alliance partners can effectively encourage our respective customers to use each company’s services. This business model has
helped us to develop more American Express cardmembers fromamong the customer bases of our alliance partners and promoteincreased use of the cards.
To enlarge the shopping-related revolving credit balance, wehave focused on increasing user convenience for Internet memberswith a service that makes requests for timely revolving credit payments using the Internet and a service for subsequent online conversion of one-time payments to revolving payments.
In other initiatives, we have been working to expand the areas inwhich credit cards are used. For example, in August 2011, westarted issuing NEO Money, a prepaid card for use outside of Japanby tourists, business travelers, exchange students and others. In thesame month, we formed an alliance with China UnionPay, which isan international brand in China that operates an interbank settlement
network. Based on this alliance, we teamed up with U.C. Card Co.,
Ltd. to begin recruiting affiliated stores for the issuance CUP Card,
which is expected to see growth in total settlement volume.
By adding new settlement services such as prepaid services
to our existing credit card offerings, we will establish a source ofrevenue from the cashless settlement market going forward.
Strengthening Internet and Fee-based Businesses
The total number of Internet members reached 6.96 million as ofMarch 31, 2012, a 25.0% year-on-year increase. The number ofmembers registered to view Web-based usage statements, whichenable users to easily check their usage statements at any timeover the Internet, was 3.49 million, an increase of 49.8% year
on year.
Credit Saison operates Eikyufumetsu.com, a shopping points
website, making use of its approximate 25 million-member baseand its Eikyufumetsu Points (“Saison Permanent Points” in English)
program of points that never expire. Approximately five and a halfyears after launching, the website has over 500 tenants and 50,000
participating shops. Monthly trading on the website has reachedapproximately ¥4 billion, with the highest single day of trading
recorded at about ¥240 million.
Looking ahead, we plan to improve the convenience of ourInternet services even more, and expand revenues from this sector
by launching a service allowing the use of Eikyufumetsu Points topay for online shopping purchases. Eikyufumetsu Points werelaunched by Eikyufumetsu.com together with Seven Net ShoppingCo., Ltd. and Groupon Japan, Inc. in November 2011.

We will also upgrade and enhance customer information in aneffort to capture revenues from a new advertising and marketingbusiness that utilizes our customer base.
Going forward, we remain determined to reinforce our initiatives
in new Internet businesses. We will build systems for generating
revenue from a variety of Internet-based services while continuing to
use the Internet to reduce costs.
Credit Risk Management
Credit Saison continues to accumulate healthy receivables bytaking steps to recover overdue receivables swiftly and continuing
to ensure payment of receivables through counseling. Anotherapproach we have used is to make extra requests for contract
payments. We carry out inspections that help to control risks duringinitial and intermediate credit checks. Through these initiatives weare expanding our stock of good quality receivables.
We will continue to focus on improving the quality of receivables
by establishing measures to limit our risk exposure. Specifically, we
will strengthen credit management and our servicing system. We
will maintain thorough credit control that balances returns and risks.
■ New Developments and Future Initiatives

On September 10, 2010, Credit Saison made a comprehensive
agreement with SEVEN & I FINANCIAL GROUP CO., LTD. (currently
Seven Financial Service Co., Ltd.) and Sogo & Seibu. In accordancewith this agreement, Credit Saison spun off its affinity card issuancebusiness operated with Sogo & Seibu as of April 1, 2011 throughan absorption-type company split, and transferred the business toSeven CS Card Service.
This move will enable the Group to offer a range of attractive
Seven & i Group services to customers in addition to the current
affinity card services. Since July 2011, customers who use theirpreregistered Saison Card or UC Card at Seven Eleven convenience
stores or Ito Yokado department stores and supermarkets throughout Japan have been eligible to automatically receive Nanaco Points
as well as ordinary Eikyufumetsu Points.
Furthermore, as a result of a merger with Seven Card Service
Co., Ltd., the card business will be expanded to cover the entire
Seven & i Group. The expansion in business size should enable
Credit Saison to formulate medium to long-term growth strategies
not only for expanding the earnings of the joint venture, but also forincreasing Credit Saison’s processing fees, referring customers to
the Seven & i Group, and developing new services.
In another initiative, in November 2011, Credit Saison concluded
a business alliance with Yahoo Japan Corporation with the goal ofincreasing convenience for customers of both companies. Bothcompanies have strong foundations in online and physical shops.
By developing new services that make full use of each company’s
strengths, Credit Saison and Yahoo Japan plan to propose significant
added value to their customers.
The two companies plan to enable automatic conversion of
Eikyufumetsu Points into Yahoo! Points by linking their respective
IDs. This will attract membership to Yahoo! Japan Shopping from
Eikyufumetsu.com and should lead to larger transaction volumes at
Eikyufumetsu.com. It should also enable Credit Saison affiliatedmerchants to transmit discount and special offer information throughYahoo! Loco, Japan’s largest location-based service Website,

CREDIT SAISONANNUAL REPORT 201219

among other benefits. This development of customer referral services
between online shops and their physical counterparts is intended toencourage greater activity among consumers.

2) Servicing (Loan Collection Agency) Business
JPN Holdings Co., Ltd. is mainly involved in contract-based servicing of small unsecured loans. While the processing agency business,
which is the core of the servicing business, JPN Holdings has been
impacted by revised business conditions among business partners,
but has seen revenues increase year on year. The main factors
behind the increase are enhanced sales activities in the personnel
outsourcing and telemarketing businesses, and the additional contribution from the net sales of private-sector childcare center operator KINDER NURSERY Corporation (currently KINDER NURSERY
Co., Ltd.), which was consolidated in November 2010.

2. Lease Business Segment
According to statistics issued by the Japan Leasing Association,
overall lease contract volume for the entire leasing industry in fiscal
2011 was ¥4,599.7 billion, up 1% year on year.
Credit Saison recorded a lease contract volume of ¥96,852
million, up 4.5% year on year. Operating revenues rose 1.5% year
on year to ¥14,670 million and segment profit climbed 1.2% to¥5,099 million. These increases were mainly due to efforts tostrengthen ties with existing customers and to increase the numberof partner sales agencies.
In the rental business, the wave of replacements of televisions formodels compatible with terrestrial digital broadcasts ran its course.
We therefore expanded sales channels for energy-saving electrical
products as well as for B2B2C and B2B2B rental services in order
to meet customers’ needs going forward.

3. Finance Business Segment
This segment consists of the credit guarantee business and otherfinance-related business. In the credit guarantee business, the amountof guarantees executed increased due to efforts to strengthen ties
with affiliated financial institutions. We also worked to improve thequality of receivables. In other finance-related business, the longterm, fixed-interest-rate mortgage loan, Flat 35, (the receivable ofwhich is acquired and securitized by the Japan Housing FinanceAgency) contributed to segment operating revenues.
As a result, segment operating revenues for fiscal 2011 increased
0.9% year on year to ¥15,715 million, and segment profit increased
14.5% to ¥7,781 million.

1) Credit Guarantee Business
Credit Saison focused on obtaining high-quality transactions byutilizing its close business relationships with affiliated financial institutions in both sales and management, particularly in the guarantee
business for unsecured free loans to individual customers.
In fiscal 2011, we endeavored to increase our transaction volume
by entering into a total of 43 new alliances with regional financial
institutions, expanding the network to a total of 308 financial institutions, a net increase of 43 institutions from fiscal 2011. The grossguarantee balance before recording an allowance for losses on
guarantees increased by 7.2% from the previous fiscal year to¥168,600 million.

20

CREDIT SAISONANNUAL REPORT 20122) Other Finance-Related Business
Credit Saison engages in financing collateralized by real estate
properties with individuals and corporations. Since March 2009, we
have handled Flat 35 mortgage loans. The number of loans executedin fiscal 2011 fell 9.5% year on year to 1,771 loans, with a totalbalance of ¥49,600 million, down 10.3%. The main factor in thisdecrease was the impact of a reduction in the size of preferential
interest rates offered under a scheme to support purchases ofhigh-quality houses (Flat 35S scheme). However, the special treatment given to cardmembers and the trust and reliability built up
through the credit card business have been highly evaluated by themarket. We have accumulated 4,278 loans with a total balance of¥118,800 million in this business since it began.
The total balance of receivables in the other finance-related
business as of March 31, 2012, including for the Flat 35 Tsunagi(Bridge) Loans that the Company started handling in July 2010,
declined 13.9% year on year to ¥68,700 million.

4. Real Estate-related Business Segment
The Real Estate Related Business segment consists of the realestate business, the real estate leasing business and other businesses. In fiscal 2011, consolidated subsidiary Atrium recorded aloss on reappraisal of its assets. As a result, segment operating
revenues decreased 75.2% year on year to ¥3,059 million, leading
Credit Saison to record a segment loss of ¥10,174 million.

5. Entertainment Business Segment
This segment consists of the amusement business and other operations. Amid the lingering impact of tightened regulations on gamemachines, Credit Saison worked to create sound, safe and enjoyable facilities that have the support of their communities. Operating
revenues for the segment declined 6.7% year on year to ¥12,999
million, primarily because of the impact of reduced operating hours
and suspension of operations at some stores due to the Great East
Japan Earthquake. Nevertheless, as a result of efforts to streamline
operations, segment profit increased by 18.9% to ¥2,066 million.

V. LIQUIDITY AND FINANCIAL POSITION
1. Fund Procurement and Liquidity Management
Fund Procurement
The Credit Saison Group emphasizes stability and low cost in the
procurement of funds, and is actively working to diversify fund procurement methods. Key procurement methods include negotiatingtransactions with banks, related financial institutions, life insurancecompanies and non-life insurance companies. In addition, theGroup procures funds indirectly through syndicated loans and committed lines of credit, and directly by issuing commercial paper andby securitizing receivables. Consolidated interest-bearing debt(including debt incurred through off-balance sheet securitizations in
the amount of ¥20,000 million and lease obligations of ¥4,900
million) totaled ¥1,409,800 million as of March 31, 2012. Of thistotal, loans accounted for 74.2%, bonds for 15.7%, commercial
paper for 2.3%, and asset-backed securities for 7.8%.
With regard to indirect fund procurement, in an effort to mitigate
refinance risks and reduce costs, Credit Saison is working tostrengthen its relations with existing lenders. We also aim todiversify sources of procurement by examining new counterparties,
targeting financial institutions with which we can expect long-term
stable transactions. In terms of direct fund procurement, in an effort
to mitigate liquidity risk and reduce costs, Credit Saison not only
utilizes corporate bonds and commercial paper, but is also setting
up new fund procurement schemes, including securitization ofreceivables that will be unaffected by the creditworthiness of
Credit Saison.
To support smooth fund procurement from the capital market,
Credit Saison has obtained credit ratings for the bonds it issues. We
have been given an A+ rating for domestic unsecured corporate
bonds, and an a-1 rating for domestic commercial paper by Rating
and Investment Information, Inc. (R&I).

Liquidity Management
Of the total assets held by the Credit Saison Group, installment
accounts receivable centered on the Credit Service Businessaccounted for 64.0%. Their annual average turnover was more thanfour times, helping Credit Saison maintain a high level of liquidity.

2. Cash Flows
Cash Flows from Operating Activities
Net cash provided by operating activities amounted to ¥25,611
million, compared to ¥152,063 million in the previous fiscal year.
The main factor was the recording of a loss on business restructuring of subsidiaries of ¥59,796 million. On the other hand, there
was an increase in trade receivables of ¥47,104 million.

Cash Flows from Investing Activities
Net cash provided by investing activities was ¥123,138 million,
compared with net cash used in investing activities of ¥35,269
million in the previous fiscal year.
The main factor increasing cash was proceeds of ¥135,794
million from transferring the affinity card issuance business operated
with Sogo & Seibu to Seven CS Card Service.

Cash Flows from Financing Activities
Net cash used in financing activities amounted to ¥161,237 million,
compared with ¥117,420 million in the previous fiscal year.
The main use of cash was repayments of long-term debt of¥157,519 million.
As a result of the above, cash and cash equivalents at the end ofyear decreased by ¥12,526 million from the previous fiscal year-end
to ¥60,001 million.

3. Assets, Liabilities and Equity
Total assets at the end of fiscal 2011 had decreased by ¥75,431
million from a year earlier to ¥2,155,906 million. The decline inassets can be primarily attributed to a decline in accounts
receivable—installment of ¥111,372 million due to the company
spinoff that took effect on April 1, 2011, and other factors.
Total current liabilities at the end of fiscal 2011 had increased by¥27,048 million from a year earlier to ¥824,714 million. Total longterm liabilities had decreased by ¥110,200 million to ¥975,465
million. These changes included a ¥154,630 million reduction ininterest-bearing debt due to the redemption of commercial paperand corporate bonds.
Total equity at the end of fiscal 2011 had increased by ¥7,811
million from the previous fiscal year-end to ¥355,727 million. This
increase included an increase of ¥3,906 million in retained earnings.

VI. CREDIT RISKSOf total receivables (i.e. the balance calculated by adding up thebalance of installment accounts receivable and the balance oflease investment assets with the balance of contingent liabilities),
receivables overdue by more than 90 days amounted to ¥120,422
million, a decrease of 29.1% year on year. The balance of theallowance for uncollectible receivables (current assets) as of March
31, 2012 was ¥95,172 million, a 19.8% year-on-year decrease.
Consequently, the ratio of the allowance to the receivables overdue
for more than 90 days increased to 200.5% from 175.8% at theprevious fiscal year-end.

COMPOSITION OF
INTEREST-BEARING DEBTTOTAL EQUITY AND
SHAREHOLDERS’ EQUITY RATIO(%)(Millions of yen/%)

100

75

15.7
2.3
7.8

DELINQUENCY RATIO (OVER 90 DAYS) AND
WRITE-OFF RATIO (NON-CONSOLIDATED BASIS)(%)

500,000

25

400,000

355,727

20

4.0

3.5

16.4

3.27

300,000

15

200,000

10

100,000

5

3.0

50
74.2
25

0

2008 2009 2010 2011 2012

■ Bonds■ Asset-backed securities■ Commercial paper ■ Loans(Years ended March 31)

0 2008 2009 2010 2011 20120

■ Total equity
Shareholders’ equity ratio(Years ended March 31)

2.66
2.5

2.0

2008 2009 2010 2011 2012

Delinquency ratio (over 90 days)
Write-off ratio (non-consolidated basis)(Years ended March 31)

CREDIT SAISONANNUAL REPORT 2012

21

COMPARISON OF DELINQUENT RECEIVABLES AND
THE ALLOWANCE FOR RECEIVABLES(Millions of yen)
2012

2011

% change(1) Receivables
1,786,198(2) Receivables overdue by
more than 90 days
120,422(3) Collateralized portion includedin (2)
72,943(4) Allowance for losses on receivables
included in current assets
95,172
Receivables overdue by more than
90 days as a percentage ofreceivables [(2) ÷ (1)]
6.7%
Ratio of allowance of losses onreceivables to receivables overdueby more than 90 days [(4) ÷ ((2) – (3))]
200.5%(Reference) Receivables overdue by
more than 90 days excluding
collateralized portion as a percentageof receivables [((2) – (3)) ÷ (1)]2.7%

1,981,604(9.9)

169,770(29.1)

102,311(28.7)

118,625(19.8)

8.6%–

175.8%–

3.4%–(Years ended March 31)

CHANGES IN THE ALLOWANCE FOR UNCOLLECTIBLE
RECEIVABLES(Millions of yen)

Allowance for losses on receivablesat the beginning of the year
Increase
Decrease
Allowance for losses on receivablesat the end of the year
(Reference) Losses on receivables

2012

2011

% change

123,594
35,69361,857

126,496
55,936
58,838(2.3)(36.2)
5.1

97,4302

123,5945(21.2)(53.2)(Years ended March 31)
Note: The increase in the fiscal year ended March 31, 2011 includes a provision of¥8,156 million to the allowance for uncollectible receivables recorded in
response to the Great East Japan Earthquake of March 11, 2011.

VII. RISK INFORMATION
The following presents an overview of operating, accounting andother issues that exert or could exert a significant influence on
investor decisions.
Forward-looking statements are Credit Saison Group estimatesas of March 31, 2012.

