ANNUAL REPORT 2012
The year ended March 31, 2012

Corporate Philosophy

Earn the support of the public withsincerity and hard work
AIFUL was founded by President and CEO Yoshitaka Fukuda in 1967
as a sole proprietorship consumer finance business and established
as a corporation in 1978 to bolster its creditworthiness. In 1982 thecorporate name was changed to the current AIFUL CORPORATION.
AIFUL has grown into a comprehensive financial group handlingsuch diverse businesses as credit cards, small business lending,credit guarantees, loan servicing and venture capital in addition to
consumer finance.
Based on the corporate philosophy “Earn the support of the
public with sincerity and hard work,” AIFUL aims to be a company
that is truly trusted by society.

Content s
1Five-Year Summary

2

Message from President and CEO Yoshitaka Fukuda

4

Consolidated Financial Statements

37

Independent Auditor’s Report

38Group Network

39

Investor Information

Forward-Looking Statements
The figures contained in this Annual Report with respect to AIFUL’s plans and strategies and other statements that are not historical facts
are forward-looking statements about the future performance of AIFUL, which are based on management’s assumptions and beliefs in lightof the information currently available to it and involve risks and uncertainties and actual results that may differ from those in the forwardlooking statements as a result of various factors.
Potential risks and uncertainties include, without limitation, general economic conditions in AIFUL’s market and changes in the overallmarket for consumer loans, the rate of default by customers, and the level of interest rates charged by AIFUL.

Five-Year Summary
AIFUL CORPORATION and Consolidated Subsidiaries
Years Ended March 31, 2012, 2011, 2010, 2009 and 2008

2012

2011

2010

2009

2008

Total income¥116,666¥145,215¥ 218,375¥316,542¥402,389

Total expenses

98,572

178,239

507,805

308,826

371,491

32,93765,069166,259

99,273

155,930

Income (loss) before income taxes andminority interests

18,094(33,024)(289,430)

7,716

30,898Net income (loss)

17,392(31,936)(295,141)

4,247

27,434Loans¥455,012¥594,527¥ 835,928¥1,290,354¥1,598,706

Nonperforming loans

131,807

182,607

256,713

322,058

343,768

Loans in legal bankruptcy

43,033

44,136

48,84941,282

46,895

Nonaccrual loans

55,42788,221137,021

181,825

189,721

Accruing loans contractually past due
three months or more as to principal
or interest payments

4,475

9,489

15,56625,97929,351

Restructured loans

28,872

40,761

55,277

72,97277,801

Total assets

665,185

858,017

1,152,945

1,644,744

2,041,128

Allowance for doubtful accounts

156,346

192,434

236,303237,820

330,415

Total liabilities

583,541

794,412

1,055,639

1,251,410

1,716,608

Interest-bearing debt

360,569

492,610

648,823

917,792

1,354,089

Total equity

81,64463,60597,306393,334

324,521

Minority interests

1,854

2,757

3,849

5,761

5,604

72.49

¥(134.05)¥(1,238.90)

24.77¥ 190.77

—

—

—

—

186.86331.59255.32392.301,626.89

1,909.46

—

—

—

15.00

40.00

Equity ratio

12.0

7.1

8.1

23.6

15.6

ROE

24.7

(41.4)(122.7)

1.2

9.6

ROA

2.3

(3.2)

(21.1)

0.2

1.3

Payout ratio

—

—

—

60.6

21.0

Number of shares outstanding at
year-end

240,933,918

238,685,568

238,685,568

238,685,568

167,475,000

Number of employees at year-end

1,898

2,073

2,514

4,895

5,138

For the Year:

Charge-offs and provision for doubtful
accounts

At Year-End:Per Share Data (Yen/U.S. dollars (Note 2)):
Net income (loss), basic
Diluted net income
Total equity
Cash dividends¥¥

Ratios (%):

Other Data:

Notes: 1. Figures in the financial section are based on audited English-language statements.
2. The U.S. dollar amounts have been translated, for convenience only, at ¥xx=$1, the approximate rate of exchange at March 31, 2012.
3. In accordance with the provisions of Article 218 of the Commercial Code of Japan, AIFUL CORPORATION conducted a split of its common shares of 1.5 to 1
on May 23, 2005.

AIFUL CORPORATION Annual Report 20121

Message from President and CEO
Yoshitaka Fukuda
I would like to take this opportunity to express my gratitude to our shareholders for theirsupport. I’m pleased to report our financial results for the fiscal year ended March 31, 2012.

Financial Results for the Fiscal Year Ended March 31, 2012
The AIFUL Group’s consolidated operating revenue for the fiscal year ended March 31, 2012 fell 21%
from the previous fiscal year, to 114.0 billion yen. The total amount of loans outstanding declined
24% year on year, to 455.0 billion yen, mainly due to the effects of restrictions on total lending limits
for two years after their introduction in June 2010, and the high level of waiver of principal due
to interest repayments. Interest income from loans outstanding also continued to decrease, partly
influenced by the reduction in lending interest rates.
Looking at operating expenses, the allowance for doubtful accounts fell 49% year on year, to32.8 billion yen. This was chiefly attributable to an allowance for doubtful accounts related to interest
repayments not being recorded, unlike in the previous fiscal year, and a decline in credit losses.
Variable costs also fell in line with a decline in the outstanding balance, and personnel expenses,
equipment costs, and other costs also decreased, reflecting the streamlining of operations in July
2011, after the reorganization of the Group. As a result, operating expenses fell 42% year on year, to97.5 billion yen. Consequently, operating income and ordinary income amounted to 16.4 billion yen
and 16.8 billion yen, respectively.
Meanwhile, the Group recorded extraordinary income of 5.1 billion yen, chiefly reflecting a gainon the Alternative Dispute Resolution (ADR) loan extinguishment and a gain on retirement of bonds
based on the Group‘s Business Revitalization Plan, although it also posted extraordinary losses of
3.9 billion yen, mainly due to a provision for business restructuring from the solicitation of voluntary
retirement.

Yoshitaka Fukuda
President and CEO

Yoshitaka Fukuda
President and CEO

2

AIFUL CORPORATION Annual Report 2012

Current Management Situation
The management environment facing the AIFUL Group continues to be severe, principally reflecting
the current level of claims for interest repayments, which directly impacts the management of theGroup, a contraction in the scale of the market and a decline in profitability following restrictions
on total lending limits under the Money Lending Business Act, which was fully enforced on June 18,
2010, and reductions in maximum interest rates pursuant to the capital subscription law.
Under these circumstances, the AIFUL Group is working diligently to build a quality loan portfolio
and improve its financial standing and profitability. By aiming to steadily execute its Business
Revitalization Plan, utilizing consensual business revitalization alternative dispute resolution, which
went into effect on December 24, 2009, the Group is endeavoring to slash operating overhead andimprove operating efficiency through rigorous structural reforms. These include the closure andamalgamation of sales and administrative offices and the reorganization of the Group, including theconsolidation of the credit sales and credit card businesses into the Life Card brand and the consumer
finance businesses into the AIFUL brand, based on the basic policy for business restructuring.
The AIFUL Group will continue to make every effort to reduce costs through comprehensive
structural reforms, increase the number of high-quality loans, and further improve businessefficiencies across the entire Group. The Group will do its best to respond to the support andexpectations of all stakeholders by steadily executing its Business Revitalization Plan.
AIFUL would like to ask all shareholders for their assistance and support in these efforts.
June 2012

Yoshitaka Fukuda
President and CEO

Important Matters
The AIFUL Group has traditionally raised short-term and long-term funds through various methods, including borrowings
from financial institutions, issuing bonds, and securitizing loan receivables. However, the AIFUL Group’s fund-raising capacity
has been confronted by difficult conditions in the current market environment due to a variety of reasons including increased
expenses as the result of rising demands for interest refunds in accordance with a ruling by Japan’s Supreme Court in 2006
as well as the rapid and sharp deterioration in the fund-raising environment. Accordingly, there have been concerns that the
AIFUL Group may have difficulty in raising sufficient new funds to sustain its business.
As a result, since the fiscal year ended March 31, 2010, conditions have arisen to cast a substantial doubt about the AIFULGroup’s ability to continue as a going concern.
In order to resolve this situation, the AIFUL Group applied on September 24, 2009 for Business Revitalization Procedures
using the Alternative Dispute Resolution (the “ADR”) process in order to improve its earning capacity and financial strengthwith the goal of revitalizing and reinforcing its business. At the meeting of participating creditors held on December 24, 2009,
the AIFUL Group obtained an approval for its Business Revitalization Plan, which includes the provision of financial support.
As a result, Business Revitalization Procedures using the ADR process were adopted.
In the fiscal year ended March 31, 2012, the AIFUL Group undertook its repayment of ¥27,301 million to creditors on June
10, 2011 in accordance with its Business Revitalization Plan.
By implementing concrete measures stipulated under the Business Revitalization Plan, the AIFUL Group considers that there
is no substantial uncertainty about its ability to continue as a going concern.

AIFUL CORPORATION Annual Report 20123

Consolidated Financial Statements

Consolidated Balance Sheet
March 31, 2012
AIFUL CORPORATION and Consolidated Subsidiaries

Thousands of U.S.
Dollars (Note 1)

Millions of Yen

ASSETS

2012

2011

2012

¥ 86,696¥ 139,971$1,057,268

CURRENT ASSETS:
Cash and cash equivalents (Note 16)

5

5

61

Operational investment securities (Notes 6 and 16)

Time deposits (Note 16)

662

725

8,073

Allowance for investment losses

(50)

(65)

(610)

Loans (Notes 3, 8 and 16)

455,012594,527

5,548,927

Installment accounts receivable (Notes 4, 8 and 16)

78,95077,335

962,805

Credit guarantees (Note 5)

74,14882,134904,244

Loans, credit guarantees and receivables:

Other receivables
Allowance for doubtful accounts (Notes 2.l and 16)
Prepaid expenses

13,031

14,902

158,914(117,604)(160,191)(1,434,195)

3,169

2,086

38,646

Other current assets (Note 8)

14,05031,316

171,343

Total current assets

608,069

782,745

7,415,476

Land (Notes 7 and 8)

8,960

9,541

109,268

Buildings and structures (Notes 7 and 8)

24,255

26,414

295,793

Machinery and equipment (Notes 7 and 8)

385

330

4,695

17,166

17,522

209,341

Lease assets

338

341

4,122

Construction in progress

140

256

1,708

PROPERTY AND EQUIPMENT:

Furniture and fixtures (Note 7)

Total

51,24454,404

624,927

Accumulated depreciation(31,886)(31,838)(388,854)

Net property and equipment

19,35822,566

236,073

1,490

5,417

18,171

(42)

(639)

(512)

INVESTMENTS AND OTHER ASSETS:
Investment securities (Notes 6 and 16)
Allowance for investment losses
Investments in and advances to unconsolidated subsidiaries (Note 16)

2,480

2,377

30,244Claims in bankruptcy (Notes 3 and 16)

45,232

46,838551,610

Software, net (Note 7)

8,510

11,589103,780

Lease and guarantee deposits

17,642

17,850215,146

Long-term prepayments

513

562

6,256

Other assets (Note 7)

675

955

8,231

Allowance for doubtful accounts (Note 16)(38,742)(32,243)(472,463)

Total investments and other assets

37,75852,706

460,463¥ 665,185¥ 858,017$8,112,012

TOTAL
See notes to consolidated financial statements.