1. Operating Conditions
Results and financial position in the Credit Saison Group’s primaryCredit Service, Lease, Finance, Real Estate-Related and Entertainment
businesses are subject to the influence of domestic economic conditions. Factors contingent upon economic conditions, including
worsening of the employment environment, disposable householdincome or consumer spending, affect or may affect transaction
volume and repayment in Group businesses including credit cards,
loans, credit guarantees, and real estate mortgage loans, and therefore have the potential to negatively impact Group operating revenues
and the cost of uncollectible receivables.

22

CREDIT SAISONANNUAL REPORT 2012

Small and medium-sized companies are the principal customer
group of the lease business. Factors contingent upon economic
conditions, including contraction in capital expenditures anddeteriorating corporate performance accompanying an economic
recession, have the potential to negatively impact operating revenues,
losses on uncollectible receivables and other results, as well as
financial position.

2. Changes in Cost of Funds
The Group utilizes interest rate swaps and other means as a hedge
against rises in interest rates, in addition to issuing corporate bonds
and borrowing from financial institutions to secure stable and fixed
funding. Nevertheless, changes in financial conditions and reductionin the Credit Saison Group’s credit rating may increase interest rates
on funds the Group procures and have the potential to negatively
impact operating revenues and other results as well as financial
position. Changes in interest rates on loans and other instruments
are impacted by a wide array of considerations. These include
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
The financial system has undergone substantial deregulation inrecent years, which has resulted in energetic restructuring of theretail financial services industry in Japan. Large mergers in the credit
card industry, the entry of competitors from other industries andother events have caused competition to intensify. In this changing
market, the results and financial position of the Credit Saison
Group may be negatively impacted by the occurrence of events
such as reduced profitability due to a decrease in fee rates frommember stores or changes in the terms of transactions withbusiness partners.

4. Unfavorable Performance Among Primary
Alliance Partners
In the credit services business, the Credit Saison Group has agreements including affinity card issuance and member store contracts
with numerous companies and organizations. Unfavorable performance among these alliance partners has the potential to negatively
impact the Credit Saison Group’s performance and financial position.
For example, the Credit Saison Group acquires many of its new
cardmembers through the outlets of alliance partners in the retailingindustry. Reduced ability to attract customers or lower sales among
these companies has the potential to negatively impact the Credit
Saison Group’s operating revenues.
In addition, the Credit Saison Group has capital relationships withsome 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 service business. A number of situations
could compromise the Credit Saison Group’s sales capabilities,
damage its credibility and cause other problems that would havethe potential to negatively impact the Credit Saison Group’s performance and financial position. These situations include Group andcounterparty system inoperability resulting from temporary systemoverload due to factors such as system errors or spikes in accesscaused by Group or counterparty hardware or software problems;
breakdown in communication networks resulting from factors including natural disasters and accidents; and illegal or inappropriate
system operation.

6. Leakage of Personal Information andOther Issues
The Credit Saison Group maintains a large volume of personal
information concerning its cardmembers and others, and implements appropriate controls throughout the group. However, if an
incident such as leakage or illegal use of this information were tooccur, the Group might be subject to administrative guidance,orders, or fines for violation of business process regulations under
the Private Information Protection Law. This would damage theCredit Saison Group’s credibility and cause other problems thatwould have the potential to negatively impact the Credit Saison
Group’s performance and financial position.

7. Regulatory Changes
The Credit Saison Group operates in accordance with current regulations and the risks that result from these regulations. The Group’sbusinesses are subject to the Installment Sales Law, the MoneyLending Business Control and Regulation Law and other laws.
Circumstances arising from future amendments to these laws, orchanges or tightening of their interpretation, or new legal restrictions,would have the potential to negatively impact on the Credit Saison
Group’s operations, performance and financial position.
Moreover, a portion of interest that was higher than the interest
rate ceiling set by the Interest Rate Restriction Law can be deemedinvalid and may be subject to claims for reimbursement. Credit
Saison is booking an allowance for losses on interest repayments in
preparation for future claims for reimbursements of this type, but
future regulatory revisions or regulatory trends that unexpectedly
expanded such reimbursement claims would have the potential tonegatively impact on the Credit Saison Group’s performance andfinancial position.
The type, content and degree of potential regulatory revisions are
difficult to predict, and the Credit Saison Group has no control overtheir potential impact on its operations.

8. Inventories and Impairment Loss of Property
and Equipment and Evaluation Losses
A material decline in the fair value of the Credit Saison Group’s landand buildings, or a projected decline in operating income in businesses employing such assets that is not deemed to be temporary,
will result in impairment losses that have the potential to negatively
impact the Credit Saison Group’s results and financial position.
Moreover, a material decline in the fair value of investment securities
and investments and loans to affiliates, or unfavorable performance
among investees, has the potential to result in evaluation losses.

9. Natural Disasters, Etc.
Major natural disasters such as earthquakes could cause physicaldamage to shops and facilities owned by the Credit Saison Group,and personal injury to employees. Such events have the potential tonegatively impact the Group’s performance and financial position.

VIII. OUTLOOK FOR THE FISCAL YEARENDING MARCH 31, 2013
The business environment for the Credit Saison Group in the fiscal
year ending March 31, 2013 is defined by a highly uncertain outlookwith respect to economic activity, business conditions and otherfactors. In the credit card sector, the Group continues to face challenging conditions, including changes in the earnings structure of theGroup’s business due to revisions to the Money-Lending BusinessControl and Regulation Law and the Installment Sales Law.
In response to these conditions, Credit Saison will take bold
action in the following key areas to lay future business foundations
that will drive sustainable growth.
s %XPAND CASHLESS SETTLEMENT SERVICES BASED ON CREDIT CARDS TO
compete successfully with the cash payment services market
s %XPAND FEE BASED BUSINESSES BASED ON THE )NTERNET BUSINESSES
and develop the advertising and marketing businesses utilizing
customer basess $IVERSIFY REVENUE SOURCES BY PROMOTING NON BANK SERVICES SUCH
as the lease and finance businessess )MPROVE THE QUALITY OF LOAN RECEIVABLES BY ENHANCING CREDIT CONTROL
and collection systems and develop lean operations by transforming
the cost structures 3TRENGTHEN CORPORATE GOVERNANCE AND REBUILD THE 'ROUP BUSINESS
portfolio
Based on the activities described above, Credit Saison forecasts
its consolidated results for the period ending March 31, 2013 to be
operating revenues of ¥250,000 million, operating income of¥43,000 million and net income of ¥29,000 million. In its nonconsolidated results, Credit Saison forecasts operating revenues of¥206,000 million, operating income of ¥38,500 million and net
income of ¥23,000 million.

CREDIT SAISONANNUAL REPORT 201223

CONSOLIDATED BALANCE SHEETS
Credit Saison Co., Ltd. and Consolidated Subsidiaries
As of March 31, 2012 and 2011ASSETS

Millions of yen

Thousands of
U.S. dollars(Note 2)

2011

2012

2012

Current Assets:
Cash and deposits (Note 12)¥60,085¥64,112$

731,499

Receivables and lease investment assets:
Accounts receivable—installment (Notes 5, 7, 12 and 27)
Lease investment assets (Notes 6, 7, 11 and 12)

1,379,776

1,491,108

16,797,853

218,390

219,895

2,658,748

Short-term loans receivable (Note 12)

6,310

10,14476,820Less: Allowance for doubtful accounts(95,173)(118,626)(1,158,662)

1,509,303

1,602,521

18,374,759

16,617

7,219

202,299

—

5,982

—
2,378,277

Operational investment securities (Notes 12 and 13)
Securities (Notes 12 and 13)
Inventories (Note 8)

195,352

243,849

Deferred tax assets (Note 15)

12,46823,558

151,787

Prepaid expenses and other current assets (Note 27)

21,09225,800256,789

1,814,917

1,973,041

22,095,410

8,081

7,072

98,384

Total current assets

Property and Equipment, at Cost:
Lease assets (Note 11)
Buildings and improvements

47,361

41,932576,591

Fixtures and equipment

26,936

27,768327,920

Total

82,37876,772

1,002,895(558,535)

Less: Accumulated depreciation(45,878)(42,083)

Net property and equipment

36,50034,689444,360

Land

26,48624,237

322,451

Construction in progress
Total property and equipment

151

644

1,837

63,13759,570768,648

Investments and Other Assets:
Investment securities (Notes 12 and 13)

41,37340,241

503,685

Investments in unconsolidated subsidiaries and affiliated companies (Note 12)42,99229,390523,404

Long-term loans receivable (Note 12)

10,237

15,166124,631

Intangible assets

98,93976,633

1,204,514

Lease deposits

5,967

6,225

72,644927,373

Deferred tax assets (Note 15)

76,17432,454

Others

4,428

3,496

53,907

Less: Allowance for doubtful accounts(2,258)(4,969)(27,489)

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

24

CREDIT SAISONANNUAL REPORT 2012

277,852

198,636

3,382,669¥2,155,906¥2,231,247$26,246,727

LIABILITIES AND EQUITY

Millions of yen

Thousands of
U.S. dollars(Note 2)

2012

2011

2012

¥ 240,950¥ 171,066$ 2,933,400

Current Liabilities:
Notes and accounts payable (Notes 12 and 27)
Short-term loans (Notes 10 and 12)

234,190

248,029

2,851,108

Current portion of long-term debt (Notes 7, 10 and 12)

243,428200,036

2,963,575

Commercial paper (Notes 10 and 12)

32,000110,000

389,579

Current portion of long-term lease obligations (Notes 10 and 12)

1,974

1,599

24,030Accrued income taxes

9,465

1,536

115,233

Unearned income

5,840

6,148

71,103

Accrued employees’ bonuses

1,985

2,018

24,163

Accrued directors’ bonuses

154

89

1,873
161,271

Allowance for losses on interest repayments

13,247

19,612

Allowance for losses on collecting gift tickets

183

192

2,224

Accrued expenses and other current liabilities

41,29837,341

502,778

Total current liabilities

824,714797,666

10,040,337

875,257

980,840

10,655,674
35,953Long-Term Liabilities:
Long-term debt (Notes 7, 10 and 12)

2,953

3,929

Accrued pension and severance costs (Note 14)

Long-term lease obligations (Notes 10 and 12)

—

2,179

—

Accrued retirement benefits to directors and corporate auditors

92

74

1,123

4,068

5,464

49,525

16

19

195

Allowance for losses on point program

70,661

65,880860,252

Allowance for losses on interest repayments

Allowance for losses on guarantees
Allowance for losses on defect warranties

11,574

15,569140,903

Asset retirement obligations

831

835

10,116

Negative goodwill

329

706

4,009

Others (Note 15)
Total long-term liabilities

9,684

10,170117,893

975,465

1,085,665

11,875,643

Commitments and Contingent Liabilities (Notes 9 and 21)
Equity (Note 23):
Common stock

75,92975,929924,390

Capital surplus

84,83884,8381,032,848

Stock acquisition rights
Retained earnings
Less: Treasury stock, at cost

0

0

0

189,535

185,6292,307,469(6,116)(6,114)(74,465)

10,045

6,570

122,284

Accumulated other comprehensive income:Net unrealized gains on available-for-sale securities
Deferred losses on derivatives under hedge accounting
Total
Minority interests
Total equity
Total liabilities and equity(1,536)(1,623)(18,698)352,695

345,229

4,293,828

3,032

2,687

36,919355,727

347,916

4,330,747¥2,155,906¥2,231,247$26,246,727

CREDIT SAISONANNUAL REPORT 201225

CONSOLIDATED STATEMENTS OF INCOME
Credit Saison Co., Ltd. and Consolidated Subsidiaries
For the years ended March 31, 2012 and 2011

2012

Millions of yen
2011

Thousands of
U.S. dollars(Note 2)
2012

Operating Revenues (Note 19):
Income from the credit service business
Income from the lease business
Income from the finance business
Income from the real estate related business
Income from the entertainment business
Financial income
Total operating revenues¥197,494
14,645
15,446
2,967
12,990467
244,009¥229,536
14,437
15,261
12,11813,928433
285,713$2,404,362
178,297
188,040
36,115
158,150
5,685
2,970,649

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

192,185
19,958212,143

235,759
22,577258,336

2,339,724
242,982
2,582,706

Operating Income

31,86627,377

387,943

—
174
7,140
5,492
969
3,796
2,648
20,219

189
—
—
—
2,190
2,010
2,559
6,948

—
2,116
86,92566,863
11,80046,21032,241
246,155570
48
59,796
—
210
1,658
517
62,799(42,580)(10,714)

551
156
—
1,177
9,986
—
998
12,868(5,920)21,457

6,934
578
727,971—
2,562
20,187
6,309
764,541(518,386)(130,443)

12,967(33,488)
9,807
353¥ 9,454

7,988
365
13,104274¥ 12,830

157,858(407,691)
119,390
4,298$ 115,092

2012

Yen
2011

U.S. dollars(Note 2)2012

¥1,920.65
51.48
50.86
30.00

¥1,879.98
69.86
69.41
30.00

$23.383
0.627
0.619
0.365

2012

Millions of yen
2011

Thousands of
U.S. dollars(Note 2)
2012

Non-Operating Revenues:
Gain on sales of property and equipment and intangible assets
Gain on sales of investment securities
Gain on sales of investments in subsidiaries and affiliates
Gain on reversal of allowance for losses from a natural disaster (Note 16)
Dividend income
Equity in earnings of equity method-affiliated companies
Other
Total non-operating revenues
Non-Operating Expenses:
Loss on devaluation of investment securities
Impairment losses
Loss on business restructuring of subsidiaries (Note 17)
Loss on adjustment for changes of accounting standard for asset retirement obligations
Losses from a natural disaster (Note 18)
Loss on revision of retirement benefit plan (Note 14)
Other
Total non-operating expenses
Non-Operating Expenses, net
Income (loss) before Income Taxes and Minority Interests
Income Taxes (Note 15):
Current
Deferred
Net Income before Minority Interests
Minority interest in net income
Net Income

Per Share Data (Notes 3 (T) and 25)
EquityNet income, basic
Net income, diluted
Cash dividends
The accompanying notes are an integral part of these statements.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Credit Saison Co., Ltd. and Consolidated Subsidiaries
For the years ended March 31, 2012 and 2011

Net Income before Minority Interests
Other Comprehensive Income (loss) (Note 22)
Unrealized gains (losses) on available-for-sale securities
Deferred gains on derivatives under hedge accounting
Share of other comprehensive income in affiliated companies
Total other comprehensive income (loss)
Comprehensive Income (Note 22)¥ 9,807¥13,104$119,390

2,010
72
1,479
3,561
¥13,368(1,193)
108
985
(100)
¥13,004

24,473880
18,00343,356$162,746

Comprehensive income attributable to (Note 22):
Owners of the parent
Minority interests¥13,015353¥12,730
274$158,451
4,295

The accompanying notes are an integral part of these statements.

26

CREDIT SAISONANNUAL REPORT 2012

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
Credit Saison Co., Ltd. and Consolidated Subsidiaries
For the years ended March 31, 2012 and 2011
Millions of yen
Accumulated othercomprehensive income

Balance at April 1, 2010

Issuednumber ofshares ofcommonstock(thousands)

Commonstock

CapitalsurplusStockacquisitionrightsRetainedearnings

185,445¥75,929¥84,861¥0¥179,237

Change of scope of
consolidation

TreasurystockNetunrealized
gains onavailablefor-salesecurities

Deferred
losses onderivatives
under hedge
accounting

Total

Minority
interests

Total equity¥(6,106)¥ 6,812¥(1,762)¥338,971¥2,434¥341,405

(774)

(774)

(774)

Cash dividends(5,511)(5,511)(5,511)

Net income for the year
ended March 31, 2011

12,830

Increase in treasury stock
Decrease in treasury stock(1)

Adjustment of retained
earnings due to adoption of
PITF No.24

12,83012,830

(3)

(3)

(3)

1

0

0

(153)

(153)

(153)

Acquisition of treasury stockfrom a consolidated
subsidiary

(22)

(6)

Net changes in the year
Balance at March 31, 2011

185,445¥75,929¥84,838¥0¥185,629

Cash dividends(5,511)

Net income for the year
ended March 31, 2012

9,454

Increase in treasury stock
Decrease in treasury stock(0)

Change of scope ofequity method¥(6,114)

(103)

253

150

¥ 6,570¥(1,623)¥345,229¥2,687¥347,916¥75,929¥84,838¥0¥189,535(5,511)(5,511)

9,454

9,454

(2)

(2)

0

0

0

(37)
185,445

(28)

139

(2)

(37)

Net changes in the year
Balance at March 31, 2012

(28)
(242)

¥(6,116)

(37)

3,475

87

3,562

345

3,907

¥10,045¥(1,536)¥352,695¥3,032¥355,727

Thousands of U.S. dollars (Note 2)
Accumulated othercomprehensive income
Issuednumber ofshares ofcommonstock(thousands)

Balance at March 31, 2011

185,445

Commonstock

CapitalsurplusRetainedearnings

TreasurystockNetunrealized
gains onavailablefor-salesecurities$0 $2,259,908$(74,439)$ 79,978

Stockacquisitionrights$924,390 $1,032,850

Cash dividends(67,098)

Net income for the year
ended March 31, 2012

115,092

Increase in treasury stock
Decrease in treasury stock(2)

Change of scope ofequity method$0 $2,307,469

Total Equity$32,710 $4,235,646(67,098)(67,098)

115,092

115,092

(28)

(28)

2

0

0

(433)
42,306$924,390 $1,032,848

Minority
interests$(19,751) $4,202,936(433)
185,445

Total

(28)

Net changes in the year
Balance at March 31, 2012

Deferred
losses onderivatives
under hedge
accounting$(74,465)$122,284

1,053

43,359$(18,698) $4,293,828

(433)
4,209

47,568$36,919 $4,330,747

The accompanying notes are an integral part of these statements.

CREDIT SAISONANNUAL REPORT 201227

CONSOLIDATED STATEMENTS OF CASH FLOWS
Credit Saison Co., Ltd. and Consolidated Subsidiaries
For the years ended March 31, 2012 and 2011

Cash Flows from Operating Activities:
Income (loss) before income taxes and minority interests
Adjustments to reconcile income before income taxes and minority interests to net cash provided byoperating activities:
Income taxes paid
Depreciation and amortization
Loss on adjustment for changes of accounting standard for asset retirement obligations
Gain on reversal of allowance for losses from a natural disaster
Losses from a natural disaster
Loss on business restructuring of subsidiaries
Decrease in allowance for doubtful accounts
Decrease in accrued pension and severance costs
Increase in allowance for losses on point program
Decrease in allowance for losses on interest repayments
Increase (decrease) in allowance for other reserves
Interest and dividend income
Interest expenses
Equity in earnings of equity method-affiliated companies
Foreign currency exchange loss
(Gain) loss on sales of investment securities
Gain on sales of investments in subsidiaries and affiliates
Loss on devaluation of investment securities
Impairment losses
Loss on disposals of property and equipment, and other assets
Increase in operational investment securities(Increase) decrease in trade receivables(Increase) decrease in lease investment assets
Increase in inventories
Decrease in other assets
Interest and dividends received
Interest paid
Increase (decrease) in notes and accounts payable
Increase in other liabilities
Other—net
Net Cash Provided by Operating Activities
Cash Flows from Investing Activities:
Payments into time deposits
Proceeds from withdrawals of time deposits
Payments for purchases of investment securities
Proceeds from sales or redemptions of investment securities (Note 24 (C))
Proceeds from sales of investment in subsidiaries and affiliates
Proceeds from purchases of investments in subsidiaries resulting in change in scope of consolidation
Proceeds from an absorption-type company split (Note 24 (D))
Payments for purchases of property and equipment and other assets
Proceeds from sales of property and equipment and other assets
Payments for short-term and long-term loans
Proceeds from short-term and long-term loans
Decrease in other assets
Net Cash Provided by (Used in) Investing Activities
Cash Flows from Financing Activities:
Decrease in short-term debt
Decrease in commercial paper
Proceeds from long-term debt
Repayments of long-term debt
Proceeds from issuance of bonds
Repayments of bonds
Proceeds from securitized account receivables and lease investment assets
Payments of payables under securitized account receivables and lease investment assets
Repayments of lease obligations
Proceeds from sales of treasury stock
Purchases of treasury stock
Cash dividends paid
Cash dividends paid to minority shareholders
Net Cash used in Financing Activities
Translation loss on Cash and Cash Equivalents
Decrease in Cash and Cash Equivalents
Cash and Cash Equivalents at the Beginning of Year
Increase in Cash and Cash Equivalents of Newly Consolidated Subsidiaries
Cash and Cash Equivalents at the End of Year (Note 24 (A))
The accompanying notes are an integral part of these statements.

28

CREDIT SAISONANNUAL REPORT 2012

2012

Millions of yen
2011

Thousands of
U.S. dollars(Note 2)2012

¥ (10,714)¥ 21,457$ (130,443)(4,207)
14,083—(5,492)
210
59,796(31,377)(2,179)4,781(10,360)
60(1,391)
18,794(3,796)39(173)(7,140)570
48
795(9,390)(47,104)
1,505
(941)
3,979
1,837
(18,993)
69,884
1,828
659
25,611(16,867)
15,568
1,177
—
9,986
—
(11,059)(1,073)
4,642
(414)
(735)
(2,602)
21,485(2,010)
38
139
—
551
156
898
(6,860)198,048(5,662)(22,213)
1,066
2,952
(21,804)(35,691)940(50)
152,063(51,201)
171,449—(66,863)
2,562
727,971(381,992)(26,533)
58,206(126,137)
726(16,932)
228,799(46,210)476(2,104)(86,925)
6,934
578
9,674
(114,320)(573,458)
18,327(11,456)
48,43722,363(231,231)
850,789
22,2688,044
311,798

—
500
(22)
2,049
18,360—135,794(35,030)
110
(165)
840
702
123,138(500)—(1,063)
1,176
69—(37,272)
2,701(1,318)167
771(35,269)

—
6,087
(272)
24,945
223,521—
1,653,206(426,470)
1,337(2,009)10,231
8,542
1,499,118(13,839)(78,000)
138,770(157,519)
9,949(45,225)
10,000(18,217)(1,636)0(2)(5,511)(7)(161,237)(38)(12,526)
72,527—¥ 60,001(48,895)(23,000)
106,000(109,037)
44,770(25,225)—(54,962)(1,529)0(3)(5,511)(28)(117,420)
(35)
(661)
73,13157¥ 72,527(168,481)(949,598)
1,689,433(1,917,689)
121,130(550,584)
121,743(221,782)(19,909)1(28)(67,098)(86)(1,962,948)(467)(152,499)
882,966—$ 730,467

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Credit Saison Co., Ltd. and Consolidated Subsidiaries
For the years ended March 31, 2012 and 2011

1. BASIS OF PRESENTING CONSOLIDATED FINANCIAL STATEMENTS
The accompanying consolidated financial statements have been prepared based on the accounts maintained by Credit
Saison Co., Ltd. (the “Company”) and its consolidated subsidiaries (together the “Companies”) in accordance with theprovisions set forth in the Japanese Financial Instruments and Exchange Act and its related accounting regulations and in
conformity with accounting principles generally accepted in Japan (“Japanese GAAP”), which are different in certain
respects as to application and disclosure requirements of International Financial Reporting Standards.
In preparing these consolidated financial statements, certain reclassifications and rearrangements have been made to theconsolidated financial statements issued domestically in order to present them in a form which is more familiar to readers
outside Japan. In addition, certain reclassifications have been made in the 2011 consolidated financial statements toconform to the classifications used in 2012.

2. U.S. DOLLAR AMOUNTSJapanese yen amounts have been translated into U.S. dollars at the rate of ¥82.14=US$1, the approximate exchange rateon March 31, 2012, for the convenience of the reader. These translations should not be construed as representations thatJapanese yen amounts have been or could be converted into U.S. dollars at that or any other rate.

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(A) BASIS OF CONSOLIDATION AND ACCOUNTING FOR INVESTMENTS IN AFFILIATED COMPANIESAs at March 31, 2012, the consolidated financial statements include the accounts of the Company and its eighteen(eighteen for 2011) significant subsidiaries.
All significant intercompany balances and transactions and unrealized profit among the Companies, if any, have been
eliminated in consolidation. Unconsolidated subsidiaries would have no material effect on the consolidated financial
statements of the Companies and have therefore been excluded from consolidation.
Investments in eight (seven for 2011) significant affiliates are accounted for by the equity method.
(NEW)
Seven CS Card Service Co., Ltd.
(Seven CS Card Service Co., Ltd., which increased in significance was newly included in accounting for investments inaffiliated companies effective from the current fiscal year.)Investments in unconsolidated subsidiaries and affiliates not accounted for by the equity method are stated at cost, due
to their immaterial effects on the consolidated financial statements of the Companies.
The excess of the cost of an acquisition over the fair value of the net assets of the acquired subsidiary at the date ofacquisition is amortized over a period of 20 years. However, if the amount is not material, it is charged to income
when incurred.

(B) INVENTORIESInventories are stated at the lower of cost, determined principally by the specific identification method, or net selling value.
Supplies, however, are stated at cost determined by the latest purchase cost method.

(C) FINANCIAL INSTRUMENTS
i. Derivatives
All derivatives are recognized as either assets or liabilities and measured at fair value. Gains or losses on derivativetransactions are recognized in the consolidated statements of income, except for derivatives that are designated as“hedging instruments” (see iii. Hedge accounting).

ii. Securities
Securities held by the Companies are classified into four categories:
Trading securities, which are held for the purpose of generating profits on short-term differences in prices, are measured
at fair value, with changes in fair value included in profit or loss for the period in which they arise.
Held-to-maturity debt securities, which the Companies intend to hold to maturity with such ability, are reported atamortized cost.
Investments 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 “available-for-sale securities.” Available-for-sale securities
that have market prices are measured at fair value, and unrealized gains or losses on these securities are reported as accumulated other comprehensive income in equity at a net-of-tax amount, other than the amounts related to gains or losses
on embedded derivatives.
Available-for-sale securities that do not have market prices are stated at cost using the moving-average method. Limited
liability partnerships for investment business and of other similar partnerships (defined as “securities” by Article 2, Section 2of the Financial Instruments and Exchange Act) are valued at the net equity equivalents based on the recently available
financial statements of the partnership corresponding to the reporting dates of the financial statements defined by thepartnership agreements.
In cases where the fair value of held-to-maturity debt securities, equity securities issued by unconsolidated subsidiaries
and affiliates, or available-for-sale securities have declined significantly and such decline in the value is not deemed
temporary, those securities are written down to fair value and the resulting loss is included in profit or loss for the period.

iii. Hedge accounting
The derivatives used as hedging instruments by the Companies are interest rate swaps. The related hedged items are bankloans and bonds issued by the Companies.
The Companies use interest rate swaps to manage their exposure to fluctuations in interest rates. The Companies do notenter into derivatives for speculative purposes.
CREDIT SAISONANNUAL REPORT 201229

As per the accounting standard for derivative financial instruments, a) all derivatives except those which qualify for hedge
accounting, are recognized as either assets or liabilities and measured at fair value and gains or losses on derivative transactions are recognized in the consolidated statements of income, and b) for derivatives used for hedging purposes, if thederivatives qualify for hedge accounting because of a high correlation and effectiveness between the hedging instruments
and the hedged items, gains or losses on derivatives are deferred until maturity of the hedged transactions.
The interest rate swaps that qualify for hedge accounting and meet specific matching criteria are not remeasured atmarket value, but the differential paid or received under the swap agreements is recognized and included in interest
expense or income.

(D) PROPERTY AND EQUIPMENT
Depreciation of property and equipment is computed principally by the straight-line method over the estimated useful livesof the assets.
Lease assets are depreciated by the straight-line method over their lease term with zero residual value.

(E) LEASEIn March 2007, the Accounting Standards Board of Japan (ASBJ) issued ASBJ Statement No. 13, “Accounting Standard
for Lease Transactions,” which revised the previous accounting standard for lease transactions issued in June 1993. The
revised accounting standard for lease transactions was effective for fiscal years beginning on or after April 1, 2008. The
Companies applied the revised accounting standard effective April 1, 2008.

(Lessee)
Under the previous accounting standard, finance leases that were deemed to transfer ownership of the leased property to
the lessee were capitalized. However, other finance leases were permitted to be accounted for as operating lease transactions if certain “as if capitalized” information was disclosed in the notes to the lessee’s financial statements. The revised
accounting standard requires that all finance lease transactions are capitalized to recognize lease assets and lease obligations in the balance sheet. In addition, the revised accounting standard permits leases which existed at the transition dateand do not transfer ownership of the leased property to the lessee to continue to be accounted for as operating leasetransactions with certain “as if capitalized” information disclosed in the notes to the lessee’s financial statements.

(Lessor)Under the previous accounting standard, finance leases that were deemed to transfer ownership of the leased property to
the lessee were treated as sales. The revised accounting standard requires that all finance leases that are deemed to transfer ownership of the leased property to the lessee are recognized as lease receivables and that all finance leases that are
not deemed to transfer ownership of the leased property to the lessee should be recognized as lease investment assets. In
addition, the revised accounting standard permits the value of lease investment assets of leases which existed at the transition date and do not transfer ownership of the leased property to the lessee to take over the appropriate book value (net ofaccumulated depreciation) of the leased property as of March 31, 2008, and after the adoption of the revised accounting
standard, the aggregate amount equivalent to interest is allocated over the lease term based on the straight-line method.

(F) INTANGIBLE ASSETS
Intangible assets are amortized by the straight-line method over the useful lives.

(G) LONG-LIVED ASSETSThe Companies review their long-lived assets for impairment whenever events or changes in circumstances indicate thecarrying amount of an asset or asset group may not be recoverable. An impairment loss would be recognized if the carrying
amount of an asset or asset group exceeds the sum of the undiscounted future cash flows expected to result from thecontinued use and eventual disposition of the asset or asset group. The impairment loss would be measured as theamount by which the carrying amount of the asset exceeds its recoverable amount, which is the higher of the discounted
cash flows from the continued use and eventual disposition of the asset or the net selling price at disposition.

(H) BOND ISSUE COSTS
Bond issue costs are amortized by the straight-line method over the bond term.

(I) ALLOWANCE FOR DOUBTFUL ACCOUNTS
Receivables and lease investment assets are classified into four risk categories: bankrupt, doubtful, substandard and normal.
The Companies individually provide a specific reserve for bankrupt and doubtful receivables based on the fair value of any
underlying collateral.
The Companies collectively provide a general reserve for substandard and normal receivables applying a ratio determinedbased on the Companies’ past credit loss experience.

(J) ACCRUED EMPLOYEES’ BONUSES
Accrued employees’ bonuses are provided at the estimated amounts which are to be paid for services rendered throughthe year.

(K) ACCRUED DIRECTORS’ BONUSES
Accrued directors’ bonuses are maintained at the amount accrued at the end of the fiscal year based on estimated future
payments and service period.

(L) ALLOWANCE FOR LOSSES ON COLLECTING GIFT TICKETS
Allowance for losses on collecting gift tickets, etc., issued by the Company takes into account its registration of collected
tickets in order to prepare for the possible future use of those tickets that had been recorded as revenue after the passageof the constant period.

30

CREDIT SAISONANNUAL REPORT 2012

(M) ALLOWANCE FOR LOSSES ON INTEREST REPAYMENTS
Allowance for losses on interest repayments is provided at the estimated amount based on payment experience, required
to be refunded upon customers’ legal claims.

(N) ACCRUED RETIREMENT BENEFITS TO DIRECTORS AND CORPORATE AUDITORS
Directors and corporate auditors customarily receive lump-sum payments upon termination of services, subject toshareholders’ approval.
Consolidated subsidiaries with such plans accrue retirement benefits at an amount based on the unfunded retirement
plan for the directors and corporate auditors.