4

AIFUL CORPORATION Annual Report 2012

Consolidated Balance Sheet

Thousands of U.S.
Dollars (Note 1)

Millions of Yen

LIABILITIES AND EQUITY

2012

2011

2012

¥ 35,000¥ 42,580$426,829

61,812

132,703753,805

144

462

1,756

Trade accounts payable

22,20921,003

270,841

Obligation under credit guarantees (Note 5)

74,14882,134904,244

426

412

5,195

Accrued expenses

1,654

2,904

20,171

Allowance for credit card point redemption

2,310

2,006

28,171

2,127

196

25,939CURRENT LIABILITIES:
Short-term borrowings (Notes 8 and 16)
Current portion of long-term debt (Notes 8, 15 and 16)
Trade notes payable

Income taxes payable

Allowance for losses from business restructuring(Note 12)
Allowance for losses from a natural disaster
Other current liabilities (Notes 4, 5 and 16)

51
7,296

9,521

88,976207,126

293,972

2,525,927

Long-term debt (less current portion) (Notes 8, 15 and 16)

263,757

317,327

3,216,549

Allowance for losses on interest refunds (Note 2.l)

Total current liabilities
LONG-TERM LIABILITIES:

108,668

178,770

1,325,220

Negative goodwill, net (Note 20)

435

653

5,305

Deferred tax liabilities (Note 14)

124

129

1,512

Other long-term liabilities

3,431

3,561

41,841

Total long-term liabilities

376,415

500,440

4,590,427

143,325

143,325

1,747,866

164,392

164,134

2,004,780

51

24

622

(224,820)(242,212)(2,741,707)(3,110)(3,110)(37,927)(48)(1,313)(585)

79,79060,848973,049

EQUITY (Note 10):
Common stock, authorized, 568,140,000 shares;
issued, 240,933,918 shares in 2012 and 238,685,000 shares in 2011
Capital surplus
Stock acquisition rights
Retained earnings
Treasury stock, at cost 457,895 shares in 2012 and 457,178 shares in 2011
Accumulated other comprehensive income (loss)
Unrealized loss on available-for-sale securities
Total
Minority interests

1,854

2,757

22,609Total equity

81,64463,605995,658¥ 665,185¥ 858,017$8,112,012

TOTAL

AIFUL CORPORATION Annual Report 20125

Consolidated Financial Statements

Consolidated Statement of Operations
Year Ended March 31, 2012
AIFUL CORPORATION and Consolidated Subsidiaries

Thousands of U.S.
Dollars (Note 1)

Millions of Yen
2012

2011

2012

¥ 75,993¥ 103,784$926,744

11,344

12,328138,341

INCOME:Interest on loans
Revenue from credit card business
Revenue from installment sales finance business
Revenue from credit guarantee

375

692

4,573

4,798

5,759

58,512

Interest on deposits, securities and other

169

283

2,061

Recovery of loans previously charged off

11,431

12,632

139,402

Amortization of negative goodwill (Note 21)

218

218

2,658

Gain on retirement of bonds (Note 21)

815

1,537

9,939

Reversal of allowance for investment losses

154

1,878

Gain on purchase of borrowings

2,902

35,390Gain on negative goodwill (Notes 20 and 21)

1,115

13,598Other income

7,352

7,982

89,660116,666

145,215

1,422,756

Interest on borrowings and bonds

9,353

11,549114,061

Provision for doubtful accounts (Note 21)

32,93765,069401,671

Total income
EXPENSES:

Provision for losses on interest refunds (Note 21)
Salaries and other employees' benefits
Net periodic benefit costs (Note 9)Advertising expenses

27,211
15,38018,106

187,561

617

628

7,524

2,416

1,719

29,463

Provision for credit card point redemption (Note 21)

1,392

2,006

16,976

Rental expenses (Note 15)

3,122

4,230

38,073

Commissions and fees

10,00012,514

121,951

Depreciation and amortization (Note 21)

6,902

7,808

84,171

347

1,548

4,232

Loss on sales of investment securities (Note 6)

1,453

64

17,720Loss from and provision for business restructuring (Note 12)

2,156

389

26,293

Provision for investment losses (Note 21)
Foreign exchange loss

271

Losses from a natural disaster (Note 13)

6,602

Loss on adjustment for application of accounting standard for asset
retirement obligations

1,278

Other expenses
Total expenses
INCOME (LOSS) BEFORE INCOME TAXES AND MINORITY INTERESTS

12,497

17,247

152,402

98,572

178,239

1,202,098

18,094(33,024)

220,658

INCOME TAXES (Notes 14 and 21):
Current

241

78

2,939

Deferred

(9)

(79)

(110)

232

(1)

2,829

17,862(33,023)

217,829

Total income taxes
NET INCOME (LOSS) before minority interests
MINORITY INTERESTS IN NET INCOME (LOSS)NET INCOME (LOSS)

470(1,087)

5,731¥ 17,392¥ (31,936)$212,098
U.S. Dollars(Note 1)Yen
AMOUNTS PER COMMON SHARE (Notes 2.v and 19):
Basic net income (loss)
Cash dividends applicable to the year
See notes to consolidated financial statements.

6

AIFUL CORPORATION Annual Report 2012

¥ 72.49¥ (134.05)

nil

nil

$0. 88

Consolidated Financial Statements

Consolidated Statement of Comprehensive Income
Year Ended March 31, 2012
AIFUL CORPORATION and Consolidated Subsidiaries

Millions of Yen

Thousands of U.S.
Dollars (Note 1)

2012

2011

2012

¥ 17,862¥ (33,023)$ 217,829

Unrealized gain (loss) on available-for-sale securities

1,265

(701)

15,427

Total other comprehensive income (loss)

1,265

(701)

15,427¥ 19,127¥ (33,724)$ 233,256¥ 18,657¥ (32,633)$ 227,524

470(1,091)

5,732

NET INCOME (LOSS) BEFORE MINORITY INTERESTSOTHER COMPREHENSIVE INCOME (LOSS) (Note 18):COMPREHENSIVE INCOME (LOSS)OTAL COMPREHENSIVE INCOME (LOSS)ATTRIBUTABLE TO:
Owners of the parent
Minority interests

See notes to consolidated financial statements.

AIFUL CORPORATION Annual Report 20127

Consolidated Financial Statements

Consolidated Statement of Changes in Equity
Year Ended March 31, 2012
AIFUL CORPORATION and Consolidated Subsidiaries

Thousands

BALANCE AT APRIL 1, 2010

Millions of Yen

Number of
Shares ofCommonStock Issued

CommonStock

238,686¥ 143,325

CapitalSurplus¥ 164,134

Stock
Acquisition
Rights¥ Nil

Net loss

Retained
Earnings¥ (210,276)

TreasuryStock

Accumulated
Other
Comprehensive
Income (Loss)
Unrealized
Gain (Loss) on
Available-forsale Securities¥ (3,110)¥ (616)(31,936)

Total

Minority
Interests

Total
Equity¥ 93,457¥ 3,849¥ 97,306(31,936)(31,936)

Net increase in treasury
stock (120 shares)
24

Net change in the year

BALANCE AT MARCH 31, 2011

238,686

143,325

164,134

24

Net income(242,212)(3,110)

(697)

(673)

(1,092)(1,765)(1,313)60,8482,757

63,605

17,392

17,392

17,392258

258

Net increase in treasury
stock (717 shares)
Issuance of new shares(Notes 10 and 20)

2,248

258

Net change in the year

BALANCE AT MARCH 31, 201227

240,934¥ 143,325¥ 164,392¥ 51¥ (224,820)¥ (3,110)

1,265

1,292

(903)

389

¥ (48)¥ 79,790¥ 1,854¥ 81,644

Total

Minority
Interests

Total
Equity$742,049$33,622$775,671

Thousands of U.S. Dollars (Note 1)

CommonStock

BALANCE AT MARCH 31, 2011

$1,747,866

CapitalSurplus$2,001,634

Stock
Acquisition
Rights$293

Net income

Retained
Earnings$ (2,953,805)

TreasuryStock$ (37,927)

Accumulated
Other
Comprehensive
Income (Loss)
Unrealized
Gain (Loss) on
Available-forsale Securities$ (16,012)

212,098

212,098

212,098

3,146

3,146

Net increase in treasury
stock (717 shares)
Issuance of new shares(Notes 10 and 20)

3,146

Net change in the year

BALANCE AT MARCH 31, 2012

329

$1,747,866

See notes to consolidated financial statements.

8

AIFUL CORPORATION Annual Report 2012

$2,004,780$622$ (2,741,707)$ (37,927)

15,42715,756(11,013)4,743$ (585)$973,049$22,609$995,658

Consolidated Financial Statements

Consolidated Statement of Cash Flows
Year Ended March 31, 2012
AIFUL CORPORATION and Consolidated Subsidiaries

Thousands of U.S.
Dollars (Note 1)

Millions of Yen
2012

2011

2012

¥ 18,094(33,024)$ 220,658

Income taxes - paid

(132)

(367)

(1,610)

Income taxes - refund

48

155

585

OPERATING ACTIVITIES:
Income (loss) before income taxes and minority interests
Adjustments for:

Loss on adjustment for application of accounting standard for asset retirement
obligations

1,278

Depreciation and amortization

6,902

7,808

84,171

Amortization of negative goodwill

(218)

(218)

(2,658)(Decrease) increase in allowance for investment losses

(358)

1

(4,366)

Decrease in allowance for doubtful accounts(36,088)(43,869)(440,098)

Decrease in allowance for bonuses

(343)

(66)

(4,183)

Increase in allowance for point card certificates

304

550

3,707

Decrease in allowance for losses on interest refunds(70,102)(59,139)(854,902)

Increase (decrease) in allowance for losses from business restructuring

1,931(1,127)23,549Loss (gain) on sale of investments in securities, net

1,398

(485)

17,049Gain on retirement of bonds(815)(1,537)(9,939)Gain on purchase of borrowings(2,902)(35,390)

Gain on negative goodwill(1,115)(13,598)

Changes in assets and liabilities:
Decrease in loans

139,515

241,401

1,701,402(1,615)48,655(19,695)(Increase) decrease in purchased receivables

(374)

1,368

(4,561)

Decrease in other operating receivables

2,245

1,598

27,378Decrease in claims in bankruptcy

1,606

3,563

19,585

86

1,090

1,049

(Increase) decrease in installment accounts receivable

Decrease in operating guarantee deposits
Decrease in other current assets

16,161

18,098

197,085

Decrease in other current liabilities(2,083)(27,762)(25,402)

595

2,129

7,257

Total adjustments

54,646

193,124

666,415

Net cash provided by operating activities

72,740160,100

887,073

Capital expenditures(2,343)(3,231)(28,573)

Proceeds from sale of property, plant and equipment

1,742

6,138

21,244

Proceeds from sales of investment securities

3,776

1,328

46,049Other, net

(521)

1,260

(6,354)

2,654

5,495

32,366¥ 75,394

165,595$ 919,439

Other, net

INVESTING ACTIVITIES:Net cash provided by investing activities
FORWARD(Continued)

AIFUL CORPORATION Annual Report 20129

Consolidated Statement of Cash Flows

Thousands of U.S.
Dollars (Note 1)

Millions of Yen
2012

2011

2012

¥ 75,394

165,595$ 919,439

Net decrease in short-term borrowings(7,580)(18,625)(92,439)

Proceeds from long-term debt

21,556

23,100262,878

Repayments of long-term debt

(142,587)(158,743)(1,738,866)

(65)

(79)

(793)

(128,676)(154,347)(1,569,220)

7

(25)

84

NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS(53,275)

11,223(649,697)

CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR

139,971

128,748

1,706,965

CASH AND CASH EQUIVALENTS, END OF YEAR

¥ 86,696¥ 139,971$ 1,057,268

FORWARD
FINANCING ACTIVITIES:Other, net
Net cash used in financing activities
FOREIGN CURRENCY TRANSLATION ADJUSTMENTS ON CASH AND
CASH EQUIVALENTS

See notes to consolidated financial statements.

10

AIFUL CORPORATION Annual Report 2012

Consolidated Financial Statements

Notes to Consolidated Financial Statements
Year Ended March 31, 2012
AIFUL CORPORATION and Consolidated Subsidiaries

1 BASIS OF PRESENTATION OF CONSOLIDATED FINANCIAL STATEMENTS
The accompanying consolidated financial statements have beenpresent them in a form which is more familiar to readers outside

prepared in accordance with the provisions set forth in theJapan. In addition, certain reclassifications have been made inJapanese Financial Instruments and Exchange Act and its related

the 2011 financial statements to conform to the classificationaccounting regulations, and in conformity with accounting

used in 2012.

principles generally accepted in Japan (”Japanese GAAP”), which

The consolidated financial statements are stated in Japaneseare different in certain respects as to application and disclosure

yen, the currency of the country in which the Company isrequirements of International Financial Reporting Standards andincorporated and operates. The translations of Japanese yen

accounting principles generally accepted in the United States ofamounts into U.S. dollar amounts are included solely for theAmerica. The consolidated financial statements are not intended

convenience of readers outside Japan and have been madeto present the financial position, results of operations and cash

at the rate of ¥82 to $1, the approximate rate of exchange atflows in accordance with accounting principles generally accepted

March 31, 2012. Such translations should not be construed

in countries and jurisdictions other than Japan.

as representations that the Japanese yen amounts could be

In preparing these consolidated financial statements, certain

converted into U.S. dollars at that or any other rate.

reclassifications and rearrangements have been made to theconsolidated financial statements issued domestically in order to

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESa. Consolidation — The consolidated financial statements

control over operations are fully consolidated, and those com-

include the accounts of AIFUL CORPORATION (the ”Company”)

panies over which the Group has the ability to exercise signifi-

and its four (eight in 2011) significant subsidiaries (together, thecant influence are accounted for by the equity method.

”Group”). Consolidation of the remaining thirteen (fourteenin 2011) unconsolidated subsidiaries would not have a material
effect on the accompanying consolidated financial statements.
On July 1, 2011, four consolidated subsidiaries (LIFE Co., Ltd.

Investments in six unconsolidated subsidiaries are statedat cost. Investments in the remaining seven unconsolidated
subsidiaries (eight in 2011), which are limited liability investment
partnerships and similar partnerships, are initially recorded at(following its spin-off), City’s Corporation, City Green Corpora-cost, and the carrying amount is adjusted to recognize thetion and Marutoh KK) were absorbed by the Company (NoteCompany’s interests in earnings or losses in such partnerships20), and excluded from the scope of consolidation. As well,based on the most recent available financial statements of thethe results of operations of these four subsidiaries were consoli-

partnerships. If the equity method of accounting had been

dated up to June 30, 2011.

applied to the investments in these companies, the effect on

In March, 2007, the Accounting Standards Board of Japan (the ”ASBJ”) issued ASBJ Implementation Guidance No.
15, ”Implementation Guidance on Disclosures about Certain

the accompanying consolidated financial statements would not
be material.
The difference between the cost of an acquisition and theSpecial Purpose Entities” (”Guidance No. 15”). This standard

fair value of the net assets of the acquired subsidiary at thepermits companies to avoid consolidation of certain special pur-date of acquisition is reported as goodwill or negative goodwill

pose entities which were established and are being operated

in the accompanying consolidated balance sheet.

for the purpose of securitization of receivables.

Goodwill on acquisition of subsidiaries is amortized us-

A consolidated subsidiary securitizes its trust beneficiarying the straight-line method over the estimated period (not tobacked by installment accounts receivable and loans to diversify

exceed 20 years) in which economic benefits are expected toits funding sources and ensure stable funding. In the securitiza-

be realized. However, when the excess of cost over net assets

tion structures, the consolidated subsidiary uses special purposeof subsidiaries acquired is not material, it is charged to income

entities.

when incurred. Negative goodwill on acquisition of subsidiar-As a result of such securitizations, a consolidated subsidiary
had one (two in 2011) special purpose entity which is not con-ies prior to March 31, 2010 is amortized using the straight-line
method over ten years.

solidated under Guidance No. 15 as of March 31, 2012. Related

All significant intercompany balances and transactions havedisclosures for the fiscal years ended March 31, 2012 and 2011

been eliminated in consolidation. All material unrealized profit

were omitted due to immateriality.

included in assets resulting from transactions within the Group

Under the control or influence concept, those companies
in which the Company, directly or indirectly, is able to exercise

is eliminated.
b. Business Combinations — In October 2003, the Business

AIFUL CORPORATION Annual Report 201211

Notes to Consolidated Financial Statements

Accounting Council (the ”BAC”) issued a Statement of Opinion,similar partnerships are initially recorded at cost, and the car-

”Accounting for Business Combinations”, and in December

rying amount is adjusted to recognize the Company’s interests

2005, the ASBJ issued ASBJ Statement No. 7, ”Accounting

in earnings or losses in such partnerships based on the mostStandard for Business Divestitures” and ASBJ Guidance No.

recent available financial statements of the partnerships.

10, ”Guidance for Accounting Standard for Business Combina-

stated at cost. Depreciation of property and equipment of thebusiness combinations allows companies to apply the pooling

Company and its consolidated subsidiaries is computed by theof interests method of accounting only when certain specificdeclining-balance method except that the straight-line method

criteria are met such that the business combination is essentiallyis applied to the buildings of the Company’s consolidated

regarded as a uniting-of-interests. For business combinations

subsidiaries acquired on and after April 1, 1998. The range ofthat do not meet the uniting-of-interests criteria, the busi-

useful lives is principally from 2 to 62 years for buildings andness combination is considered to be an acquisition and thestructures, from 3 to 17 years for machinery and equipment,purchase method of accounting is required. This standard alsoprescribes the accounting for combinations of entities undercommon control and for joint ventures.

and from 2 to 20 years for furniture and fixtures.
f. Long-lived Assets — The Group reviews its long-lived assets
for impairment whenever events or changes in circumstanceIn December 2008, the ASBJ issued a revised accounting

indicate the carrying amount of an asset or asset group may

standard for business combinations, ASBJ Statement No. 21,

not be recoverable. An impairment loss would be recognized”Accounting Standard for Business Combinations”. Major

if the carrying amount of an asset or asset group exceeds theaccounting changes under the revised accounting standard

sum of the undiscounted future cash flows expected to result

are as follows: (1) The revised standard requires accounting

from the continued use and eventual disposition of the asset orfor business combinations only by the purchase method. As

asset group. The impairment loss would be measured as thea result, the pooling of interests method of accounting is noamount by which the carrying amount of the asset exceeds its

longer allowed. (2) The previous accounting standard accounts

recoverable amount, which is the higher of the discounted cash

for research and development costs to be charged to income asflows from the continued use and eventual disposition of theincurred. Under the revised standard, in-process research andasset or the net selling price at disposition.

development (IPR&D) acquired in the business combination is

g. Software — Expenditures for the purchase of software, which

capitalized as an intangible asset. (3) The previous accounting

meet certain future-tests, are capitalized as software and amor-

standard provided for a bargain purchase gain (negative good-

tized by the straight-line method over the estimated useful liveswill) to be systematically amortized over a period not exceeding
20 years. Under the revised standard, the acquirer recognizesof five years.
h. Allowance for Doubtful Accounts — The allowance forthe bargain purchase gain in profit or loss immediately on the

doubtful accounts is stated in amounts considered to be appro-acquisition date after reassessing and confirming that all ofpriate based on the Group’s past credit loss experience and an

the assets acquired and all of the liabilities assumed have been

evaluation of potential losses in the accounts outstanding.

identified after a review of the procedures used in the purchasei. Allowance for Investment Losses — The allowance forallocation. This standard was applicable to business combina-

investment losses is stated in amounts considered to be appro-tions undertaken on or after April 1, 2010.

priate based on the financial position of the investment destina-c. Cash Equivalents — Cash equivalents are short-term investments that are readily convertible into cash and that are exposed to insignificant risk of changes in value. Cash equivalentstion and an evaluation of potential losses on non-marketable
investment securities.
j. Allowance for Credit Card Point Redemption — The al-include time deposits which mature or become due withinlowance for credit card point redemption is provided at an

three months of the date of acquisition.

estimated amount of future costs related to credit card point

d. Operational Investment Securities Held by Venture

redemption. These points are granted to card members ac-

Capital Subsidiary and Investment Securities — Operation-

cording to the point system that is intended to promote theal investment securities held by a venture capital company andusage of cards.

investment securities, all of which are classified as available-k. Allowance for Losses from Business Restructuring — The

for-sale securities, are reported at fair value, with unrealized

allowance for losses from business restructuring is provided

gains and losses, net of applicable taxes, reported in a separate

at an estimated amount of future costs related to closure ofcomponent of equity. The cost of securities sold is determined

outlets and other restructuring activities.

based on the moving-average cost method. Non-marketablel. Allowance for Losses on Interest Refunds — The limit of in-available-for-sale securities are stated at cost determined by theterest rates is regulated by two laws - ”Contributions Law” andmoving-average method. For other than temporary declines”Interest Rate Restriction Law”. Under the former law, interestin fair value, operational investment securities and investment

rates on loans should not exceed 29.2% (20.0% for customers

securities are reduced to net realizable value by a charge to

who originate loans after June 18, 2010) and the violation ofincome.

law is considered to be a criminal penalty. The latter law stipu-

Investments in limited liability investment partnerships and

12e. Property and Equipment — Property and equipment are

tions and Business Divestitures”. The accounting standard for

AIFUL CORPORATION Annual Report 2012lates that interest payments for interest rates that exceed theNotes to Consolidated Financial Statements

legal limit (20.0% for principal amounts under ¥100 thousand,Statement No. 8, ”Accounting Standard for Stock Options”

18.0% for principal amounts not less than ¥100 thousand andand related guidance. The new standard and guidance areunder ¥1 million and 15.0% for principal amounts not lessapplicable to stock options newly granted on and after May

than ¥1 million) are void. However, under the ”Moneylending

1, 2006. This standard requires companies to recognize com-Business Control and Regulation Law”, such interest payments

pensation expense for employee stock options based on theare nonetheless considered to be valid if moneylenders issue

fair value at the date of grant and over the vesting period as

notices as prescribed by the law to debtors and debtors pay vol-consideration for receiving goods or services. The standard

untarily (For customers who originate loans after June 18, 2010,

also requires companies to account for stock options grantedsuch system is abolished.). Strict interpretation by the courts of

to non-employees based on the fair value of either the stock

these requirements has led to decisions against moneylenders

option or the goods or services received. In the balance sheet,and resulted in more debtors claiming for the return of excess

the stock option is presented as a stock acquisition right as ainterest payments.

separate component of equity until exercised. The standard

The Company and certain consolidated subsidiaries havecovers equity-settled, share-based payment transactions, butloaned money at rates between the limits set by the two laws.

does not cover cash-settled, share-based payment transactions.