(O) ALLOWANCE FOR LOSSES ON GUARANTEESAn allowance for losses on guarantees is provided for potential losses arising from the Companies’ guarantee obligationsof customers’ liabilities (personal loans to individuals from the banks with which the Companies have guarantee service
arrangements).
The allowance is provided at an amount determined by applying the ratio of the Companies’ loss experience to thebalance of guarantees outstanding at year-end.

(P) ALLOWANCE FOR LOSSES ON DEFECT WARRANTIESAllowance for losses on defect warranties is provided for the potential repair costs on sold real estate due to the Companies’
warranty. The allowance is provided at the amount estimated based on the past experience of repair costs.

(Q) ALLOWANCE FOR LOSSES ON POINT PROGRAM
To stimulate card usage, the Company provides cardholders with credit card points which can be exchanged for various
commodities and services. Allowance for losses on a point program is provided based on estimated usage of card points
outstanding at the year-end and exchange experience.

(R) RECOGNITION OF OPERATING REVENUE
The operations of the Companies are mainly comprised of the following business areas and the recognition of operating
revenues differs for each business.

i. Credit card contracts and personal credit contracts for shopping (The credit service business)
Fees for collection and administrative services to be received from affiliated stores are recognized when payments
are received.
Fees from customers are recognized by the interest method or the sum-of-the-digits method.

ii. Loan contracts and guarantee contracts (The finance business)
Fees from customers under loan contracts or guarantee contracts are recognized by the interest method.

iii. Lease contracts (The lease business)
The aggregate amount equivalent to interest is allocated to each period.

(S) INCOME TAXESThe provision for income taxes is computed based on the pretax income included in the consolidated statements of income.
Deferred taxes are recorded to reflect the impact of temporary differences between assets and liabilities recognized forfinancial reporting purposes and such amounts recognized for tax purposes.

(T) PER SHARE INFORMATION
Basic net income per share is computed by dividing net income available to common shareholders by the weighted-average
number of common shares outstanding for the period, retroactively adjusted for stock splits.
Diluted net income per share reflects the potential dilution that could occur if securities were exercised or converted into
common stock. Diluted net income per share of common stock assumes full exercise of the stock options at the beginningof the year (or at the time of issuance).
Cash dividends per share presented in the accompanying consolidated statements of income are dividends applicable to
the respective years including dividends to be paid after the end of the year.

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

(V) ACCOUNTING CHANGES AND ERROR CORRECTIONSIn December 2009, the ASBJ issued ASBJ Statement No. 24, “Accounting Standard for Accounting Changes and Error
Corrections” and ASBJ Guidance No. 24, “Guidance on Accounting Standard for Accounting Changes and Error Corrections.”
Accounting treatments under this standard and guidance are as follows: (1) Changes in Accounting Policies—When a new
accounting policy is applied due to a revision of accounting standards, the new policy is applied retrospectively unless therevised accounting standards include specific transitional provisions. When the revised accounting standards include specifictransitional provisions, an entity shall comply with the specific transitional provisions. (2) Changes in Presentation—When thepresentation of financial statements is changed, prior-period financial statements are reclassified in accordance with the newpresentation. (3) Changes in Accounting Estimates—A change in an accounting estimate is accounted for in the period of
the change if the change affects that period only and is accounted for prospectively if the change affects both the period of
the change and future periods. (4) Corrections of Prior-Period Errors—When an error in prior-period financial statements is
discovered, those statements are restated. This accounting standard and the guidance are applicable to accountingchanges and corrections of prior-period errors which are made from the beginning of the fiscal year that begins on or after
April 1, 2011.

CREDIT SAISONANNUAL REPORT 201231

4. BUSINESS COMBINATIONAt the Board of Directors meeting held on December 22, 2010, the Company resolved to implement an absorption-typecompany split of the Company’s affinity card business (the “card business”) to Seven CS Card Service Co., Ltd. (“Seven CS
card”), a wholly owned subsidiary of the Company, effective April 1, 2011, based on a comprehensive business partnershipcontract with Seven Financial Service Co., Ltd. (“Seven financial service”) and Sogo & Seibu Co., Ltd. (“Sogo & Seibu”) on
September 10, 2010.
Furthermore, on April 1, 2011, the Company transferred 51% of shares in Seven CS card to Seven financial service.

TRANSACTIONS UNDER COMMON CONTROL(A) OUTLINE OF BUSINESSThe Company has issued an affinity card with Sogo & Seibu.

(B) DATE OF BUSINESS COMBINATION
April 1, 2011

(C) LEGAL FORM OF BUSINESS COMBINATIONPart of the Company was split for absorption by Seven CS Card as the succeeding company.

(D) DETAILS OF ALLOTMENTS WITH REGARD TO THE SPLIT
i. Allotment of stock
Upon execution of this absorption-type company split, the succeeding company issued one new share of common stock,which was allotted to the Company.
As a result, the Company came to own a total of 1,000 shares in the succeeding company.
Of those shares, 510 shares were transferred to Seven Financial Service effective April 1, 2011, in accordance with astock transfer contract concluded with Seven Financial Service on September 10, 2010.

ii. Payment of cash
The succeeding company made interest payments at a rate of 0.8% per year on the amount that was calculated based on
the net assets transferred from the Company in the split and a deduction of ¥22.0 billion (total equity of the succeedingcompany), prorated for the actual number of days from the day after April 1, 2011 (including such date) until the payment
date (counting such date) of the split.

(E) RIGHTS AND OBLIGATIONS TAKEN OVER BY THE SUCCEEDING COMPANY
The succeeding company took over the assets, liabilities and contractual status of the affinity credit card business fromthe Company.
Excluded were obligations arising out of unlawful actions or regulatory infringements on or before April 1, 2011 (including
the obligation to refund excess interest payments—received on cash advances and other loans).

(F) DETAILS OF THE ASSETS AND LIABILITIES ACQUIRED BY THE SUCCEEDING COMPANY
Year ended March 31, 2011

Current assets
Non-current assets
Total assets
Current liabilities
Long-term liabilities
Total liabilities

Millions of yen¥158,28849¥158,337
¥
742
—
¥
742

(G) PURPOSE OF TRANSACTION
The Company decided to this split after considering the many benefits that will result from the new business, including theability to offer existing holders of Sogo & Seibu affinity cards access to all of the attractive services provided by the Seven
financial service.
In addition, the business integration with Seven Card Service Co., Ltd., and Seven CS Card will dramatically expand thescale of the business compared with its present level and allow the Company to develop a strategy for growth over the
medium- to long-term future, including increased processing revenues and other income from Seven CS Card.

(H) OUTLINE OF THE ACCOUNTING TREATMENT IMPLEMENTED
This transaction was accounted for as a transaction under common control in accordance with the “Accounting Standard
for Business Combinations” issued by the Business Accounting Council in Japan and “Guidance on Accounting Standard
for Business Combinations” and “Accounting Standard for Business Divestitures,” issued by the ASBJ.

32

CREDIT SAISONANNUAL REPORT 2012(I) OUTLINE OF THE SUCCEEDING COMPANY(As of March 31, 2011)
Name
Representative
Address
Establishment date
Main line of business
Fiscal year-end
Employee headcountTotal assets
Total liabilities
Capital
Total shares issued
Composition and equity ratio of major shareholders

Seven CS Card Service Co., Ltd.
Toshiharu Yamamoto, Representative Director and President
8-8 Nibancho, Chiyoda-ku, Tokyo
September 17, 2010
Credit card issuance and related activities
End of February
464 employees¥382 million¥255 million¥100 million
999 shares
Credit Saison Co., Ltd. 100%

5. ACCOUNTS RECEIVABLE-INSTALLMENT
As of March 31, 2012 and 2011, liquidated receivables were as noted below. The following amounts of trust beneficiary rights
and other receivables generated from liquidation or operational transactions were included in accounts receivable-installment.

Liquidating receivables:
Single-payment card shopping, etc.
Trust beneficiary rights and other receivables include:
Single-payment card shopping, etc.
Acquisition from operational transaction

Millions of yen

Thousands of
U.S. dollars

2012

2011

2012

¥20,000¥112,000$243,487

2,472—

12,7442

30,094—

6. LEASE INVESTMENT ASSETS
As of March 31, 2012 and 2011, liquidated lease investment assets were as noted below. The following amounts of trust
beneficiary rights were included in lease investment assets.

Liquidating receivables
Trust beneficiary rights

Millions of yen

Thousands of
U.S. dollars

2012

2011

2012

¥—
—

¥1,4006,881$——

7. PLEDGED ASSETS
As of March 31, 2012 and 2011, pledged assets and liabilities related to pledged assets were as follows.

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

Millions of yen

Thousands of
U.S. dollars

2012

2011

2012

¥44,750
41,202¥47,500
46,669$544,802
501,603

41,07944,87315,851
78,318500,110546,294

Millions of yen

Thousands of
U.S. dollars

8. INVENTORIESInventories at March 31, 2012 and 2011 consisted of the following:

Receivable by purchase
Real estate for sale
Other
Total

2012

2011

2012

¥ 10,316
183,784
1,252¥195,352¥ 12,738
229,997
1,114¥243,849$ 125,584
2,237,452
15,241$2,378,277

CREDIT SAISONANNUAL REPORT 201233

9. LOAN COMMITMENTS(A) LENDER
The Companies provide cashing and card loan services that supplement their credit card operations.
The unexercised loans contingent with the loan commitments in these businesses were as follows:
Millions of yen

Total loan limits
Loan executions

Thousands of
U.S. dollars

2012

2011

2012

¥4,736,245
320,905¥4,415,340¥5,710,496
443,428¥5,267,068$57,660,636
3,906,806$53,753,830

Most of the contracts for the above loan commitments were for cashing services supplementary to credit card services
furnished to the Company’s cardholders, such that not all unexecuted loans will be exercised.

(B) BORROWER
The Companies have concluded loan commitment contracts with 5 banks for efficient procurement of working capital.
The portion of the credit line that had not been exercised under these contracts as of March 31, 2012 and 2011 was
as follows.
Millions of yen

Total loan limits
Loan executions

Thousands of
U.S. dollars

2012

2011

2012

¥125,000—¥125,000¥125,000—¥125,000$1,521,792—$1,521,792

10. 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 0.75% and0.81% as of March 31, 2012 and 2011, respectively.
Commercial paper is issued by the Companies with an average interest rate of 0.13% and 0.14% as of March 31, 2012
and 2011, respectively.
Long-term debt and lease obligations as of March 31, 2012 and 2011 consisted of the following:
Millions of yen

Average 1.39% (2012) and 1.47% (2011) unsecured loans from banks,
insurance companies and other financial institutions, due in installments
through 2022
0.46% to 2.41% (2012) and 0.47% to 2.41% (2011) bonds, due ininstallments through 2017
Lease obligations*1
Average 1.32% (2012) and 1.39% (2011) payables on under-securitized loans*2
Subtotal
Less: Current portion

Thousands of
U.S. dollars

2012

2011

2012

¥ 811,846¥ 830,595$ 9,883,686

220,887

256,1122,689,159

4,927
5,528
85,952
94,1691,123,612
1,186,404(245,402)(201,635)¥ 878,210 ¥ 984,769

59,983
1,046,404
13,679,232(2,987,605)$10,691,627*1 Because interest is included in lease obligations, presentation of the average interest rate is omitted.
*2 Payables under securitized lease receivables and loans resulting from liquidation.

The aggregate annual maturities of long-term debt subsequent to March 31,2012 are as follows:Year ending March 31

Millions of yen

Thousands of
U.S. dollars

2013
2014
2015
2016
2017 and thereafter¥186,980
229,753
191,843
160,448
109,186$2,276,361
2,797,096
2,335,555
1,953,349
1,329,266

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

34

CREDIT SAISONANNUAL REPORT 2012

11. LEASE TRANSACTIONS(A) FINANCE LEASES THAT DO NOT TRANSFER OWNERSHIP (LESSEE)
i. Lease assets
Property and equipment—mainly servers and other equipment
Intangible assets—mainly software used in the credit service businessii. Depreciation
Depreciation equivalent is computed by the straight-line method under the assumption that the lease term equals the usefullife and that there is no residual value.
iii. As discussed in Note 3 (E), the Companies account for leases which existed at the transition date (March 31, 2008) anddo not transfer ownership of the leased property to the lessee as operating lease transactions.
Pro forma information of such leases existing at the transition date, such as acquisition cost, accumulated depreciation,
obligations under finance leases, depreciation expense, interest expense, and on an “as if capitalized” basis for the years
ended March 31, 2012 and 2011 is as follows:

Pro forma capitalization of leased items

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

2012

Millions of yen
2011

Thousands of
U.S. dollars
2012

¥ 115
(88)
27

¥ 157
(111)
46

$ 1,399(1,066)
333

138
(108)
30

487
(377)
110

1,686
(1,316)
370

253
(196)
¥ 57

644
(488)
¥ 156

3,085
(2,382)
$ 703

2012

Millions of yen
2011

Thousands of
U.S. dollars
2012

¥35
32
¥67

¥113
67
¥180

$420
390
$810

Obligations under finance leases

Due within one year
Due after one year
Total

Allowance for impairment losses on leased property of ¥1 million as of March 31, 2011 is not included in the obligations
under finance leases.

Lease payments, depreciation equivalent and interest equivalent

Lease payments
Reversal of allowance for impairment losses on leased property
Depreciation equivalentInterest payable equivalent

2012

Millions of yen
2011

Thousands of
U.S. dollars
2012

¥116
1
98
4

¥217
1
189
8

$1,41413
1,198
46

Depreciation equivalent is computed by the straight-line method over their lease term determined by their useful lives, withzero residual value.
Interest equivalent, which represents the aggregate lease payments less the acquisition cost equivalent, is allocated overthe lease term based on the interest method.

CREDIT SAISONANNUAL REPORT 201235

(B) FINANCE LEASES THAT DO NOT TRANSFER OWNERSHIP (LESSOR)
i. Lease investment assets
Lease investment assets at March 31, 2012 and 2011, consisted of the following:

Gross lease receivables
Residual value
Unearned interest income
Lease investment assets

2012

Millions of yen
2011

Thousands of
U.S. dollars
2012¥247,679—(29,289)¥218,390¥252,134—(32,239)¥219,895$3,015,321—(356,573)$2,658,748

ii. Collection schedule for the amount of lease payments related to lease investment assets after March 31, 2012
and 2011
Millions of yen
2011

2012

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

Lease
investment
assetsGross leasereceivables

Lease
investment
assetsGross leasereceivables¥ 57,093
52,52044,87333,80520,081
10,018¥218,390¥ 68,837
60,792
49,97736,482
21,214
10,376¥247,678¥ 56,081
52,43445,41934,66821,095
10,198¥219,895¥ 68,574
61,652
51,33937,71822,287
10,563¥252,133

Thousands of U.S. dollars
2012
Lease
investment
Gross leaseassetsreceivables$ 695,060
639,395
546,302411,555
244,469
121,967$2,658,748$ 838,041
740,108
608,431444,143
258,264
126,334$3,015,321

iii. The Companies account for the value of lease investment assets which existed at the transition date (March 31, 2008)
and do not transfer ownership of the leased property to the lessee to take over the appropriate book value (net of accumulated depreciation) of the leased property as of March 31, 2008, and after the adoption of the revised accounting standard,
the aggregate amount equivalent to interest is allocated over the lease term based on the straight-line method.
As a result, Income (loss) before income taxes and minority interests as of March 31, 2012 and 2011 increased(decreased) more than it would have if the revised accounting standard had been retroactively adopted starting from thelease transaction commencement dates as follows:

Income (loss) before income taxes and minority interests

2012

Millions of yen
2011

Thousands of
U.S. dollars
2012¥2,218¥2,687$27,008(C) OPERATING LEASES
i. Lessee
The minimum rental commitments under noncancellable operating leases at March 31, 2012 and 2011 were as follows:
Millions of yen

Due within one year
Due after one year
Total

Thousands of
U.S. dollars

2012

2011

2012

¥390
21
¥411

¥1,591399¥1,990$4,741259$5,000ii. Lessor
The minimum rental commitments under noncancellable operating leases at March 31, 2011 were as follows:
Millions of yen

Due within one year
Due after one year
Total

36

CREDIT SAISONANNUAL REPORT 2012

Thousands of
U.S. dollars

2012

2011

2012

¥194
249
¥443

¥ 87
41
¥128

$2,365
3,032$5,397

12. FINANCIAL INSTRUMENTS AND RELATED DISCLOSURESTHE CONDITIONS OF FINANCIAL INSTRUMENTS(A) POLICY FOR FINANCIAL INSTRUMENTS
The Companies engage in the credit service business; lease business; finance business including guarantees and loans
businesses; real estate related business; and entertainment business. To conduct such businesses, the Companies, byobserving the market circumstances and adjusting the balance of long-term and short-term debt, seek financing throughindirect financing such as bank loans and through direct financing such as issuance of corporate bonds, commercial paperand securitized receivables. Through such activities, the Companies hold financial assets and financial liabilities that are
mostly accompanied by interest rate risks and the Company conducts asset and liability management (ALM) to prevent
disadvantageous effects from such interest rate risks. As part of ALM, the Company also conducts derivative transactions
that leverage interest rate swaps, etc.

(B) NATURE AND EXTENT OF RISKS ARISING FROM FINANCIAL INSTRUMENTS
The financial assets held by the Companies are mainly accounts receivable—installments from credit card members.
The Companies are exposed to credit risk such as the potential deterioration of the member’s repayment situation. As ofthe end of the current fiscal year, accounts receivable—installment included a large component of receivables related tocredit service business and credit cards members’ repayments according to the contract depend on changes of businesscircumstances including the economic environment surrounding the said business (employment environment in the falloutof the economic recession, household disposable income, personal consumption).
Also, (operational) investment securities are mainly stocks, bonds, investment trusts and partnership investments. Suchsecurities are held for the purpose of either trading or business promotion. Each of these securities is exposed to theissuer’s credit risks, interest rate fluctuation risks and market price fluctuation risks.
The Companies are exposed to liquidity risks relating to interest-bearing debt such as loans, corporate bonds andcommercial paper whereby they may be unable to execute payments of such liabilities on the payment dates in cases, forexample, where the Companies are unable to use the market under certain environments such as a greater than expectedfluctuations in financial conditions or a downgrading of the Companies’ credit rating. Furthermore, the Companies alsoborrow funds by variable interest loans and although they are exposed to interest fluctuation risks those risks are partly
mitigated by conducting interest swap transactions.
Among the derivative transactions conducted by the Companies are interest swap transactions conducted as part of
ALM. Using these interest swap transactions as the hedge instruments, the Company applies hedge accounting to interest
fluctuation risk related to borrowings that are the hedged item. The hedge is assessed based on the cumulative total of
cash flow fluctuations and determined to actually have been highly effective throughout the financial reporting periods forwhich the hedge is designated.
In addition, the interest rate swaps which qualify for hedge accounting of long-term loans and meet specific matching
criteria are not remeasured at market value but the differential paid or received under the swap agreements is recognized
and included in interest expence or income.

(C) RISK MANAGEMENT FOR FINANCIAL INSTRUMENTS(i) Credit risk management
The Companies manage their credit risk in accordance with the Companies’ credit risk management rules by ensuring theongoing soundness of receivables and maintaining a system for credit risk management including credit limits, managementof creditworthiness information, and internal ratings. The Company holds regular Board of Directors’ meetings in order todiscuss and report matters relating to credit risk management. (Operational) investment securities are managed byperiodically ascertaining creditworthiness information and fair values at the ALM committee meetings.
Also, with regard to long-term loans receivable, the relevant departments periodically monitor the credit risk of the obligors.
With regard to counterparty risk of derivative transactions, in order to avoid credit risk arising from defaults on contractual
obligations, the Company chooses Japanese and overseas banks and securities firms with high creditworthiness as thecounterparty to contracts.

(ii) Market risk management
Management of fluctuation risk of interest rates
The Companies manage interest rate fluctuation risks by applying ALM. The rules related to ALM state the details of risk
management methods, procedures and so forth. Based on policies determined at the ALM committee meetings, the Boardof Directors ascertains the status of implementation and discusses matters concerning future responses at the meetings.
As part of its regular routine, the Treasury & Account Department maintains an overall grasp of the interest rates and termsof financial assets and liabilities and conducts monitoring such as by performing an interest rate gap analysis. When conducting interest rate swap derivative transactions for the purpose of hedging interest rate variable risk, the Companies
apply ALM to this also.

Management of fair value fluctuation risk
With regard to financial investment products including (operational) investment securities, pursuant to ALM policy, in addition to examining each investment project before investment and establishing limit amounts for the investment, continuous
monitoring is also conducted for the purpose of mitigating the price fluctuation risk. Moreover, with regard to stock held forthe purpose of business promotion, including business and capital tie-ups, the market environment and the financial
condition of the transaction counterparty are also monitored through relevant departments.
This information is periodically reported through the relevant departments to the ALM committee meetings and other meetings.

Derivatives
The Treasury & Account Department executes derivative transactions in accordance with internal management regulations
set by the Board of Directors, keeping within the scope of the overall transaction framework and hedge ratio approved
beforehand by the Board of Directors. The status of the derivative transactions is reported to the Board of Directors on aquarterly basis.

CREDIT SAISONANNUAL REPORT 201237

The derivative transactions of consolidated subsidiaries are conducted in accordance with the internal management regulations that have been set by the respective company. During the term of the transactions, the subsidiary reports to theCompany on a quarterly basis the status of hedges between the derivative transactions and corresponding assets or liabilities,
the counterparty to contracts, the transaction amounts, the period remaining in the terms, and the transaction fair values.

Quantitative information regarding market risk
The main financial instruments of the Companies exposed to interest rate risk as the main risk are accounts receivable—
installment, short-term loans, long-term debt, corporate bonds, securitized receivables, and interest rate swap transactions.
The Companies estimate the impact of a reasonable fluctuation in interest rates on profit and loss a year or so from theend of an accounting period for the purpose of quantitative analysis in managing their variable risk on interest rates. In
estimating this impact, the financial assets and financial liabilities subject to the analysis are grouped into subsets of fixedinterest assets and liabilities and variable-interest assets and liabilities. The Companies then calculate the net estimatedimpact of interest rate fluctuation on variable-interest assets and variable-interest liabilities as the interest rate gap.
As of March 31, 2012 and 2011, the Companies calculated that their income (loss) before income taxes and minority
interests would decrease (increase) ¥33 million (US$404 thousand) in 2012 and ¥44 million in 2011 if the benchmark interest
rate rose 1 basis point (0.01 percentage point), and increase (decrease) ¥33 million (US$404 thousand) in 2012 and ¥44
million in 2011 if this interest rate fell 1 basis point. The impact was calculated holding risk variables other than interest rate
constant and in the absence of correlations between the other risk variables and the interest rate. Fluctuations in interest
rates greater than those reasonably estimated may result in an impact larger than the aforementioned calculations.

(iii) Liquidity risk management
The Companies manage their liquidity risk by applying ALM. In addition to ensuring fund management is conducted withappropriate timeliness, they ensure a multiplicity of fund procurement methods, secure commitment lines from multiple
financial institutions and maintain a balance of long-term and short-term procurement that is adjusted to reflect the current
market environment.

(D) SUPPLEMENTARY EXPLANATION RELATING TO FAIR VALUE OF FINANCIAL INSTRUMENTS AND OTHERS
The fair value of financial instruments is either an amount based on market prices or, in the case of no market value, thevalue calculated based on rational grounds. In the case of the latter, established assumptions and conditions are adopted.
Accordingly, if different assumptions and preconditions are adopted, the calculated amount may also be different.
Moreover, with regard to contractual value or notional principal amount that relate to derivative transactions in Note 20,
the amount itself does not reflect market risk related to the derivative transaction.

Fair value of financial instruments and others
The following presents the amount presented in the consolidated balance sheet for the years ended March 31, 2012 and2011, the fair value, and the difference between the carrying amount and fair value. Immaterial amounts in the consolidatedbalance sheets have been omitted from disclosure.

ASSETS
Millions of yen
2012
Carrying
amountCash and deposits
Accounts receivable—installment
Lease investment assets
Short-term loans receivable
Operational investment securities
Securities
Investment securities
Investments in unconsolidated subsidiaries andaffiliated companies
Long-term loans receivable¥

60,085
1,379,776
218,390
6,310
9,997
—
32,625

Allowance for
doubtfulaccounts¥

5,908
10,237—(82,426)(11,638)
(282)
—
—
—

Total

¥

—
(2)

60,085
1,297,350
206,752
6,028
9,997
—
32,625

Fair value

¥

5,908
10,23560,085
1,343,783
220,087
6,028
9,997
—
32,625Difference

¥

9,052
10,235—46,433
13,335
—
—
—
—
3,144
—

Millions of yen
2011
Carrying
amountCash and deposits
Accounts receivable—installment
Lease investment assets
Short-term loans receivable
Operational investment securities
Securities
Investment securities
Investments in unconsolidated subsidiaries andaffiliated companies
Long-term loans receivable

38

CREDIT SAISONANNUAL REPORT 2012¥

64,112
1,491,108
219,895
10,144865
982
30,104
5,722
15,166

Allowance for
doubtfulaccounts¥—(103,807)(13,527)
(483)
—
—
—
—
(4,426)

Total¥

64,112
1,387,301
206,368
9,661
865
982
30,104
5,722
10,740Fair value¥

64,112
1,452,058
219,894
9,661
865
982
30,104
9,333
10,740Difference¥—
64,757
13,526
—
—
—
—
3,611
—

Thousands of U.S. dollars
2012
Allowance for
doubtfulaccounts

Carrying
amountCash and deposits
Accounts receivable—installment
Lease investment assets
Short-term loans receivable
Operational investment securities
Securities
Investment securities
Investments in unconsolidated subsidiaries andaffiliated companies
Long-term loans receivable$

731,499
16,797,853
2,658,748
76,820121,710—397,184$

71,932
124,631

Total

Fair value— $ 731,499(1,003,492) 15,794,361(141,685)
2,517,063(3,428)73,392—
121,710———397,184$ 731,499
16,359,661
2,679,413
73,392
121,710—397,184—(25)

71,932
124,606

Difference$

110,208
124,606—
565,300
162,350————
38,276—(A) CASH AND DEPOSITSFor deposits with no maturity, as fair value approximates the carrying value, the carrying value is deemed to be the fair value.

(B) ACCOUNTS RECEIVABLE—INSTALLMENT
Accounts receivable-installment items with variable interest rates have interest rates that reflect the market interest rate in
the short term and because the fair value approximates the carrying value provided that the creditworthiness of the obligor
does not significantly change after a loan is executed, the carrying value is deemed to be the fair value. The fair value ofaccounts receivable—installment with fixed interest rates are determined by discounting the cash flow related to the financial
assets reflecting credit risk at the risk-free rate. With respect to doubtful claims, because the amount obtained by deducting
the current estimated irrecoverable balance from the amount stated on the balance sheet as of the end of the current year
is assumed to approximate the fair value, this amount is deemed to be the fair value.
Because the fair value of a part of accounts receivable—installment is assumed to approximate the carrying value for reasons
such as the estimated repayment period and the interest rate conditions, the carrying value is deemed to be the fair value.
Note that the fair value calculations stated above do not reflect future interest repayments.

(C) LEASE INVESTMENT ASSETS
The fair value of lease investment assets is determined by discounting the cash flows reflecting credit risk at the risk-free rate.

(D) OPERATIONAL INVESTMENT SECURITIES, SECURITIES, INVESTMENT SECURITIES ANDINVESTMENTS IN UNCONSOLIDATED SUBSIDIARIES AND AFFILIATED COMPANIESThe fair value of listed stock depends on the listed price on the stock exchange and the fair value of debentures depends
on the price disclosed by the listed price on the stock exchange or the price made available by the transacting financial
institutions or, in the case of no market value, the value calculated based on rational grounds. The fair value of investment
trusts is based on a reference price that has been publicly released. Concerning the investments in investment limited
partnerships or similar associations, the fair value of the association’s assets shall be the fair value appraisal in cases wherea fair value appraisal of the association’s assets is possible and the corresponding equity share of the aforesaid fair value
shall be deemed to be the fair value of the investment in the association.
Financial instruments with no market price such as unlisted stocks whose fair values cannot be reliably determined are
indicated in the table below and are not included in the fair value disclosure.
Millions of yen

Unlisted stocks
Investments in unconsolidated subsidiaries and affiliated companies
Unlisted debentures
Other

Thousands of
U.S. dollars

2012

2011

2012

Carrying
amountCarrying
amountCarrying
amount¥ 9,257
37,084—
6,111¥10,485
23,6682,800
8,206$112,699
451,472—
74,391For notes concerning available-for-sale securities for each holding purpose, refer to Note 13, “AVAILABLE-FOR-SALE
SECURITIES.”(E) SHORT-TERM LOANS RECEIVABLE
Because short-term loans receivable will be settled within the short term, the fair value approximates the carrying value andthe carrying value is deemed to be the fair value.

(F) LONG-TERM LOANS RECEIVABLE
Long-term loans receivable items with variable interest rates have interest rates that reflect the market interest rate in the
short-term and because the fair value approximates the carrying value provided that the creditworthiness of the obligor
does not significantly change after a loan is executed, the carrying value is deemed to the be the fair value. With respect todoubtful claims, because the amount obtained by deducting the current estimated irrecoverable balance from the amountstated on the balance sheet as of the end of the current year is assumed to approximate the fair value, this amount isdeemed to the fair value.

CREDIT SAISONANNUAL REPORT 201239

LIABILITIESMillions of yen
Carrying
amountNotes andaccounts payable¥240,950
Short-term loans
234,190
Commercial paper
32,000Long-term debt:
Long-termloans payable
811,846
Bonds
220,887
Long-term loans
payable on under
securitized loans
85,952
Lease obligations
4,927
Guarantee contracts—

Thousands of U.S. dollars

2011

2012
Carrying
amountFair value

Difference

2012
Carrying
amountFair value

Fair value

Difference

Difference¥240,950
234,190
32,000¥———¥171,066
248,029
110,000¥171,066
248,029
110,000¥———$2,933,400
2,851,108
389,579$2,933,400
2,851,108
389,579

820,509
225,165(8,663)(4,278)

830,595
256,112

837,532
259,713(6,937)(3,601)

9,883,686
2,689,159

9,989,155
2,741,236(105,469)(52,077)

86,296
4,927
9,277

(344)
—
9,277

94,1695,528—

94,800
5,528
6,508

(631)
—
6,508

1,046,404
59,983—

1,050,594
59,983112,941(4,190)—112,941$———(A) NOTES AND ACCOUNTS PAYABLE, SHORT-TERM LOANS, AND COMMERCIAL PAPER
Because these items will be settled within the short term, the fair value approximates the carrying value and the carrying
value is deemed to be the fair value.

(B) LONG-TERM LOANS PAYABLE
Because the rate of long-term loans payable at a variable interest rate reflects the market interest rate, long-term loans payable
at a variable interest rate are valued considering only the fluctuation of credit spreads. The fair value of long-term loans payable
with fixed interest rates is determined by discounting the cash flows related to the debt at rates assumed for the same borrowing.

(C) BONDS
For corporate bonds issued by the Company as public-offering bonds, the fair value is decided by the market price (over-thecounter selling and buying reference statistics for public and corporate bonds decided by the Japan Securities Dealers
Association). Private placement bonds issued by the Company are underwritten by the Company’s major banks based onnegotiated transactions and the fair value of such items is calculated using the same method as for (B) long-term loans payable.

(D) LONG-TERM LOANS PAYABLE ON UNDER SECURITIZED LOANS
Because the rate of long-term loans payable on under securitized loans with a variable interest rate is not affected bychanges in the Companies’ creditworthiness, the items are valued at changes in the market interest rate. The fair value of
long-term loans payable on under securitized loans with a fixed interest rate is determined by discounting the cash flows
related to the debt at the rate assumed for the same borrowing.

(E) LEASE OBLIGATIONSAs the fair value of lease obligations approximates the carrying values, the carrying value is deemed to be the fair value.