Allowance for losses on interest refunds is stated in amounts

In addition, the standard allows unlisted companies to measureconsidered to be appropriate based on the Company’s and cer-

options at their intrinsic value if they cannot reliably estimate

tain consolidated subsidiaries’ past refund loss experience, therecent situation regarding interest refunds and other factors.

fair value.
o. Leases — In March 2007, the ASBJ issued ASBJ Statement

At March 31, 2012 and 2011, the Group recorded an

No. 13, ”Accounting Standard for Lease Transactions”, whichallowance of ¥108,668 million ($1,325,220 thousand) andrevised the previous accounting standard for lease transactions¥178,770 million, respectively, as ”Allowance for losses on

issued in June 1993. The revised accounting standard for leaseinterest refunds”. In addition, the estimated amount of interest

transactions was effective for fiscal years beginning on or after

refunds of ¥58,112 million ($708,683 thousand) and ¥77,013

April 1, 2008.

million which were expected to be preferentially set off against

Under the previous accounting standard, finance leases

loans was recorded as ”Allowance for doubtful accounts” forthat were deemed to transfer ownership of the leased property

the Company and certain consolidated subsidiaries at March 31,

to the lessee were capitalized. However, other finance leases

2012 and 2011, respectively.

were permitted to be accounted for as operating lease transac-

m. Asset Retirement Obligations — In March 2008, the ASBJ

tions if certain ”as if capitalized” information was disclosed

published ASBJ Statement No. 18 ”Accounting Standard forin the note to the lessee’s financial statements. The revised

Asset Retirement Obligations” and ASBJ Guidance No. 21

accounting standard requires that all finance lease transactions”Guidance on Accounting Standard for Asset Retirement Obli-be capitalized by recognizing lease assets and lease obligations

gations”. Under this accounting standard, an asset retirementin the balance sheet.

obligation is defined as a legal obligation imposed either by

In addition, the accounting standard permits leases which

law or contract that results from the acquisition, construction,

existed at the transition date and do not transfer ownership ofdevelopment and the normal operation of a tangible fixed asset

the leased property to the lessee to continue to be accounted

and is associated with the retirement of such tangible fixed as-

for as operating lease transactions.

set. The asset retirement obligation is recognized as the sum of

The Group applied the revised accounting standard effec-

the discounted cash flows required for the future asset retire-tive April 1, 2008. In addition, the Group continues to accountment and is recorded in the period in which the obligation isfor leases which existed at the transition date and do not trans-

incurred if a reasonable estimate can be made. If a reasonable

fer ownership of the leased property to the lessee as operating

estimate of the asset retirement obligation cannot be madelease transactions.

in the period the asset retirement obligation is incurred, theLease assets related to finance lease transactions without

liability should be recognized when a reasonable estimate of as-

title transfer are depreciated on a straight-line basis, over theset retirement obligation can be made. Upon initial recognitionleased periods as their useful lives and with no residual value.

of a liability for an asset retirement obligation, an asset retire-

All other leases are accounted for as operating leases.

ment cost is capitalized by increasing the carrying amount of

p. Income Taxes — The provision for income taxes is computed

the related fixed asset by the amount of the liability. The asset

based on the pretax income included in the consolidated state-retirement cost is subsequently allocated to expense throughments of operations. The asset and liability approach is used

depreciation over the remaining useful life of the asset. Over

to recognize deferred tax assets and liabilities for the expected

time, the liability is accreted to its present value each period.

future tax consequences of temporary differences between

Any subsequent revisions to the timing or the amount of thethe carrying amounts and the tax bases of assets and liabilities.

original estimate of undiscounted cash flows are reflected as

Deferred taxes are measured by applying currently enacted tax

an increase or a decrease in the carrying amount of the liability
and the capitalized amount of the related asset retirement cost.
n. Stock Options — In December 2005, the ASBJ issued ASBJ

laws to the temporary differences.
q. Foreign Currency Transactions — All short-term andlong-term monetary receivables and payables denominated in

AIFUL CORPORATION Annual Report 201213

Notes to Consolidated Financial Statements

foreign currencies are translated into Japanese yen at the ex-

sured at market value but the differential paid or received underchange rates at the balance sheet date. The foreign exchange

the swap or cap contracts is recognized and included in interest

gains and losses from translation are recognized in the consolidated statements of operations to the extent that they are nothedged by forward exchange contracts.
r. Revenue Recognition:
Interest on Loans — Interest on loans is recorded on an ac-

puted 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.

crual basis. In accordance with the practice prevailing in the

Diluted net income per share of common stock reflects

industry, the Company records accrued interest at either thethe potential dilution that could occur if securities were con-interest rate stipulated in the Interest Rate Restriction Law orverted into common stock and assumes full conversion of thethe contracted interest rate, whichever is lower.

outstanding convertible bonds at the time of issuance and full

Revenue from Credit Card Business, Revenue fromexercise of outstanding stock options.

Installment Sales Finance Business — Fees from customers

Cash dividends per share presented in the accompanying

and member stores applying the add-on method are generally

consolidated statements of operations are dividends applicable

recorded collectively as unearned income when credit contracts

to the respective years including dividends to be paid after the

become effective and are recognized in equal installments

end of the year and have not been retroactively adjusted forover the lives of contracts. Fees from customers applying thestock splits.

remaining principal method or revolving method are generally

w. Accounting Changes and Error Corrections — In Decem-

recognized in equal installments over the lives of contracts.

ber 2009, ASBJ issued ASBJ Statement No. 24 ”Accounting

Revenue from Credit Guarantees — Revenue from credit

Standard for Accounting Changes and Error Corrections” andguarantees is recorded by the remaining principal method.

ASBJ Guidance No. 24 ”Guidance on Accounting Standard fors. Interest on Borrowings — Interest on financial liabilities is

Accounting Changes and Error Corrections”. Accounting treat-accounted for as operating expenses while other interest isments under this standard and guidance are as follows:

included in other expenses.

(1) Changes in Accounting Policies - When a new accounting

t. Bond Issue Costs — Amortization is calculated by the straight-

policy is applied with revision of accounting standards, the newline method over the term of the related bond issue. Bond

policy is applied retrospectively unless the revised accounting

issue costs are included in other assets.

standards include specific transitional provisions. When the re-u. Derivatives and Hedging Activities — The Group uses

vised accounting standards include specific transitional provisions,derivative financial instruments to manage its exposures toan entity shall comply with the specific transitional provisions.

fluctuations in interest rates and foreign exchange. Interest rate(2) Changes in Presentation - When the presentation of financial

swaps, interest rate caps and currency swaps contracts are uti-

statements is changed, prior-period financial statements are

lized by the Group to reduce interest rate and foreign currency

reclassified in accordance with the new presentation.

exchange risks. The Group does not enter into derivatives for(3) Changes in Accounting Estimates - A change in an account-trading or speculative purposes.

ing estimate is accounted for in the period of the change if the

Derivative financial instruments and foreign currency trans-change affects that period only, and is accounted for prospec-

actions are classified and accounted for as follows: a) all deriva-

tively if the change affects both the period of the change andtives are recognized as either assets or liabilities and measured

future periods. (4) Corrections of Prior-Period Errors - When an

at fair value, and gains or losses on derivative transactions areerror in prior-period financial statements is discovered, thoserecognized in the consolidated statements of operations, and b)

statements are restated. This accounting standard and thefor derivatives used for hedging purposes, if derivatives qualify

guidance are applicable to accounting changes and corrections

for hedge accounting because of high correlation and effective-of prior-period errors which are made from the beginning ofness between the hedging instruments and the hedged items,

the fiscal years that begins on or after April 1, 2011.

gains or losses on derivatives are deferred until maturity of thehedged transactions.
Currency swaps contracts are utilized to hedge foreign currency exposure in principal and interest payments of U.S. dollar
straight bonds. U.S. dollar straight bonds are translated at thecontracted rates.
The interest rate swaps and caps which qualify for hedge
accounting and meet specific matching criteria are not remea-

14

expenses or income.
v. Per Share Information — Basic net income per share is com-

AIFUL CORPORATION Annual Report 2012

Notes to Consolidated Financial Statements

3 LOANS
Loans at March 31, 2012 and 2011 consisted of the following (before allowance for doubtful accounts):
Thousands of
U.S. Dollars

Millions of Yen

2012

2011

2012

Unsecured¥ 318,785¥ 425,400$ 3,887,622

Secured77,11599,650940,427

Small business loans
Total

59,112

69,477

720,878¥ 455,012¥ 594,527$ 5,548,927

Registered moneylenders are required to disclose the following information under the Non-Bank Bond Issuing Law.
Thousands of
U.S. Dollars

Millions of Yen

2012

2011

2012

¥ 43,033¥ 44,136$ 524,793

Nonaccrual loans

55,42788,221

675,939

Accruing loans contractually past due three months or moreas to principal or interest payments

4,475

9,489

54,573

Restructured loans

28,872

40,761

352,097¥ 131,807¥ 182,607$ 1,607,402

Loans in legal bankruptcy

Total
Loans in legal bankruptcy are loans in which accrual of

Restructured loans are loans on which creditors grantinterest is discontinued (excluding the portion recognized as badconcessions (e.g., reduction of the stated interest rate, deferral

debts), based on management’s judgment as to the collectabilityof interest payment, extension of maturity date, waiver of theof principal or interest resulting from the past due payment offace amount, or other concessive measures) to the debtors ininterest or principal and other factors. Allowances for claims infinancial difficulties to assist them in their recovery and eventuallybankruptcy are stated at such amount less net realizable value of

enable them to pay creditors. Loans classified as loans in legal

collateral.

bankruptcy, nonaccrual loans and accruing loans contractually

Nonaccrual loans are loans in which accrual of interest is
discontinued, other than loans in legal bankruptcy as well as

past due three months or more are excluded.
At March 31, 2012 and 2011, the Group had balancesloans receiving regular payments in the case of granting deferral

related to revolving loan contracts aggregating ¥382,972 millionof interest payment to the debtors in financial difficulties to assist($4,670,390 thousand) and ¥538,711 million, respectively,

them in their recovery.

whereby the Group is obligated to advance funds up to a

Accruing loans contractually past due three months or morepredetermined amount upon request. At March 31, 2012 andas to principal or interest payments are loans for which payments

2011, the balances of unadvanced commitments were ¥688,926

of principal or interest have not been received for a period of

million ($8,401,537 thousand) and ¥759,699 million, respectively.

three months or more beginning with the next business day

The loan contract contains provisions that allow the Group tofollowing the last due date for such payments. Loans classified as

reduce the contract amount of the commitment or refuse toloans in legal bankruptcy and nonaccrual loans are excluded fromadvance funds to loan customers under certain conditions.

accruing loans contractually past due three months or more.