(F) GUARANTEE CONTRACTS
The fair value of guarantee contracts is determined by discounting the cash flows related to the contracts reflecting credit
risk at the risk-free rate.
As of March 31, 2012 and 2011, the guarantee contract amounts of contingent liabilities are ¥168,662 million(US$2,053,348 thousand) in 2012 and ¥157,791 million in 2011 and the amounts that are recorded as the allowance forlosses on guarantees in the consolidated balance sheets are ¥4,068 million (US$49,525 thousand) in 2012 and ¥5,464
million in 2011.
Note: Maturity analysis for financial assets and securities with contractual maturities subsequent to March 31, 2012 is asfollows:
Millions of yen
2012Year ending March 31

Cash and deposits
Accounts receivable—installment
Lease investment assets
Short-term loans receivable
Investment securities
Available-for-sale securities with
contractual maturities
Long-term loans receivable

40

CREDIT SAISONANNUAL REPORT 2012

Due in one
year or less

¥ 60,085
955,72255,680
6,310

596
19

Due after one
year throughtwo years¥—
182,61751,451—867
36

Due after
two years
throughthree years¥—
48,391
44,139—4,232
18

Due after
three years
through four
years

¥

—
17,87933,385—600
18

Due after
four years
through five
years

¥

—
6,991
19,925—2,911
18

Due after five
years

¥

—
19,888
9,983
—

888
129

Thousands of U.S. dollars
2012

Due in one
year or lessYear ending March 31

Cash and deposits
Accounts receivable—installment
Lease investment assets
Short-term loans receivable
Investment securities
Available-for-sale securities with
contractual maturities
Long-term loans receivable$

731,499
11,635,284
677,870
76,820Due after one
year throughtwo years

Due after
two years
throughthree years

Due after
three years
through fouryears

Due after
four years
through five
years

$

$

$

$

—
2,223,240
626,383——
589,131537,364——
217,670
406,444—

Due after fiveyears—
85,105242,580—$—
242,121
121,535—

7,255

10,55751,5277,305

35,43910,813

230

433

219

219

219

1,570

¥162,114 million (US$1,973,615 thousand) in 2012, and ¥204,549 million in 2011 of estimated uncollectible amounts are
not included.
Please see Note 10 for annual maturities of long term debt.

13. AVAILABLE-FOR-SALE SECURITIES(A) As of March 31, 2012 and 2011, acquisition costs and carrying amounts on the consolidated balance sheets ofavailable-for-sale securities that have market value 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

Acquisition
cost

Carrying
amount¥18,602

Thousands of U.S. dollars

2011

2012

2012

Difference

Acquisition
cost

Carrying
amountDifference

Acquisition
cost

Carrying
amount¥28,316¥9,714¥18,526¥26,311¥ 7,785$226,473 $344,724 $118,251

1,000
511

1,014
543

14
32

—
958

—
993

—
35

12,173
6,217

12,341
6,614

168
397

20,11329,8739,760

19,48427,304

7,820

244,863

363,679

118,816

4,793

4,066

(727)

4,893

3,554

(1,339)58,35349,507(8,846)

6,758
900

6,758
791

(0)
(109)

147
900

104
865

(43)
(35)

82,272
10,957

82,2719,627(1)(1,330)Difference

Other

1,164

1,134

(30)

154

124

(30)

14,172

13,810(362)

Subtotal

13,615

12,749

(866)

6,094

4,647

(1,447)

165,754

155,215(10,539)

Total¥33,728¥42,622¥8,894¥25,578¥31,951¥ 6,373$410,617 $518,894 $108,277(B) Proceeds from sales of available-for-sale securities for the years ended March 31, 2012 and 2011 were ¥971 million(US$11,824 thousand) and ¥1,672 million, respectively.
Gross realized gains and losses on these sales, computed on the moving-average cost basis, were ¥174 million(US$2,116 thousand) and ¥1 million (US$12 thousand), respectively, for the year ended March 31, 2012 and ¥2 million and¥100 million, respectively, for the year ended March 31, 2011.

(C) As of March 31, 2012, the carrying values of debt securities by contractual maturities for securities classified asavailable-for-sale securities were as follows:
Millions of yen

Thousands of
U.S. dollars

2012

Due in one year or lessDue in one to five years
Due in five to ten years
Due after ten years
Total

¥

596
8,610
—
888
¥10,094

2012

$

7,255
104,828—
10,813$122,896

CREDIT SAISONANNUAL REPORT 201241

14. RETIREMENT BENEFIT PLANS
The Company and some of its consolidated subsidiaries changed from cash balance plans and defined contribution plansor prepaid retirement benefit payment plans at the employee’s option to defined contribution plans or prepaid retirement
benefit payment plans at the employee’s option during at the current fiscal year.
The effect of this change was to increase loss before income taxes and minority interests by ¥1,658 million ($20,187
thousand) and was recorded as a loss on revision of retirement benefit plan in the statement of income for the year ended
March 31, 2012.

(A) ACCRUED PENSION AND SEVERANCE COSTS
Accrued pension and severance costs as of March 31, 2012 and 2011 are calculated below:

Projected benefit obligation
Fair value of plan assets
Funded status
Unrecognized actuarial differences
Unrecognized prior service costs
Accrued pension and severance costs

2012

Millions of yen
2011

Thousands of
U.S. dollars
2012

¥—
—
—
—
—
¥—

¥(10,260)
7,035(3,225)
3,013(1,967)¥ (2,179)

$—
—
—
—
—
$—

Adjustment for change of retirement benefit plan as of March 31, 2012 was as follows:
Thousands of
U.S. dollars

Millions of yen

Decrease in projected benefit obligation
Decrease in fair value of plan assets
Unrecognized actuarial differences
Unrecognized prior service costs
Decrease in accrued pension and severance costs

2012

2012

¥(10,757)
7,061
3,287
(1,663)¥ (2,072)$(130,963)
85,96040,012(20,240)$ (25,231)

The amount of assets moved to the defined contribution pension plan was ¥5,791 million (US$70,496 thousand). This
move was conducted on April 27, 2012.

(B) RETIREMENT BENEFIT EXPENSES
Retirement benefit expenses for the year ended March 31, 2012 and 2011 are stated below:

Service costs
Interest costs
Expected return on plan assets
Actuarial differences recognized as expenses
Prior service costs recognized as expenses
Other*
Retirement benefit expenses
Loss on revision of retirement benefit plan
Total

2012

Millions of yen
2011

Thousands of
U.S. dollars
2012

¥ 256
104
(19)
390
(304)
524
951
1,658
¥2,609

¥ 490
212
(268)
838
(613)
319
978
—
¥ 978

$ 3,112
1,269
(225)
4,752
(3,706)
6,370
11,572
20,187$31,759* Other represents payments to the defined contribution pension fund and other items.

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

42

CREDIT SAISONANNUAL REPORT 2012

2012

2011

—
—
—
—

2.0%
4.0%
9–11 years evenly
9–11 years evenly

15. DEFERRED TAX ASSETS AND LIABILITIESThe Company and consolidated subsidiaries are subject to Japanese national and local income taxes which, in the aggregate, resulted in a normal effective statutory tax rate of approximately 40.7% for the years ended March 31, 2012 and 2011.

(A) EFFECTIVE TAX RATE
A reconciliation between the normal effective statutory tax rate reflected in the accompanying consolidated statement ofincome for the year ended March 31, 2012 is as follows.
2012

Statutory tax rate
Reconciliation:
Expenses not deductible for tax purposes
Non-taxable dividend income
Inhabitants taxes per capita
Amortization of negative goodwill
Equity in net earnings of affiliated companies
Increase of valuation allowance
Decrease in deferred tax assets due to tax rate changes
Tax effect on investments in subsidiaries to be liquidated
Other
Effective tax rate

40.70%(1.23)
0.71(1.74)
1.43
14.42(277.62)(94.05)510.44(1.53)
191.53%

A reconciliation for the year ended March 31, 2011 is not provided because the deference between the effective income
tax rate of the Companies and the statutory tax rate is less than 5%.

(B) DEFERRED TAX ASSETS
The tax effects of significant temporary differences and loss carryforwards which resulted in deferred tax assets and liabilities
at March 31, 2012 and 2011 are as follows:

Deferred tax assets:
Inventories
Accumulated impairment losses
Accumulated depreciation expense
Asset retirement obligations
Investment securities
Allowance for doubtful accounts
Allowance for losses on interest repayments
Accrued expenses
Accrued enterprise taxes
Accrued pension and severance costs
Allowance for losses on point program
Allowance for losses on guarantees
Other allowance
Long-term unearned revenue
Tax effect on investments in subsidiaries to be liquidated
Tax loss carryforwards
Unrealized losses on available-for-sale securities
Deferred losses on derivatives under hedge accounting
Other
SubtotalLess valuation allowance
Total deferred tax assets
Deferred tax liabilities:
Capital gains deferred for tax purposes
Unrealized gains on available-for-sale securities
Deferred gains on derivatives under hedge accounting
Adjustment account of retirement debt
Adjustment account of debt
Other
Total deferred tax liabilities
Net deferred tax assets

Millions of yen

Thousands of
U.S. dollars

2012

2011

2012

¥ 35,081
2,360
1,191
579
5,833
20,429
9,478
380
752
—
26,011
1,528
906
426
47,892
24,951
43855
3,797
182,492(86,708)
95,784¥ 16,807
2,077
1,476
601
3,416
28,504
14,319
313
157
1,069
26,813
2,223
965
228
—
19,473
43
1,104
4,172
123,760(61,325)
62,435$ 427,092
28,736
14,5007,047
71,013248,712
115,390
4,622
9,151
—
316,669
18,597
11,036
5,184
583,057
303,767524
10,413
46,2142,221,724(1,055,608)
1,166,116(185)(3,283)
(5)
(347)
(56)
(3,267)(7,143)¥ 88,641(212)(2,682)
—
(162)
(407)
(2,962)(6,425)¥ 56,010(2,257)(39,968)(59)(4,228)(676)(39,777)(86,965)$ 1,079,151

Net deferred tax assets are presented on the consolidated balance sheets as of March 31, 2012 and 2011 as follows:

Current assets
Investment and other assets
Current liabilities—other
Long-term liabilities—other2012

Millions of yen
2011

Thousands of
U.S. dollars
2012¥12,468
76,174—
1¥23,558
32,454—2$151,787
927,373—
9
CREDIT SAISONANNUAL REPORT 201243

(C) NEW TAX REFORM LAWSOn December 2, 2011, new tax reform laws were enacted in Japan which changed the normal effective statutory tax ratefrom approximately 40.70% to 38.01% effective for the fiscal years beginning on or after April 1, 2012 through March 31,
2015, and to 35.64% afterwards. The effect of this change was to decrease deferred taxes in the consolidated balance
sheet as of March 31, 2012 by ¥9,854 million (US$119,962 thousand) and to increase income taxes—deferred in the
consolidated statement of income for the year then ended by ¥10,194 million ($124,105 thousand).

16. GAIN ON REVERSAL OF ALLOWANCE FOR LOSSES FROM A NATURAL DISASTER
For the year ended March 31, 2012, gain on reversal of allowance for losses from a natural disaster consisted of the following:Thousands of
U.S. dollars

Millions of yen

Gain on reversal of allowance for doubtful accounts
Gain on reversal of allowance for losses on guarantees
Total

2012

2012

¥4,075
1,417¥5,492$49,612
17,251$66,863

17. LOSS ON BUSINESS RESTRUCTURING OF SUBSIDIARIES
During the board meeting held on February 29, 2012, for the purpose of business restructuring of the Companies’ realestate related business, the Company made a decision to conduct a corporate reorganization (corporate split, etc.)(hereinafter referred to as the “Business Restructuring”) of consolidated subsidiary, Atrium Co., Ltd. (hereinafter referred
to as “Atrium”).
In the Business Restructuring, the Company substantially revised the real estate development policy enforced regarding
real estate (mainly consisting of development projects) owned by Atrium in relation to its business, and after drawing amuch clearer line between the projects among the businesses of Atrium to be continued, and those to withdraw from,sub-classified the property portfolio by corporate split.
In connection with this business restructuring, a loss on business restructuring was recorded for the fiscal year ended
March 31, 2012. The following is a breakdown of the loss on business restructuring:Thousands of
U.S. dollars

Millions of yen

Loss on valuation of inventories
Provision for allowance for doubtful accounts
Other
Total

2012

2012

¥45,202
11,9682,626¥59,796$550,301
145,706
31,964$727,971

18. LOSSES FROM A NATURAL DISASTER
For the years ended March 31, 2012 and 2011, losses from a natural disaster recorded as a result of the Great East Japan
Earthquake in March 2011 consisted of the following:

Provision for allowance for doubtful accounts
Provision for allowance for losses on guarantees
Restoration costs
Other
Total

2012

Millions of yen
2011

¥ —
—
—
210
¥210

¥8,1561,417
401
12¥9,986

Thousands of
U.S. dollars
2012

$

—
—
—
2,562
$2,562

19. OPERATING REVENUES
Operating revenues for the years ended March 31, 2012 and 2011 were comprised of the following revenues and expenses:
Millions of yen

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

44

Thousands of
U.S. dollars

2012

2011

2012

¥197,494
14,645
15,446¥229,536
14,437
15,261$2,404,362
178,297
188,040

49,814
46,8472,967

44,46932,351
12,118606,453
570,338
36,11576,604
63,614
12,990467¥244,009

79,67465,746
13,928433¥285,713

932,600
774,450
158,150
5,685$2,970,649*Cost of sales included write-downs of inventories amounting to ¥10,702 million (US$130,286 thousand) as of March 31, 2012 and ¥1,832 million
as of March 31, 2011.
CREDIT SAISONANNUAL REPORT 2012

20. DERIVATIVES(A) Non-hedged derivative transactions as of March 31, 2012 and 2011 are summarized below:(i) Interest rate transactions
Millions of yen
2011

2012
Contractual value or
notional principal amount

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

Total

Over 1 year

Unrealized
profit (loss)¥13,500¥13,500¥11,500¥11,500¥149¥149

Contractual value or
notional principal amount
Total

Over 1 year

Unrealized
profit (loss)¥25,500¥25,500¥13,500¥13,500¥(241)¥(241)

Thousands of U.S. dollars
2012
Contractual value or
notional principal amount

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

Total

Over 1 year

Unrealized
profit (loss)$164,354$164,354$140,005$140,005$1,813$1,813

Note: Fair value is measured at prices and other information presented by financial institutions with which the Companies have concluded
derivative agreements.

(ii) Other
Millions of yen
2011

2012
Contractual value or
notional principal amount

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

Total

Over 1 year

Unrealized
profit (loss)¥3,000¥3,000

—
—

¥47
¥47

Contractual value or
notional principal amount
Total

Over 1 year

Unrealized
profit (loss)¥3,000¥3,000¥3,000¥3,000

¥(31)
¥(31)

Thousands of U.S. dollars
2012
Contractual value or
notional principal amount

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

Total

Over 1 year

Unrealized
profit (loss)$36,523$36,523

—
—

$577
$577

Note: Fair value is measured at prices and through other information presented by financial institutions with which the Companies have concluded derivatives agreements.

(B) Hedged derivative transactions as of March 31, 2012 and 2011 are summarized below:
Millions of yen
2011

2012
Mainly hedged
objects

Interest rate swaps
recognized in general rule:
Floating-rate receipt/
fixed-rate payment
Interest rate swaps
recognized in specific rule:
Floating-rate receipt/
fixed-rate payment
Fixed-rate receipt/
floating-rate payment
Total

Contractual value or
notional principal amountContractual value or
notional principal amount

Total

Over 1 year

Fair value

Total

Over 1 year

Fair value

Long-term debt

¥176,826¥150,826¥(2,428) ¥136,716¥122,026¥ (2,712)

Long-term debt

308,841

215,400(7,442)365,881

312,041(9,120)45

10,00010,00036¥(9,825) ¥512,597¥444,067¥(11,796)

Long-term debt

15,00015,000¥500,667¥381,226

CREDIT SAISONANNUAL REPORT 201245

Thousands of U.S. dollars
2012
Mainly hedged
objects

Interest rate swaps
recognized in general rule:
Floating-rate receipt /fixed-rate payment
Interest rate swaps
recognized in specific rule:
Floating-rate receipt/
fixed-rate payment
Fixed-rate receipt/
floating-rate payment

Contractual value or
notional principal amount
Total

Over 1 year

Fair value

Long-term debt

$2,152,739$1,836,206$ (29,560)

Long-term debt

3,759,935

2,622,353(90,601)

Long-term debt

Total

182,615

182,615553$6,095,289$4,641,174$(119,608)

Note: Fair value is measured at prices and other information presented by financial institutions with which the Companies have concluded
derivative agreements.

21. COMMITMENTS AND CONTINGENT LIABILITIESAs of March 31, 2012, the Companies were contingently liable as credit guarantors for customers borrowing from ouralliance banks amounting to ¥164,594 million (US$2,003,824 thousand).

22. COMPREHENSIVE INCOME
The components of other comprehensive income for the year ended March 31, 2012 were as follows:

Unrealized gains on available-for-sale securities
Gains arising during the year
Reclassification adjustments to profit or loss
Amount before income tax effect
Income tax effectTotal unrealized gains on available-for-sale securities
Deferred losses on derivatives under hedge accounting
Losses arising during the year
Reclassification adjustments to profit or loss
Amount before income tax effect
Income tax effectTotal deferred losses on derivatives under hedge accounting
Share of other comprehensive income in affiliated companies
Gains arising during the year
Reclassification adjustments to profit or loss
Total share of other comprehensive income in affiliated companies
Total other comprehensive income

Millions of yen

Thousands of
U.S. dollars

2012

2012

¥2,588
25
2,613
(603)
2,010

$31,500
309
31,809(7,336)24,473

(724)
1,049
325
(253)
72

(8,804)
12,767
3,963(3,083)
880

1,464
15
1,479
¥3,561

17,818185
18,003$43,356

The corresponding information for the year ended March 31, 2011 was not required under the accounting standard forpresentation of comprehensive income as an exemption for the first year of adopting that standard.

23. EQUITY(A) EQUITY
Japanese companies are subject to the Companies Act of Japan (the “Companies Act”).
The significant provisions in the Companies Act that affect financial and accounting matters are summarized below:

i. Dividends
Under the Companies Act, companies can pay dividends at any time during the fiscal year in addition to the year-end
dividend upon resolution at the shareholders’ meeting. For companies that meet certain criteria, the Board of Directors may
declare dividends (except for dividends-in-kind) at any time during the fiscal year if the company has prescribed so in its
articles of incorporation.
However, the Company cannot do so because it does not meet all the above criteria.
Semiannual interim dividends may also be paid once a year upon resolution by the Board of Directors if the articles ofincorporation of the company so stipulate.
The Companies Act provides certain limitations on the amounts available for dividends or the purchase of treasury stock.
The limitation is defined as the amount available for distribution to the shareholders, but the amount of net assets after
dividends must be maintained at no less than ¥3 million.

46

CREDIT SAISONANNUAL REPORT 2012

ii. Increases/decreases and transfer of common stock, reserve and surplus
The Companies Act requires that an amount equal to 10% of dividends must be appropriated as a legal reserve (a component of retained earnings) or as additional paid-in capital (a component of capital surplus) depending on the equity accountthat was charged upon the payment of such dividends until the total of the aggregate amount of the legal reserve andadditional paid-in capital equals 25% of common stock. Under the Companies Act, the total amount of additional paid-in
capital and legal reserve may be reversed without limitation. The Companies Act also provides that common stock, legal
reserve, additional paid-in capital, other capital surplus and retained earnings can be transferred among the accounts undercertain conditions upon resolution of the shareholders.

iii. Treasury stock and treasury stock acquisition rights
The Companies Act also provides for companies to purchase treasury stock and dispose of such treasury stock by resolutionof the Board of Directors.
The amount of treasury stock purchased cannot exceed the amount available for distribution to the shareholders which isdetermined by a specific formula.
Under the Companies Act, stock acquisition rights are presented as a separate component of equity. The Companies Act
also provides that companies can purchase both treasury stock acquisition rights and treasury stock. Such treasury stockacquisition rights are presented as a separate component of equity or deducted directly from stock acquisition rights.

(B) COMMON STOCKThe Company has 300,000,000 authorized shares of which 185,444,772 shares as of March 31, 2012 and 185,444,772
shares as of March 31, 2011 were issued.

Type and number of shares issued and treasury stockThousands of shares
Issued shares(Common stock)

Balance at April 1, 2010
Number of shares increase
Number of shares decrease
Balance at March 31, 2011
Number of shares increase
Number of shares decrease
Balance at March 31, 2012

Treasury stock(Common stock)

1,802
8*1
0*2
1,810
2*3
0*4
1,812

185,445——
185,445——
185,445

Notes: 1. Increase in treasury stock
Acquisition from consolidated subsidiary: 6 thousand shares
Acquisition of any number of shares less than a full trading unit: 2 thousand shares
2. Detail of decrease
Sales of any number of shares less than a full trading unit: Less than a thousand shares
3. Increase in treasury stock
Acquisition of any number of shares less than a full trading unit: 2 thousand shares
4. Detail of decrease
Sales of any number of shares less than a full trading unit: Less than a thousand shares(C) DIVIDENDi. Dividend payment

Resolution

Type ofshare

Total amountThousands
Millions ofof U.S.
yen
dollars

General Meeting of Shareholders
on June 21, 2011

Commonstock¥5,511$67,098

Dividend per share

Yen

U.S. dollars

Recorddate

Effective
date¥30.00$0.365

March 31,2011

June 22,2011

ii. For dividend payments with an effective date in the year ended March 31, 2013, the record date occurred in the year
ended March 31, 2012

Resolution

Type ofshare

General Meeting of Shareholders Common
stockon June 27, 2012, approved

Source ofpayment

Total amountThousands
Millions ofof U.S.
yen
dollars

Retainedearnings¥5,511$67,098

Dividend per share

Yen

U.S. dollars

Recorddate

Effective
date¥30.00$0.365

March 31,2012

June 28,2012

24. CASH FLOWS INFORMATION(A) The balance of cash and cash equivalents as of March 31, 2012 and 2011 is reconciled with the respective consolidatedbalance sheet items as follows:

Consolidated balance sheet:
Cash and deposits
Securities
Short-term loans
Time deposits with a maturity of over 3 months as of the date of acquisition
Segregated trustee deposits
Cash and cash equivalents at the end of year

Millions of yen

Thousands of
U.S. dollars

2012

2011

2012

¥60,085———(84)¥60,001¥64,112
5,000
3,999
(500)
(84)
¥72,527$731,499———(1,032)$730,467
CREDIT SAISONANNUAL REPORT 201247

(B) Non-cash investing and financing activities as of March 31, 2012 and 2011 are as follows:
Thousands of
U.S. dollars

Millions of yen

Assets and liabilities from finance leases recorded in the current fiscal year

2012

2011

2012

¥1,008¥3,243$12,266(C) DESCRIPTION OF PROCEEDS FROM SALES OR REDEMPTIONS OF INVESTMENT SECURITIESThousands of
U.S. dollars

Millions of yen

Proceeds from sales of investment securities
Proceeds from redemptions of investment securities
Proceeds from distribution of limited liability partnerships and other similar
partnerships or return of capital
Total proceeds from sales or redemptions of investment securities

2012

2011

2012

¥ 971
1,028

¥ 104
1,042

$11,824
12,51250¥2,04930¥1,176609$24,945(D) BREAKDOWN OF MAJOR ASSETS AND LIABILITIES THAT DECREASED OWING TO AN ABSORPTIONTYPE COMPANY SPLIT
The following is a breakdown of the assets and liabilities the Company succeeded to Seven CS Card Service Co., Ltd,by an absorption-type company split and proceeds.
Please refer to Note 4 for additional information on the absorption-type company split.
Thousands of
U.S. dollars

Millions of yen

Current assets
Non-current assets
Current liabilities
Difference
Value of the shares transferred
Proceeds from an absorption-type company split

2012

2012

¥ 158,288
49(742)
157,595(21,801)¥135,794$ 1,927,050
596(9,037)
1,918,609(265,403)$1,653,206

25. NET INCOME PER SHARE
Reconciliation of the differences between basic and diluted net income per share (“EPS”) for the year ended March 31,
2012 and 2011 is as follows:

For the year ended March 31, 2012:

Basic EPS
Net income available to common shareholders
Effect of dilutive securities
Securities issued by a consolidated subsidiary
Diluted EPS
Net income for computation

For the year ended March 31, 2011:

Basic EPS
Net income available to common shareholders
Effect of dilutive securities
Securities issued by a consolidated subsidiary
Diluted EPS
Net income for computation

Millions of yen

Thousands ofshares

Net income

Weighted
averageshares¥9,454

183,634¥51.48$0.627

9,340

183,634

50.86

0.619

Millions of yen

Thousands ofsharesYen

U.S. dollars

Net income

Weighted
averageshares¥12,830

183,636¥69.86$0.850183,636

69.41

0.845

Yen

U.S. dollars

EPS

(114)

EPS

(84)
12,746

26. SEGMENT INFORMATION
For the years ended March 31, 2012 and 2011
Under ASBJ Statement No. 17, “Accounting Standard for Segment Information Disclosures,” and ASBJ Guidance No. 20,“Guidance on Accounting Standard for Segment Information Disclosures,” an entity is required to report financial anddescriptive information about its reportable segments. Reportable segments are operating segments or aggregations ofoperating segments that meet specified criteria. Operating segments are components of an entity about which separate
financial information is available and such information is evaluated regularly by the chief operating decision maker in deciding
how to allocate resources and in assessing performance. Generally, segment information is required to be reported on thesame basis as is used internally for evaluating operating segment performance and deciding how to allocate resources tooperating segments.

48

CREDIT SAISONANNUAL REPORT 2012

(A) DESCRIPTION OF REPORTABLE SEGMENTS
The Companies’ reportable segments are those for which separate financial information is available and regular evaluation by
the Board of Directors meeting is performed in order to decide how resources are allocated among the Companies.
The Companies conduct business activities directly with customers based on the services by market and target customer.
Accordingly, Credit Service Business, Lease Business, Finance Business, Real Estate Related Business and Entertainment Business comprise the Companies’ reporting segments.
The Credit Service Business segment consists of the Companies’ core credit card business and various peripheral businesses closely linked with the credit card business.
The Lease Business segment consists mainly of the leasing of office equipment and other assets.
The Finance Business segment consists of the credit guarantee business and other finance-related businesses.
The Real Estated Related Business segment consists of the real estate business, real estate lease business and otherbusinesses.
The Entertainment Business segment consists of amusement businesses, mainly indoor recreation facilities.

(B) METHODS OF MEASUREMENT OF THE AMOUNTS OF OPERATING REVENUES, PROFIT (LOSS),ASSETS, LIABILITIES AND OTHER ITEMS FOR EACH REPORTABLE SEGMENT
The accounting policies of each reportable segment are consistent with those disclosed in Note 2, “SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES.”(C) Information about operating revenues, profit (loss), assets and other items is as follows:

Operating revenues
Year ended
March 31, 2012
Reportable segment

OutsidecustomersInter
segment

Total

Segment
profit(loss)

Credit service
Lease
Finance
Real Estate related
Entertainment
Total
Reconciliations
Consolidated¥197,931
14,646
15,4692,973
12,990244,009—¥244,009

¥ 944
24
246
86
9
1,309
(1,309)¥ —¥198,875
14,67015,715
3,059
12,999245,318(1,309)¥244,009¥ 27,161
5,099
7,781
(10,174)
2,066
31,933(67)¥ 31,866

Segment
assets Depreciation¥1,464,670
247,157
106,415
330,637
16,0582,164,937(9,031)¥2,155,906¥10,494
236
216
833
2,552
14,331(3)¥14,328

Financial
cost

Creditcost¥11,290
3,063
1,172
4,645
34
20,204(246)¥19,958¥22,948
3,578
3,325
751
—
30,602
70¥30,672

Operating revenues
Year ended
March 31, 2011
Reportable segment

OutsidecustomersInter
segment

Total

Segment
profit(loss)

Credit service
Lease
Finance
Real Estate related
Entertainment
Total
Reconciliations
Consolidated¥229,925
14,43715,305
12,11813,928285,713—¥285,713

¥ 948
14
275
204
12
1,453
(1,453)¥ —¥230,873
14,451
15,58012,322
13,940287,166(1,453)¥285,713¥15,973
5,038
6,796(2,182)
1,737
27,362
15¥27,377

Segment
assets Depreciation¥1,493,232
241,474
121,795
365,522
20,0972,242,120(10,873)¥2,231,247¥11,575
226
255
787
2,978
15,821(4)¥15,817

Financial
cost

Creditcost¥13,953
2,957
1,220
4,679
44
22,853(276)¥22,577¥56,577
3,569
4,108
1,976
—
66,230(12)¥66,218

Operating revenues
Year ended
March 31, 2012
Reportable segment

Outsidecustomers

Credit service$2,409,676
Lease
178,300
Finance
188,331
Real Estate related
36,192Entertainment
158,150
Total
2,970,649
Reconciliations—
Consolidated$2,970,649

Inter
segment

Total

Segment
profit(loss)

Segment
assets Depreciation

Financial
cost

Creditcost$ 11,491 $2,421,167 $ 330,671 $17,831,390 $127,763 $137,446 $279,378
292
178,592
62,0833,008,977
2,871
37,29043,554
2,990
191,32194,731
1,295,531
2,634
14,27040,486
1,050
37,242 (123,857)
4,025,291
10,14656,5549,141
109
158,259
25,135
195,489
31,060412—
15,932 2,986,581
388,763 26,356,678
174,474
245,972
372,559(15,932)(15,932)(820)(109,951)(44)(2,990)855$— $2,970,649 $ 387,943 $26,246,727 $174,430 $242,982 $373,414

Millions of yen
Increase in
Investment
property,in equity
plant andmethodequipment
affiliated and intangible
companies
assets¥40,372————
40,372—¥40,372¥31,138
176
74
8,378
2,545
42,311—¥42,311

Millions of yen
Increase in
Investment
property,in equity
plant andmethodequipment
affiliated and intangible
companies
assets¥24,785————
24,785—¥24,785¥31,261
300
133
2,797
3,576
38,067—¥38,067

Thousands of U.S. dollars
Increase in
Investment
property,in equity
plant andmethodequipment
affiliated and intangible
companies
assets$491,506————
491,506—$491,506$379,079
2,142
897
101,996
30,990515,104—$515,104

RELATED INFORMATION(A) INFORMATION ABOUT PRODUCTS AND SERVICES
Years ended March 31, 2012 and 2011 were as follows:
The Company omitted this disclosure because the information is similar to the information disclosed under the segment
information.

CREDIT SAISONANNUAL REPORT 201249

(B) INFORMATION ABOUT GEOGRAPHIC REGION(i) Operating Revenues
Years ended March 31, 2012 and 2011 were as follows:
The Company omitted this disclosure because operating revenues to external customers within Japan account for morethan 90% of operating revenues reported in the consolidated statements of income.

(ii) Tangible Property and Equipment
The Company omitted this disclosure because property and equipment within Japan account for more than 90% of theproperty and equipment reported in the consolidated balance sheets.

(C) INFORMATION ABOUT MAJOR CUSTOMERS
Years ended March 31, 2012 and 2011 were as follows:
The Company omitted this disclosure because no operating revenues to any specific external customer account for 10%
or more of operating revenues reported in the consolidated statements of income.

INFORMATION REGARDING IMPAIRMENT LOSSES ON PROPERTY AND EQUIPMENT
Years ended March 31, 2012 and 2011 were as follows:
Millions of yen

Thousands of
U.S. dollars

2012
Loss onimpairment

2011
Loss onimpairment

2012
Loss onimpairment

¥ 8
—
—
31
9
48
—
¥48

¥ —
—
—
88
68
156
—
¥156

$ 97
—
—
373
108
578
—
$578

Credit service
Lease
Finance
Real Estate related
Entertainment
Total
Reconciliations
Consolidated

INFORMATION REGARDING AMORTIZATION OF GOODWILL AND UNAMORTIZED BALANCE OF GOODWILL
Years ended March 31, 2012 and 2011 were as follows:
There was no significant amortization of goodwill or unamortized balance of goodwill.