AIFUL CORPORATION Annual Report 201215

Notes to Consolidated Financial Statements

4 INSTALLMENT ACCOUNTS RECEIVABLE
Installment accounts receivable and unearned income, included in other current liabilities, at March 31, 2012 and 2011 consisted of thefollowing:Thousands of
U.S. Dollars

Millions of Yen

2012

Credit card business
Installment sales finance business
Total
Off-balance sheet securitizedinstallment accounts receivable
Net

2011

2012

Receivables

Unearned
IncomeReceivables

Unearned
IncomeReceivables

Unearned
Income¥ 77,755¥ 365¥ 74,677¥ 441$ 948,232$ 4,451

2,859

54

6,313

220

34,866659¥ 80,614¥419¥ 80,990¥ 661¥ 983,098$ 5,110(1,664)¥ 78,950(3,655)¥ 419(20,293)¥ 77,335¥ 661$ 962,805$ 5,110

In addition, the Group had unearned income of immaterial amounts at March 31, 2012 and 2011 which was included in other current
liabilities, related to loans other than those shown in the above table.

5 CREDIT GUARANTEES AND OBLIGATIONS UNDER CREDIT GUARANTEESThe Group, as guarantor, recorded credit guarantees as a contra account of obligations under credit guarantees. Unearned income relatingto credit guarantees was ¥49 million ($598 thousand) and ¥63 million at March 31, 2012 and 2011, respectively, which was included inother current liabilities.

6 OPERATIONAL INVESTMENT SECURITIES HELD BY VENTURE CAPITAL SUBSIDIARY AND INVESTMENT SECURITIESOperational investment and investment securities at March 31, 2012 and 2011 consisted of the following:Thousands of
U.S. Dollars

Millions of Yen

Current — Equity securities

2012

2011

2012

¥ 662

¥ 725

$ 8,073¥ 1,344¥ 5,223$ 16,390

Non-current:
Equity securities
Other
Total

146

194

1,781

¥ 1,490¥ 5,417$ 18,171

The costs and aggregate fair values of operational investment and investment securities at March 31, 2012 and 2011 were as follows:
Millions of Yen

2012
Unrealized
Gains

Unrealized
LossesFair Value

¥ 43

¥ 17

¥ 247

Cost

Unrealized
Gains

Unrealized
LossesFair Value¥ 5.302¥ 127¥ 1,307¥ 4,122

Cost

Securities classified as:
Available-for-sale — Equity securities¥ 221

Millions of Yen

2011

Securities classified as:
Available-for-sale — Equity securities

Thousands of U.S. Dollars

2012

Securities classified as:
Available-for-sale — Equity securities
16

AIFUL CORPORATION Annual Report 2012

Cost

Unrealized
Gains

Unrealized
LossesFair Value$ 2,695

$ 524

$ 207

$ 3,012

Notes to Consolidated Financial Statements
Proceeds from sales of available-for-sale securities for the years ended March 31, 2012 and 2011 were ¥3,755 million ($45,793
thousand) and ¥1,367 million, respectively. Gross realized gains on these sales, computed on the moving-average cost basis, were
¥56 million ($683 thousand) and ¥565 million for the years ended March 31, 2012 and 2011, respectively, and gross realized losses were¥1,457 million ($17,768 thousand) and ¥77 million for the years ended March 31, 2012 and 2011, respectively.
The impairment losses on available-for-sale equity securities for the years ended March 31, 2012 and 2011 were ¥339 million ($4,134
thousand) and ¥48 million, respectively. And they were setoff against allowance for investment losses of ¥243 million ($2,963 thousand)for the year ended March 31, 2012.

7 LONG-LIVED ASSETS
The following table summarizes the Group’s asset grouping:Business Classification

Asset Grouping

Financial services and venture capital

Each business entity is the minimum unit. For assets related to businessrestructuring, each outlet and department which each company has decided toclose or each headquarter which each company has decided to transfer is theminimum unit.

Real estate business

Each real estate for rent (rental property) is the minimum unit.

Works of art

Each work of art is the minimum unit.

System related equipment

Each system related equipment which each company has decided to sell is theminimum unit.

Year ended March 31, 2012
The Group reviewed its long-lived assets for impairment for the year ended March 31, 2012. As a result, the Group recognized an
impairment loss for outlets and the department (called, ”Contact Center”) and other which the Group decided to close. The carrying
amount of the relevant assets was written down to the estimated recoverable amount. The estimated recoverable amount of each asset
grouping was measured at its value in use, which is the equivalent to the depreciation expense up to the point of disposal.
Impairment Loss

Description

Classification

Location

Millions of Yen

Thousands of
U.S. Dollars

Miyagi prefecture and other

¥5

$ 61

318

3,878

Outlets and other

Buildings and structures, and furnitureand fixtures

The department
and other

Buildings and structures and machineryTokyo metropolitan areaand equipment, and furniture and fixtures and other

The following table summarizes the components of the Group’s loss on impairment of long-lived assets for the year ended March 31,
2012:
Impairment Loss
Millions of Yen

Thousands of
U.S. Dollars¥ 312$ 3,805

Machinery and equipment

1

12

Furniture and fixtures

9

110

¥ 322

$ 3,927

Buildings and structures

Total
Year ended March 31, 2011

The Group reviewed its long-lived assets for impairment for the year ended March 31, 2011. As a result, the Group recognized an
impairment loss for rental properties, system related equipment and other which were intended to be sold, outlets and other which theGroup decided to close and headquarters of consolidated subsidiaries and other which the Group decided to transfer. The carrying amountof the relevant assets was written down to the estimated recoverable amount. The estimated recoverable amount of each asset grouping
was measured as follows:
Rental properties - The amount of sales contract and other
System related equipment and other - The expected amount of sale
Outlets and Headquarters of consolidated subsidiaries which the Group decided to close or transfer and other - The asset group was
measured at its value in use, which is the equivalent to the depreciation expense up to the point of disposal or transfer.
AIFUL CORPORATION Annual Report 201217

Notes to Consolidated Financial Statements

Impairment Loss

Description

Classification

Location

Millions of Yen¥ 1,020

Rental properties

Buildings and structures, land, and other

Kyoto prefecture and otherOutlets and other

Buildings and structures, and furniture andfixtures

Tokyo metropolitan area
and other122

System related equipment
and other

Furniture and fixtures, and software

Kyoto prefecture

93

Headquarters of consolidated
subsidiaries and other

Buildings and structures, furniture andfixtures, and software

Tokyo metropolitan area,
Kyoto Prefecture and other

8

The following table summarizes the components of the Group’s loss on impairment of long-lived assets for the year ended March 31,
2011:
Millions of Yen

Buildings and structures¥ 516

Furniture and fixtures

145

Land

569

Other

13

Total

¥ 1,243

8 SHORT-TERM BORROWINGS AND LONG-TERM DEBT
Short-term borrowings at March 31, 2012 and 2011 consisted of the following:Thousands of
U.S. Dollars

Millions of Yen

Other (from a credit card company), 1.55%(1.80% to 2.00% at March 31, 2011)

2012

2011

2012

¥ 35,000¥ 42,580$ 426,829

Long-term debt at March 31, 2012 and 2011 consisted of the following:Thousands of
U.S. Dollars

Millions of Yen

Loans from banks, 1.90% to 3.58% *Loans from other financial institutions, 1.90% to 2.92% *

2012

2011

2012

¥ 183,108¥ 221,447$ 2,233,024

39,73949,761

484,622

Unsecured 1.50% to 1.58% yen straight bonds, due 2011
Unsecured 1.22% to 1.63%(1.20% to 1.99% at March 31, 2011) yen straight bonds, due 2012

17,90017,00035,900207,317

Unsecured 1.74% yen straight bonds, due 2013

9,300

10,000113,414

Unsecured 1.99% yen straight bonds, due 2015

10,00010,000121,951

Unsecured 6.00% U.S. dollar straight bonds, due 2011
Unsecured 3.50% medium-term notes, due 2015

15,00015,000182,927

Other (principally from securities companies),
1.90% to 2.675% (0.90% to 2.30% at March 31, 2011) *51,29832,232625,585

124

190

1,512

¥ 325,569¥ 450,030$ 3,970,354

Obligations under finance leases
Total
Less current portionLong-term debt, less current portion

18

57,600

AIFUL CORPORATION Annual Report 2012

(61,812)(132,703)(753,805)¥ 263,757¥ 317,327$ 3,216,549

Notes to Consolidated Financial Statements* The Company and certain consolidated subsidiaries receive financial assistance based on consensual business revitalization alternative dispute resolution
procedures prescribed in the Act on Special Measures for Industrial Revitalization (the ”Business Revitalization Procedures”). Financial assistance is obtained
through modification to repayment schedules for loan obligations, the content of which will be to make partial payments until June 10, 2014, and withregard to the obligations remaining after June 10, 2014, to receive refinancing by no later than July 10, 2014 or to make a proposal to the participating
creditors regarding the payment method in the period after July 10, 2014 and to reach an agreement thereon.
Therefore, the final due dates for long-term debts subject to financial assistance mentioned above cannot be identified.
At March 31, 2012 and 2011, long-term debts subject to the financial assistance of ¥141,312 million ($1,723,317 thousand) and ¥177,657 million were
included in ”Loans from banks”, ¥39,739 million ($484,622 thousand) and ¥49,761 million were included in ”Loans from other financial institutions”, and¥51,298 million ($625,585 thousand) and ¥32,232 million were included in ”Other” in the table above.
The final due date for ”Loans from banks” other than those subject to financial assistance is 2015 (due 2014 at March 31, 2011).

Annual maturities of long-term debt, excluding finance leases (see Note 16) at March 31, 2012 were as follows:
Millions of Yen

Thousands of
U.S. Dollars

2013¥ 61,748$ 753,024

2014

39,800485,366

2015

22,646276,1712016

25,000304,878

Total¥ 149,194$ 1,819,439

Year Ending March 31

Long-term debt whose repayment schedule is determined is included in the table above.
Long-term debt of ¥176,251 million ($2,149,402 thousand) whose repayment schedule is undetermined, such as obligations remaining
after June 10, 2014, is not included in the table above.
At March 31, 2012, the following assets were pledged as collateral for short-term borrowings and long-term debt (including current
portion of long-term debt):
Millions of Yen

Thousands of
U.S. Dollars¥ 276,426$ 3,371,049

68,726

838,122

276

3,365

Land

8,577

104,597

Buildings and structures

5,589

68,15950610¥ 359,644$ 4,385,902

Short-term borrowings¥ 35,000$ 426,829

Long-term debt (including current portion of long-term debt)

232,349

2,833,525¥ 267,349$ 3,260,354

Loans
Installment accounts receivable
Other current assets

Machinery and equipments
Total
Related liabilities:

Total

If requested by lending financial institutions, the Group has committed to pledge loans of ¥52,732 million ($643,073 thousand) as
collateral in addition to those shown in the above table. At March 31, 2012, lending financial institutions can request the Group to pledge
additional collateral for long-term debt (including current portion of long-term debt) of ¥41,819 million ($509,988 thousand). In thisamount, ¥23 million ($280 thousand) of related liabilities shown in the above table is included.