INFORMATION REGARDING GAINS ARISING FROM NEGATIVE GOODWILL
Years ended March 31, 2012 and 2011 were as follows:
There were no significant gains from negative goodwill.

27. RELATED PARTY DISCLOSURES
Transactions and balances of the Company with its affiliated companies for the years ended March 31 2012 and 2011 wereas follows:

UC Card Co., Ltd.

Millions of yen

Thousands of
U.S. dollars

2012

2011

2012

¥1,080,393¥1,102,062$13,153,070

66,894
6,467

58,5996,750

814,394
78,729Millions of yen

Thousands of
U.S. dollars

2012

2011

2012

¥701,400¥—$8,539,074

43,058—524,205

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

Seven CS Card Service Co., Ltd.

Transactions:
Volume of new contracts
Balances:
Accounts receivable—installment

Transaction terms and decision-making policy for the transaction terms:
1. Transaction amounts exclude consumption tax, among others.
2. Commissions in the recovery of accounts receivable—installment and from member store liquidations are determinedbased on market prices and other factors.

28. SUBSEQUENT EVENT
There is no applicable information.

50

CREDIT SAISONANNUAL REPORT 2012

INDEPENDENT AUDITORS’ REPORTCREDIT SAISONANNUAL REPORT 2012

51

CORPORATE HISTORY

1951

May Established as a retailer specializing in2000

installment sales

1968

Jun. Listed on the First Section of the Tokyo

started

2001

1980

Nov. Supporting company contract for the Japan

Mar. The Seibu Department Stores, Ltd. and theCompany establish a shareholding relationship,
develop a consumer credit system for the
Saison Groupnational soccer team concluded

2002

Aug. Credit Saison begins to build anationwide network of Saison Counters
to process Seibu Card issues, and to
install automated cash dispensers.
1983

Mar. Seibu Card name changed to SAISON CARD

1988

Jul. Developed an international credit card

2003

Aug. Agreement reached on a comprehensive
alliance with the card division of Idemitsu Kosan
Co., Ltd. (Idemitsu Card mydoplus issued in
April 2004)

Sep. Super Value Plus, an insurance productOct. Company name changed to Credit Saison

exclusively for cardmembers, issued through abusiness alliance between Credit Saison,
Saison Automobile and Fire Insurance Co., Ltd.
and Sompo Japan Insurance Inc.

Co., Ltd.

1991

Jan. Affinity card business started

1992

Apr. Credit Saison begins to issue Saison

Postal Savings Cards, the first cards inJapan to support signature-lesstransactions (in Seiyu food outlets).
1995

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

1997

Oct. SAISON American Express® Card

issued through an affiliation withAMERICAN EXPRESS®

Jan. Begins using SAISON CARD EXPRESS for
speedy online card issuancewith no membership fees through atie-up with Visa and MasterCard

1989

Feb. Shares of Saison Life Insurance Co., Ltd.
transferred to GE Edison Life Insurance Co., Ltd.
(currently Gibraltar Life Insurance Co., Ltd.).
New membership point service SAISON Dream
started (currently Eikyufumetsu Points, or
SAISON Permanent Points in English).
Started “Saison Eikyufumetsu Points” (“Saison
Permanent Points” in English)

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

1982

Mar. Nominated for inclusion in the Nikkei Stock
Average (Nikkei 225)

Stock Exchange

1976

Aug. Net Answer, a web site for cardmembers,

2004

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

Apr. Basic agreement reached withTakashimaya Company, Limited on a
strategic alliance in the credit cardbusiness. (TAKASHIMAYA SAISON Card
issued in September 2004)
Aug. Basic agreement on forming a strategic

alliance in the credit card businessconcluded with the Mizuho Financial
Group, Inc., Mizuho Bank, Ltd. and UC
CARD Co., Ltd.
1999

Sep. Two combined credit/cash cards issued with
regional banks, Shonai SAISON cards andSuruga SAISON card

52

CREDIT SAISONANNUAL REPORT 2012

2005

Apr. New credit center Ubiquitous starts

Oct. Establishment of Qubitous Co., Ltd., theoperationindustry’s first comprehensive
processing service specialist(Qubitous made a consolidated subsidiary in
April 2008.)
Integration of SAISON and UC point services(application of SAISON Permanent Points to the
UC Card point system)

Mizuho Mileage Club Card SAISON issued

Oct. SAISON Platinum American Express Card2008of home appliance rental in an alliance with
Yamada Denki)

issuedDec. Credit Saison acquires additional shares ofSep. Absorption by merger ofResona Card Co., Ltd.; makes this company anequity-method affiliate

2006

LAWSON CS Card, Inc.

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

Jan. Credit Saison merges with UC Card

Co., Ltd.
(card issuance business)

2009

Apr. Began to accept applications for Mitsui

Shopping Park Card Saison
Oct. Affiliation with Kyushu Railway Company,

Mar. New loan product, SAISON Card Loan, issued

issue of a common card for the whole of
JR Kyushu Group “JQ CARD Saison”

Jun. Comprehensive alliance formed with

Yamada Denki Co., Ltd. in the credit
card business (Yamada LABI Cardlaunched in July of the same year)

Jun. Launch of the rental business (commencement

2010

Mar. Basic agreement reached oncomprehensive business alliance withSEVEN & i
FINANCIAL GROUP CO., LTD.

Jul. Agreements to form a business alliance(2011 Feb. Sogo & Seibu Card business is split
off into a new joint venture)with The Shizuoka Bank, Ltd.
(Shizugin Saison Card Co., Ltd.
established in October 2006 and ALL-S
Card issued in April 2007)

Apr. Started operation of Akagi Nature Park
Jun. Strengthened alliance withAMERICAN EXPRESS®

Oct. Eikyufumetsu.com online shopping

mall opened

JPN COLLECTION SERVICE CO., LTD.
listed on the Hercules Section of the Osaka
Securities Exchange

Nov. Shareholder agreement signed with

Sep. Formed partnership with Walmart Japan
Holdings G.K., and began to accept
applications for Walmart Card SAISON

2011

2007

Aug. Tie-up with China UnionPay
for affiliated store operationsin JapanMar. Saison Asset Management Co., Ltd. launches
own investment trusts
Agreement for comprehensive alliance with
Yamaguchi Financial Group, Inc. (YM Saison
Card issued in October 2007)

Jul. Issued the NEO Money international prepaid
card targeting Japanese residents travelingoutside Japan

Daiwa House Industry Co., Ltd. and joint
venture established (Heart One Card issued
in May 2007)

Nov. Made possible to use eikyufumetsu points fornet shopping

2012

Apr. Started handling “Flat 35 Plus” mortgage loan
packages

Jun./Jul. Maximum interest rate for cash

advances reduced to 18%

Jun. Established a representative office in Hanoi,
VietnamCREDIT SAISONANNUAL REPORT 201253

CARD TIE-UPS/SOCIAL CONTRIBUTION ACTIVITIES/DONATIONS USING EIKYUFUMETSU POINTS

Card Tie-Ups

54

SAISON Platinum
American Express® Card

SAISON Gold
American Express® Card

SAISON Blue
American Express® Card

SAISON Pearl
American Express® Card

SAISON CARD International

Seiyu G.K.
Walmart Japan Holdings G.K.

PARCO CO., LTD.

Ryohin Keikaku Co., Ltd.

Yamada Denki Co., Ltd.
All Nippon Airways Co., Ltd.

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

Mitsui Fudosan Co., Ltd.

Kyushu Railway Company

Takashimaya Company, Limited

Takashimaya Company, Limited

SEIBU HOLDINGS INC.

United Air Lines, Inc.

KDDI CORPORATIONSOFTBANK MOBILE Corp.

Jupiter Telecommunications Co., Ltd.

LAWSON, INC.
Japan Airlines Co., Ltd.

Mizuho Bank, Ltd.

Yamaguchi Financial Group, Inc.

Japan Football Association

Tokyo Metro Co., Ltd.

UC Card

THE PRINTEMPS GINZA CO., LTD.

Sogo & Seibu Co., Ltd.

Sogo & Seibu Co., Ltd.

IDEMITSU CREDIT CO., LTD.

Daiwa House Financial Co., Ltd.

Resona Card Co., Ltd.

Shizugin Saison Card Co., Ltd.

CREDIT SAISONANNUAL REPORT 2012Social Contribution Activities
Support for Sport and Culture
Credit Saison is also passionately involved in social contribution
through its support of sports and cultural activities.
In sports, we have been a supporting company and corporate
sponsor of the various Japanese national football teams, including
the Nadeshiko Japan Women’s National Team, who made history bywinning the 2011 Women’s World Cup in July, and the Samurai Blue
Men’s National Team.

©J.LEAGUE PHOTOS
Starting players in the women’s representative
team playing Australia in the Kirin Challenge Cup(July 11, 2012)

In cultural activities, we are a corporate sponsor of the musicalcareer of José Carreras, an opera singer and one of The Three
Tenors famous throughout the world, as well as a corporate
endorser of and donor to the José Carreras Leukemia Foundation.

©J.LEAGUE PHOTOS
Starting players in the men’s representative
team playing Azerbaijan in the Kirin Challenge Cup(May 23, 2012)

Supporting Social Contribution Activities Through Card Usage
Our customers can participate in social contribution activities with
their cards. For example, points earned through cards use can beused to make donations to charities, including the World Terakoya
Movement of the National Federation of UNESCO Associations inJapan, guide dog training by the Japan Guide Dog Association, andactivities to support protection and education of children by theJapan Committee for UNICEF.

Donations Using Eikyufumetsu Points
Japan Soccer
Representatives Support
Fund

Support for Rearing
Guide Dogs

Support forProtecting the Earth

200 Points

200 Points

Donation to the Japan Guide
Dog Association

Donate to the Japan Fundfor Global Environment

Environmental
Protection at the
Akagi Nature Park

Support for School
Meals for Children in
Developing Countries

Protection of Coral

100 Points

200 Points

Nature preservation activities

Donation to the Japan
Association for the World
Food Programme, the public
support contact point for theUnited Nations World Food
ProgramDonation to UNICEF to
support children aroundthe world

Support for Global
Education forChildren

200 Points

200 Points

Donation to the Japan Committee
for UNICEF

Donation to the World
Terakoya Movement of the
National Federation of
UNESCO Associations inJapan

100 Points
Donation to the Japan Football
Association

200 Points
Donate to Project AWARE

Protection ofEndangered Species
200 Points
Donate to NPO Organizationof ecology-cafe

CREDIT SAISONANNUAL REPORT 2012

55

MAJOR GROUP COMPANIES(As of March 31, 2012)ATRIUM Co., Ltd. and group! Real estate liquidation andservicing business
Atrium will specialize in its original two corebusinesses: short-term, high-turnover realestate liquidation for small- and medium-sizedproperties, and the special servicing business.
It will also further refine and enhance the knowledge and skills that it has developed throughits involvement in the real estate business.
Atrium produces value by regenerating realestate assets. We aim to build customer
confidence and support by focusing on customer satisfaction and implementing effective
compliance and corporate governance.

SAISON FUNDEX CORPORATION! Personal/Business/Mortgage loans,guarantee business
Under SAISON’s Loan Hyakusen brand,
Saison Fundex offers card loan products,
such as the Cash Reserve Loan and VIPloans (for both individuals and businesses),
as well as the contract-type loan products
Lifestyle Support Loans and Real Estate
Mortgage Loans. Development in the credit
guarantee business through business cooperation with various financial institutions will
cover loans collateralized by real estate properties. The company also provides projectloans to companies that operate real estatebusinesses. In this business, it focuses onproviding reliable products that meet wide
ranging funding requirements. Going forward,
the company intends to further improve thequality of its services to better meet theserequirements.

56

Concerto Inc.
! Amusement business
Concerto aims to create optimal amusement
spaces for the enjoyment of its customers andhas established 25 “Concert Hall” pachinko
parlors in eastern Japan. As an organization
with strong regional links, it contributes to local
communities while combining spacious facilities with fine-tuned services.

JPN Holdings GroupJPN Holdings Co., Ltd. is a pure holding
company for three business companies: JPN
COLLECTION SERVICE CO., LTD., which is
involved in the servicer business, humanplus
Corporation, which provides temporary staffing and telemarketing services, and KINDERNURSERY Co., Ltd., which operates a childcare service.

! Servicer business:
A powerful infrastructure in the form of alarge-scale call center enables JPN Holdings
to respond to a wide range of needs relating
to small, unsecured receivables held by financial institutions, non-banks, and local governments. Services cover everything frommanagement and recovery to purchase ofreceivables. JPN also offers research operations, back-up services, and others.

! Real estate rental business
Concerto lets 10 commercial buildings, especiallyits “The Prime” properties in Shibuya and othercentral Tokyo locations. It is working to develop
new properties and expand its leasing businessunder a concept that calls for utilization anddevelopment of properties that enhance
local communities.

! Membership club management
The concept for Concerto’s uraku AOYAMA
membership club is to provide “the ultimate in
hospitality.” With facilities that include a fitness
gym, restaurant, guest rooms and banquet halls,
this luxurious complex provides superb service
and the ideal environment in which to enjoy thebenefits of club membership.

! Temporary staffing business:
Through its temporary staffing services, JPN
Holdings helps to improve the operational efficiency and performance of client operations andcollection divisions, especially financial institutions
and non-banks. Using this same expertise, it alsooffers best-fit solutions for local government tax
guidance services and for other public services.

! Telemarketing business:
JPN Holdings uses the expertise from receivables
management operations and its strong humanresource base from the temporary staffing business to offer various telemarketing, processing
agency and outsourcing businesses through theoperation of the company’s call centers.

! Childcare business:
JPN Holdings offers comprehensive school education services with three departments: “Child” (nursery school), “Academy” (kindergarten) and “Junior”(afterschool program). The goal is to provide childcare services that meet a diverse spectrum ofneeds by combining the academic and physicaleducation of kindergarten- age and older children
with daycare services that look after children in asafe, secure environment for extended hours.

Qubitous Co., Ltd.

Saison Information
Systems Co., Ltd.

Entertainment Plus Inc.

! Processing business! Information processing services! Entertainment Business

Qubitous provides processing services in theareas of credit card application screening,monitoring, call center operation, and otherprocessing operations, with a focus on credit
services. The company engages in contracted
processing for more than 80 client companies, primarily for Saison brand and UC brandcredit cards.
The company will seek active expansion of
its contracted processing business with theaim of being the No. 1 comprehensive processing company in both quality and quantity
by providing high-quality services and attaining
cost leadership.

Saison Information Systems engages in systems construction and operation grounded ina wealth of business process expertise developed in fields such as finance and distribution.
The company also actively engages in payroll
outsourcing and communications middleware
based on HULFT technology. It aims to be acompany that enjoys the complete trust ofcustomers by providing a one-stop service foreverything from systems construction to outsourcing and package products.

Entertainment Plus Inc. operates an online
ticketing service called “e+” for music concerts, theater, movies and other entertainment.
The company was the first in Japan to moveits operation to the Internet and with approximately 7 million registered members it leads
the industry in online sales through its storeless ticketing service. Other operations include
artist discovery and financing and productionof entertainment.

CREDIT SAISONANNUAL REPORT 2012

CORPORATE INFORMATION(As of March 31, 2012)

CREDIT SAISON CO., LTD.
Head Office:

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

Incorporated:

May 1, 1951

Paid-in Capital:¥75,929 million

Number of Employees:

Consolidated: 3,598
Non-consolidated: 1,865

Closing of Accounts:

March 31

Stock Listing:Tokyo Stock Exchange, First Section

Ticker No.:

8253

Independent Auditor:

Deloitte Touche Tohmatsu LLC

Transfer Agent:

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

Common Stock Authorized:

300,000 thousand shares

Common Stock Outstanding:

185,444 thousand shares

CREDIT SAISONANNUAL REPORT 201257