AIFUL CORPORATION Annual Report 201219

Notes to Consolidated Financial Statements

9 RETIREMENT AND PENSION PLANS
The Company and certain consolidated subsidiaries have a defined contribution pension plan and a prepaid retirement benefits plan.
Contributions to the defined contribution plan and payments to the prepaid retirement benefits plan are charged to income when made.
The components of net periodic benefit costs for the years ended March 31, 2012 and 2011 were as follows:
Thousands of
U.S. Dollars

Millions of Yen

2012

2011

2012

Payments for prepaid retirement benefits plan

¥ 259

¥ 260

$ 3,158

Premiums for defined contribution pension plan

357

368

4,354

Other
Net periodic benefit costs

1
¥ 617

12
¥ 628

$ 7,524

10 EQUITY
Japanese companies are subject to the Companies Act ofcomponent of capital surplus) depending on the equity accountJapan (the ”Companies Act”). The significant provisions in the

charged upon the payment of such dividends until the aggregate

Companies Act that affect financial and accounting matters areamount of legal reserve and additional paid-in capital equals

summarized below:

25% of the common stock. Under the Companies Act, the total
amount of additional paid-in capital and legal reserve may be(a) Dividends

reversed without limitation. The Companies Act also provides

Under the Companies Act, companies can pay dividends at any

that common stock, legal reserve, additional paid-in capital, othertime during the fiscal year in addition to the year-end dividend

capital surplus and retained earnings can be transferred among

upon resolution at the shareholders meeting. For companies thatthe accounts under certain conditions upon resolution of themeet certain criteria such as; (1) having the Board of Directors,

shareholders.

(2) having independent auditors, (3) having a Board of Corporate
Auditors, and (4) the term of service of the directors is prescribed(c) Treasury Stock and Treasury Stock Acquisition Rights

as one year rather than two years of normal term by its articles

The Companies Act also provides for companies to purchaseof incorporation, the Board of Directors may declare dividends

treasury stock and dispose of such treasury stock by resolution of(except for dividends in kind) at any time during the fiscal year

the Board of Directors. The amount of treasury stock purchased

if the company has prescribed so in its articles of incorporation.

cannot exceed the amount available for distribution to the

The Company meets all the above criteria.

shareholders which is determined by specific formula. Under

The Companies Act permits companies to distribute

the Companies Act, stock acquisition rights are presented as adividends-in-kind (non-cash assets) to shareholders subject to a

separate component of equity. The Companies Act also provides

certain limitation and additional requirements.

that companies can purchase both treasury stock acquisition

Semiannual interim dividends may also be paid once arights and treasury stock. Such treasury stock acquisition rights

year upon resolution by the Board of Directors if the articles

are presented as a separate component of equity or deductedof incorporation of the company so stipulate. The Companies

directly from stock acquisition rights.

Act provides certain limitations on the amounts available fordividends or the purchase of treasury stock. The limitation

When the Company merged with LIFE Co., Ltd., a consolidated

is defined as the amount available for distribution to thesubsidiary, on July 1, 2011, the Company issued 2,248 thousand

shareholders, but the amount of net assets after dividends mustof new shares to the shareholders of LIFE Co., Ltd. excluding the

be maintained at no less than ¥3 million.

Company.

(b) Increases/Decreases and Transfer of Common Stock,of the Company to be issued as of the date of the Merger wasReserve and Surplus¥258 million ($3,146 thousand), and other capital surplus was

The Companies Act requires that an amount equal to 10% of

increased by the same amount (described in more detail in Note

dividends must be appropriated as a legal reserve (a component

20. III).

An amount equivalent to the market value of common stockof retained earnings) or as additional paid-in capital (a20

AIFUL CORPORATION Annual Report 2012

Notes to Consolidated Financial Statements

11 STOCK OPTION
The stock options outstanding as of March 31, 2012 and 2011 are as follows:

Stock Option
2005
Stock Option
2010
Stock Option

Persons Granted
31 Company's and Subsidiaries'
directors
454 Company's and Subsidiaries'
key employees
2,206 Company's andSubsidiaries' key employees

Number of
Options Granted

Date of Grant

Exercise Price

374,400 shares

June 24, 2005

¥8,420($102.68)

2,192,650 shares

July 1, 2010

¥128($1.56)

Exercise Period

From July 1, 2007
to June 30, 2010
From August 1, 2014
to July 31, 2016

The stock option activity is as follows:2005 Stock Option

2010 Stock Option

For the year ended March 31, 2011Non-vested
April 1, 2010 - Outstanding
Granted

2,192,650

Canceled

97,050

VestedMarch 31, 2011 - Outstanding

2,095,600

VestedApril 1, 2010 - Outstanding

263,400

VestedExercised
Canceled

263,400

March 31, 2011 - Outstanding
Exercise price
Fair value price at grant date

¥ 8,420

¥ 128
¥ 61

2010 Stock Option(Shares)

For the year ended March 31, 2012

Non-vested
March 31, 2011 - Outstanding

2,095,600

GrantedCanceled

151,000

VestedMarch 31, 2012 - Outstanding

1,944,600

VestedMarch 31, 2011 - Outstanding
VestedExercised
Canceled
March 31, 2012 - Outstanding
Exercise price¥ 128($1.56)

Fair value price at grant date

¥ 61($0.74)
AIFUL CORPORATION Annual Report 201221

Notes to Consolidated Financial Statements

12 PROVISION FOR BUSINESS RESTRUCTURING
The following table summarizes the components of the Group’s provision for business restructuring for the year ended March 31, 2012:
Millions of Yen

Thousands of
U.S. Dollars

Voluntary retirement cost and other¥ 2,065$ 25,183

Total¥ 2,065$ 25,183

Provision for business restructuring:

Disclosure of the components of the Group’s provision for business restructuring for the year ended March 31, 2011 was not presented
herein, since the amount recognized was immaterial.

13 LOSSES FROM A NATURAL DISASTER
The following table summarizes the components of the Group’s losses from a natural disaster for the year ended March 31, 2011. The
disaster was caused by the Great East Japan Earthquake which occurred on March 11, 2011.
Millions of Yen

Losses from a natural disaster:
Provision for doubtful accounts¥ 6,544

Provision for losses from a natural disaster

51

Other

7

Total

¥ 6,602

14 INCOME TAXESThe Company and its domestic subsidiaries are subject to Japanese national and local income taxes which, in the aggregate, resulted in anormal effective statutory tax rate of approximately 41% for the years ended March 31, 2012 and 2011.
The tax effects of significant temporary differences and tax loss carryforwards which resulted in deferred tax assets and liabilities at
March 31, 2012 and 2011 were as follows:
Thousands of
U.S. Dollars

Millions of Yen

2012

2011

2012

¥ 39,580¥ 47,338$ 482,683

Allowance for losses on interest refunds

42,66472,539520,293

Charge-offs for doubtful accounts

11,565

16,863141,037

Accrued interest on loans

3,257

4,537

39,720Tax loss carryforwards

166,422

156,6222,029,537

Interest refunds payable

3,650

4,563

44,512

Other

11,722

9,979

142,950

Total

278,860

312,441

3,400,732

Less valuation allowance(278,860)(312,441)(3,400,732)

Total deferred tax assets

¥ Nil

¥ Nil

¥ Nil

Unrealized gain on available-for-sale securities¥ (12)¥ (8)$ (146)

Costs of removal related to asset retirement obligations

(112)

(121)

(1,366)¥ (124)¥ (129)$ (1,512)¥ (124)¥ (129)$ (1,512)

Deferred tax assets:
Allowance for doubtful accounts

Deferred tax liabilities:

Total deferred tax liabilities
Net deferred tax assets

22

AIFUL CORPORATION Annual Report 2012

Notes to Consolidated Financial Statements
A valuation allowance is established to reduce certain deferred tax assets with respect to deductible temporary differences and net
operating loss carryforwards where it is more likely than not that they will not be realized.
A reconciliation between the normal effective statutory tax rates and the actual effective tax rates reflected in the accompanying
consolidated statement of operations for the year ended March 31, 2012 is as follows - one for the year ended March 31, 2011 has notbeen disclosed because of the Group’s net loss position:

2012
Normal effective statutory tax rate

41%

Expenses not deductible for income tax purposes

13

Income not taxable for income tax purposes(2)Less valuation allowance(258)

Effect of tax rate reduction

210

Others, net(3)

Actual effective tax rate

1%

On December 2, 2011, new tax reform laws were enacted in Japan, which changed the normal effective statutory tax rate fromapproximately 41% to 38% effective for the fiscal years beginning on or after April 1, 2012 through March 31, 2015, and to 36%
afterwards. The effect of this change on deferred taxes in the consolidated statement of operations for the year ended March 31, 2012 isimmaterial.
At March 31, 2012, the Company and certain consolidated subsidiaries had tax loss carryforwards aggregating approximately ¥468,103
million ($5,708,574 thousand) which were available for offset against taxable income of the Company and such subsidiaries in future years.
These tax loss carryforwards, if not utilized, will expire as follows.
Millions of Yen

Thousands of
U.S. Dollars¥ 238$ 2,9022015

39,866486,1712016

59,408724,4882017

158,479

1,932,671

2018 and thereafter

210,1122,562,342¥ 468,103$ 5,708,574

Year Ending March 31
2013
2014

Total

15 LEASES
The Group leases furniture and fixtures.
Total rental expenses including lease payments under finance leases for the years ended March 31, 2012 and 2011 were ¥3,122 million($38,073 thousand) and ¥4,230 million, respectively.
Obligations under finance leases at March 31, 2012 were as follows:
Millions of Yen

Thousands of
U.S. Dollars

Due within one year

¥ 64

$ 780

Due after one year

60

732

¥ 124

$ 1,512Total

AIFUL CORPORATION Annual Report 201223

Notes to Consolidated Financial Statements

16 FINANCIAL INSTRUMENTS AND RELATED DISCLOSURES(1) Group policy for financial instruments
The main business of the Group is finance. The Group is engaged

periodically.
Because the counterparties to derivatives are limited toin the provision of unsecured loans for individual consumers,

major financial institutions, the Group does not anticipate any

secured loans, small business loans, shopping loans, credit

losses arising from credit risk. The Group manages such credit

guarantee, debt collection and so on. To run these businesses,

risks by relevant sections evaluating, analyzing and deliberating

the Group raises funds domestically and internationally. Indirect

countermeasures and reporting to the board of directors

financing by loans from banks and direct financing by bond issue

accordingly.

are used. The Group enters into derivative transactions as means

See Note 17 for details regarding derivatives.

of managing its interest rate exposures and foreign currency
exposures on certain liabilities. Such derivative transactions are

Market risk management (foreign exchange risk and interest rate

entered into to hedge interest exposures and foreign currency

risk)

exposures inherent within its business. The Group does not hold

The Group manages foreign exchange risk and interest rate risk

or issue derivatives for trading or speculative purposes.

based on a “risk management manual” which was endorsed by
the Group’s risk management committee. The risk management(2) Nature and extent of risks arising from financial
instruments

committee is directly controlled by the board of directors. The
finance department reports the conditions of foreign exchange

Loans and installment accounts receivable for domestic consumers

risk and interest rate risk to the internal control department.

and small businesses are the main financial assets of the GroupThe internal control department examines the reasonability

and are exposed to credit risk through default of contract by

and adequacy of the finance department’s risk evaluation andcustomers. Other financial assets such as operational investment

countermeasures, and reports to the board of directors. Also, thesecurities and investment securities are mainly stock andGroup utilizes interest rate swaps in order to hedge exposure toinvestments in limited liability investment partnerships. The Grouprisks from changes in interest rates and currency swaps to manage

holds these securities to develop these businesses. The securities

exposure to risks from changes in foreign currency.

are exposed to the issuer’s credit risk and the risk of market priceMarket risk management (stock price volatility risk)

fluctuations.

Most of the operational investment securities and investment

Borrowings and debt including bonds are the main financial
liabilities of the Group. These liabilities are exposed to liquidity

securities the Group holds are intended to develop businessincluding business alliances and capital alliances. Relevant sections

risks, or risk that liabilities cannot be met when they fall due if themonitor the market environment and the financial situation of theGroup is unable to participate in fund-raising markets in certain

issuers, deliberate countermeasures and report to the board of

circumstances. In addition, the Group raises funds at variabledirectors accordingly. The Group does not hold trading securities,

interest rates or by bonds in foreign currency, and these arewhich are held for the purpose of earning capital gains in the near

exposed to the market risks of fluctuation in interest rates andterm.

foreign currency exchange rates.

Market risk management (derivatives)

Derivatives include interest rate swaps and currency swaps

The Group manages market risk of derivatives according to internal

which are applicable to hedge accounting, and interest rate swaps

guidelines. Relevant sections conduct internal checks to makeand caps which are not applicable to hedge accounting. Thesesure that transactions, valuations of effectiveness of hedging andderivatives are exposed to the market risks of fluctuation in interest

management of affairs are performed in accordance with internal

rates and foreign currency exchange rates, and counterparty

guidelines.

risks. See Note 17 for more details about derivatives and hedging

Quantitative information of market risk

activities.

The Group does not perform quantitative analysis of the market
risk.

(3) Risk management for financial instruments
Credit risk management

24(Interest rate risk)
The main financial instruments in the Group which are affected

Credit risk is the risk of economic loss arising from a counterparty’s

by interest rate risk, the typical risk parameter, are “Loans”,

failure to repay or service debt according to the contractual“Installment accounts receivable”, “Short-term borrowings”

terms. The Group manages its credit risks according to internaland “Long-term debt”. Fair values under movements of the risk

guidelines. In relation to loans, installments accounts receivableparameter of long-term debts, including those subject to theand credit guarantees which are the Group’s major financial assets,financial assistance based on consensual business revitalization

the Group conducts credit checks for each contract based onalternative dispute resolution procedures which accounts for adata of the consumer data industry and its own credit standards,

large portion of long-term debt, cannot be reasonably estimated.

maintaining its system to modify credit ceilings, set guarantees

Therefore, changes in fair value as of March 31, 2012 and 2011

or collateral. The Group manages its credit risks of issuers ofaffected by movements of the risk parameter assumed within asecurities by checking credit information and market prices

normal range and related information is not disclosed herein.

AIFUL CORPORATION Annual Report 2012

Notes to Consolidated Financial Statements
Liquidity risk management regarding fund-raising(4) Fair value of financial instruments

The Group manages liquidity risk by adequate financial planning

Fair values of financial instruments are based on quoted prices inof the Group on a timely basis, diversifying means of fund-raising

active markets. If a quoted price is not available, other rational

and adjusting the ratio of long-term and short-term debt in thevaluation techniques are used. There are possibilities that fair value

light of market environment.

calculation results may differ when different assumptions are used.
Also please see Note 17 for details of fair value for derivatives.

(a) Fair value of financial instruments
Note that the following table does not include non-listed equity securities and certain other securities for which fair value is difficult todetermine (see (4) (b) below).
Millions of Yen

March 31, 2012
Cash and cash equivalents
Time deposits
Loans
Allowance for doubtful accounts and losses oninterest refunds *1

Carrying Amount

Fair Value¥ 86,696¥ 86,69655455,012(106,374)
348,638

Installment accounts receivable
Unearned income *2
Allowance for doubtful accounts *3
Operational investment securities, investment securities
and investments in unconsolidated subsidiaries
Claims in bankruptcy
Allowance for doubtful accounts *3

Unrealized Gain (Loss)

413,320¥ 64,862

72,37374,158

1,785

247

247

78,950(374)(6,203)45,232(38,643)
6,589

6,589

Total

¥ 514,548¥ 581,015

Short-term borrowings¥ 35,000¥ 35,000

93,096

77,954¥ 15,412¥ 128,096¥ 112,954¥ 15,412

Long-term debt *4

Total¥ 66,467

Thousands of U.S. Dollars

March 31, 2012
Cash and cash equivalents
Time deposits
Loans
Allowance for doubtful accounts and losses oninterest refunds *1

Carrying Amount

Fair Value$ 1,057,268$ 1,057,268

61

61

5,548,927(1,297,244)
4,251,683

Installment accounts receivable
Unearned income *2
Allowance for doubtful accounts *3
Operational investment securities, investment securities
and investments in unconsolidated subsidiaries
Claims in bankruptcy
Allowance for doubtful accounts *3
Total

Unrealized Gain (Loss)

5,040,488$ 788,805

882,598

904,366

21,768

3,012

3,012

962,805(4,561)(75,646)

551,610(471,256)
80,35480,354$ 6,274,976$ 7,085,549$ 810,573

AIFUL CORPORATION Annual Report 201225

Notes to Consolidated Financial Statements
Thousands of U.S. Dollars

March 31, 2012

Carrying Amount

Fair Value

Short-term borrowings$ 426,829$ 426,829

Long-term debt *4

1,135,317

950,659$ 184,659$ 1,562,146$ 1,377,488$ 184,659

Total

Unrealized Gain (Loss)*1. Allowance for doubtful accounts which correspond to loans and allowance for losses on interest refunds which is expected to be preferentially set off
against loans is deducted.
*2. Unearned income of installment accounts receivable, included in other current liabilities, is deducted.
*3. Allowance for doubtful accounts which correspond to installment accounts receivable or claims in bankruptcy is deducted.
*4. Long-term debt which is subject to the financial assistance based on the Business Revitalization Procedures is excluded. Obligations under finance leases
are excluded.

Millions of Yen

March 31, 2011
Cash and cash equivalents
Time deposits
Loans
Allowance for doubtful accounts and losses oninterest refunds *1

Carrying Amount

Fair Value¥ 139,971¥ 139,971

5

5

594,527(158,249)
436,278

Installment accounts receivable
Unearned income *2
Allowance for doubtful accounts *3
Operational investment securities, investment securities
and investments in unconsolidated subsidiaries
Claims in bankruptcy
Allowance for doubtful accounts *3

Unrealized Gain (Loss)

513,978¥ 77,700

70,08071,165

1,085

4,122

4,122

77,335(589)(6,666)

46,838(32,177)
14,661

14,661

Total¥ 665,117¥ 743,902

Short-term borrowings¥ 42,580¥ 42,580

Long-term debt *4*5

190,190

145,778¥ 44,412¥ 232,770¥ 188,358¥ 44,412

Total¥ 78,785*1. Allowance for doubtful accounts which correspond to loans and allowance for losses on interest refunds which is expected to be preferentially set off
against loans is deducted.
*2. Unearned income of installment accounts receivable, included in other current liabilities, is deducted.
*3. Allowance for doubtful accounts which correspond to installment accounts receivable or claims in bankruptcy is deducted.
*4. Long-term debt which is subject to the financial assistance based on the Business Revitalization Procedures is excluded. Obligations under finance leases
are excluded.
*5. The fair value of derivatives transactions which qualify for hedge accounting is included in the fair value of the hedged item (i.e. long-term debt).

Cash and cash equivalents

outflows of costs of collection. The expected future cash flow is

The carrying values of cash and cash equivalents approximate fairdiscounted at a risk free interest rate based on maturity length.

value because of their short maturities.
Installment accounts receivable
Time deposits

The carrying values of installment accounts receivables related

The carrying values of time deposits approximate fair value

to the credit card business approximate fair value because mostbecause of their short maturities.

transactions are single payments in the following month. The
fair value of installment accounts receivable related to installment

Loans

26

sales finance business is determined based on the present value

The fair value of loans is determined based on the present value ofof expected future cash flow, which consists of expected inflows

expected future cash flow, which consists of expected inflows ofof principal and fees which is adjusted to reflect collectability andprincipal and interest which is adjusted to reflect collectability andoutflows of costs of collection. The expected future cash flow is

AIFUL CORPORATION Annual Report 2012

Notes to Consolidated Financial Statements
discounted at a low-risk interest rate based on maturity length.

cash flows of principal and interest, discounted at the rate whichreflects credit risk and the maturities of the bond. The fair values

Operational investment securities, investment securities andof certain bonds are determined as fixed interest rate, yen-investments in unconsolidated subsidiaries

denominated bonds, because forward exchange contracts and

The fair value of operational investment securities, investment

interest rate swaps qualify for hedge accounting and are assigned

securities and investments in unconsolidated subsidiaries areto the associated bond. Carrying values of the current portion

measured at the quoted market price of the stock exchange.

of long-term debt approximate fair value because of their short

Claims in bankruptcy

maturities. The carrying values of long-term debt other than the

The carrying values of claims in bankruptcy less allowances for

current portion of long-term debt approximate fair value because

claims in bankruptcy approximate fair value because allowances

the variable rate reflects the market interest rate in a short period

for claims in bankruptcy are stated taking net realizable value ofof time and also all of the debts are those of a consolidated

collateral into account.

subsidiary whose credit condition has not significantly changed

Short-term borrowings

since the initial date of borrowing.

The carrying values of short-term borrowings approximate fairvalue because of their short maturities.

Derivatives
The fair values of derivatives are measured at prices indicatedLong-term debt

by the correspondent financial institution because all derivatives

The fair values of marketable bonds issued by the Company aretransactions are nonmarketable. The information regarding themeasured at the quoted market price and those of nonmarketable

fair value for derivatives is included in Note 17.

bonds issued by the Company are determined by discounting(b) Financial instruments whose fair value cannot be reliably determined
Carrying AmountMarch 31, 2012

Millions of Yen

Thousands of
U.S. Dollars¥ 2,333$ 28,451

828

10,098232,349

2,833,524

Operational investment securities, investment securities and investments inunconsolidated subsidiaries: *1
Unlisted stocks
Investments in limited liability investment partnerships
Long-term debt *2

Carrying AmountMarch 31, 2011

Millions of Yen

Operational investment securities, investment securities and investments inunconsolidated subsidiaries: *1
Unlisted stocks
Investments in limited liability investment partnerships

Long-term debt *2¥ 2,675
1,298
259,651

Since the fair values of the items in the table above cannot be reliably determined, they are not included in operational investment
securities, investment securities and investments in unconsolidated subsidiaries and long-term debt in (4) (a).
*1. Unlisted stocks and investments in limited liability investment partnerships do not have a quoted market price in an active market and their fair values
cannot be reliably determined, so they are not subject to fair value disclosure.
*2. The Company and certain consolidated subsidiaries receive financial assistance based on the Business Revitalization Procedures. Financial assistance isobtained through modification to repayment schedules for loan obligations, the content of which will be to make partial payments until June 10, 2014,
and with regard to the obligations remaining after June 10, 2014, to receive refinancing by no later than July 10, 2014 or to make a proposal to theparticipating creditors regarding the payment method in the period after July 10, 2014 and to reach an agreement thereon. Under such circumstances,long-term borrowings which are subject to the financial assistance have significant uncertainties in estimates of future repayment plans. Also, increased
credit risks and long repayment periods have substantial impact on discounted cash flows. Since it is difficult to make reasonable fair value calculations forsuch long-term borrowings, they are not subject to fair value disclosure.

AIFUL CORPORATION Annual Report 201227

Notes to Consolidated Financial Statements(5) Maturity analysis for financial assets with contractual maturities
Millions of Yen
Due in One Yearor Less

March 31, 2012
Cash and cash equivalents

Due after One Yearthrough Five Years

Due after FiveYears

¥ 24,690¥ 86,696

Time deposits

5

Loans *1

193,351¥ 236,971

Installment accounts receivable

75,254

3,696¥ 355,306¥ 240,667

Total¥ 24,690

Thousands of U.S. Dollars
Due in One Yearor Less

March 31, 2012
Cash and cash equivalents

Due after One Yearthrough Five Years

Due after FiveYears

2,357,939$ 2,889,890$ 301,098

917,732

45,073$ 4,333,000$ 2,934,963$ 1,057,268

Time deposits

61

Loans *1
Installment accounts receivable
Total$ 301,098*1. Loans of ¥45,232 million ($551,610 thousand) whose amount of redemption cannot be determined, such as claims in bankruptcy, are not included in thetable above.

Please see Note 8 for annual maturities of short-term borrowings and long-term debt and Note 15 for obligations under finance leases,
respectively.

17 DERIVATIVESThe Group enters into interest rate swap and cap, and currency

derivatives for trading or speculative purposes.

swap contracts as a means of managing its principal and interest

Because the counterparties to these derivatives are limited

rate exposures and foreign currency exposures on certain liabilities.

to major financial institutions, the Group does not anticipate any

Such derivative transactions are entered into to hedge interest
exposures and foreign currency exposures inherent within its

losses arising from credit risk.
Derivative transactions entered into by the Group have been

business. Accordingly, market and foreign exchange risks in thesemade in accordance with internal policies, which regulate thederivatives are theoretically offset by opposite movements in theauthorization process and credit limit amount.

value of hedged liabilities. The Group does not hold or issue
Derivative transactions to which hedge accounting is not applied
Millions of Yen
Contract AmountContract Amountdue after One Year¥ 2,500

¥ Nil

¥ (3)

¥ 52,500¥ 2,500¥ (150)Fair Value

Unrealized Gain
(Loss)March 31, 2012
Interest rate caps agreements
At March 31, 2011
Interest rate caps agreements (Buying)Thousands of U.S. Dollars
Contract AmountContract Amountdue after One Year¥ 30,488$ NilFair Value

Unrealized
Gain (Loss)

March 31, 2012
Interest rate caps agreements$ (37)

The fair value of derivative transactions is measured at the quoted price obtained from the correspondent financial institution.

28

AIFUL CORPORATION Annual Report 2012

Notes to Consolidated Financial Statements

Derivative transactions to which hedge accounting is applied
Millions of Yen

At March 31, 2012

Hedged Item

Contract AmountInterest rate swaps(fixed rate payment, floating rate receipt)

Long-term debt

¥ Nil

Currency swap contracts

Long-term debt

NilContract Amountdue after One Year

*
*
*

¥ Nil

Total

Fair Value

Millions of Yen

At March 31, 2011

Hedged Item

Contract AmountInterest rate swaps(fixed rate payment, floating rate receipt)

Long-term debt

¥ 11,520

Currency swap contracts

Long-term debt

57,600Contract Amountdue after One Year***¥ 69,120

Total

Fair Value

Thousands of U.S. Dollars

At March 31, 2012

Hedged Item

Contract AmountInterest rate swaps(fixed rate payment, floating rate receipt)

Long-term debt

$ Nil

Currency swap contracts

Long-term debt

Nil

Total

Contract Amountdue after One Year

Fair Value

*
*
*

$ Nil

Note * The above interest rate swaps and currency swaps which 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. In addition,
the fair value information of such interest rate swaps and currency swaps in Note 16 is included in that of the hedged items (i.e. long-term debt).

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

Thousands of
U.S. Dollars

Gains arising during the year

¥ (140)$ (1,707)

Reclassification adjustments to profit or loss

1,410

17,195

Amount before income tax effect

1,270

15,488

(5)

(61)

Total

¥ 1,265$ 15,427

Total other comprehensive income¥ 1,265$ 15,427

Unrealized gain (loss) on available-for-sale securities:

Income tax effect

The corresponding information for the year ended March 31, 2011 was not required under the accounting standard for presentation ofcomprehensive income as an exemption for the first year of adopting that standard and not disclosed herein.

AIFUL CORPORATION Annual Report 201229

Notes to Consolidated Financial Statements

19 NET INCOME (LOSS) PER SHARE
Basic net income (loss) per share (“EPS”) for the years ended March 31, 2012 and 2011 is as follows:
Millions of Yen

Thousandsof Shares

Net Income (Loss)

Weighted Average
Shares¥ 17,392

239,917¥ 72.49¥ (31,936)

238,228¥ (134.05)

For the year ended March 31, 2012:
Basic EPS
Net income attributable tocommon shareholders

Yen

Dollars
EPS$ 0.88For the year ended March 31, 2011:
Basic EPS
Net income attributable tocommon shareholders

Diluted net loss per share for the years ended March 31, 2012 and 2011 was not disclosed because of the Company’s net loss position or
because no dilutive securities were outstanding.

20 BUSINESS COMBINATIONSTransactions under common control for the year ended March 31, 2012
Spin-off and Merger(“the ADR process”). In addition to implementing this full-fledged

I. Objectives of the Spin-off and Merger

cost structure reform, the Group is also maximizing efforts

Confronted by a very challenging operating environment due

to consolidate its organization and business by implementing

largely to such factors as an increase in interest refund claims

this subsidiary spin-off and merger. These efforts take into

following a ruling of the Japanese Supreme Court in January

consideration each of the selection and concentration perspectives

2006, financial turmoil triggered by the sub-prime loan crisis, andand are based on a business reorganization policy consistentcontrols on the total amount an individual can borrow following

with the Group’s Business Revitalization Plan approved under thecomprehensive implementation of amendments to Japan’s Money

ADR process. By implementing Group reorganization, the Group

Lending Business Act in June 2010, the Group is undertaking

consolidates its consumer finance businesses to the “AIFUL”

steps to restructure its business. These steps include a full-fledged

brand and Installment sales finance and Credit card businesses

reform of the Group’s cost structure encompassing cutbacks

to the “LIFECARD” brand to take full advantage of each brand’sin personnel and other measures in line with organizationalrecognition across their business activities and operations. In

integration and the elimination and consolidation of bases, andaddition, steps are taken to consolidate head office operations,are complemented by the sale of consumer finance subsidiaries

back office divisions and credit management as well as debt

and the application of financial support entailing the consensualcollection divisions, and to further improve business efficiencies

business revitalization alternative dispute resolution procedures

across the entire Group.

II. Spin-off(1) Overview
1 Profiles of the Companies Involved in the Spin-off

Splitting Company
Trade Name
Principal businessSuccessor Company

LIFE Co., Ltd. ("LIFE")

LIFECARD Co., Ltd. ("LIFECARD")

Consumer credit business andConsumer finance business

Consumer credit business and Credit
guarantee business2 Scheduled Effective Date of the Spin-off

July 1, 2011

spin-off method) its Consumer Credit business (Credit cardand Installment sales finance) as well as the part of credit
guarantee and insurance businesses to LIFECARD, a wholly

3 The Method of the Spin-off

LIFE transferred by way of the spin-off (absorption-type

30

AIFUL CORPORATION Annual Report 2012

owned LIFE subsidiary established in July 2010, on thescheduled effective date of July 1, 2011.

Notes to Consolidated Financial Statements“Accounting Standard for Business Combinations (ASBJ

4 Trade Name after the Spin-off

Statement No. 21 December 26, 2008)” and “Guidance

LIFECARD Co., Ltd.

on Accounting Standard for Business Combinations andAccounting Standard for Business Divestitures (ASBJ

5 Summary of Accounting Treatments

Guidance No.10 December 26, 2008)”.

This spin-off is accounted for as a transaction undercommon control in accordance with accounting standards,
III. Merger(1) Overview
1 Profiles of the Merging Companies

The Absorption-Type Merger Absorbed Company
Trade Name

LIFE Co., Ltd.

City's Corporation("City's")

City Green Corporation("City Green")

Marutoh KK("Marutoh")

Principal
business

Consumer finance business
and Consumer credit business

Small businessloan

Holding company forCity's Corporation

Real estatebusiness

2 Scheduled Effective Date of the Merger

5 Summary of Accounting Treatments

TThis corporate spin-off is accounted for as a transaction

July 1, 2011

under common control in accordance with accounting
3 The Method of the Merger

standards, “Accounting Standard for Business Combinations

The absorption-type merger was undertaken with the(ASBJ Statement No. 21 December 26, 2008)” andCompany as the surviving company and the four companies“Guidance on Accounting Standard for Businesscomprising LIFE, following its corporate spin-off, identified

Combinations and Accounting Standard for Businessin II. above, City’s, City Green and Marutoh, as theDivestitures (ASBJ Guidance No. 10 December 26, 2008)”.

absorbed companies.
4 Trade Name after the Merger

AIFUL Corporation(2) Details of acquisition costs
2 Direct Expenses Incurred for the Acquisition

1 Amount of Consideration

Market value of the common stock of the Company to be

Advisory fees and other were ¥5 million ($61 thousand).

delivered as of the date of the Merger was ¥258 million
3 Acquisition Costs($3,146 thousand).

The sum of the above was ¥263 million ($3,207 thousand).
(3) Exchange ratio for different types of stock and the method of calculation, and number of shares to be delivered
1 Exchange Ratio for Different Types of Stock

Company
Name

AIFUL Corporation

AIFUL Corporation(The Absorption-Type Merger Surviving Company)(The Absorption-Type Merger Surviving Company)

Exchange ratio

139

Types of stock

Common stock

Common stock

2 The Method of Calculation

The Company and LIFE asked each external independent
financial advisor to calculate the share exchange ratio,

3 Number of Shares to be Delivered

2,248,350 sharesand determined the final share exchange ratio after the
discussion between the parties based on the reports
submitted by them.

AIFUL CORPORATION Annual Report 201231

Notes to Consolidated Financial Statements(3) Details of gain on negative goodwill
1 Amount of Gain on Negative Goodwill¥1,115 million ($13,598 thousand)2 Cause of Occurrence

Difference between the amount equivalent to minority
interests of LIFE and the market value of shares of theCompany to be delivered

21 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, an entity is required to report financial and descriptive information about its reportablesegments. Reportable segments are operating segments or aggregations of operating 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 isrequired to be reported on the same basis as is used internally for evaluating operating segment performance and deciding how to allocate
resources to operating segments.
1. Description of reportable segments
The Group’s reportable segments are those for which separate financial information is available and regular evaluation by the Company’s
management is being performed in order to decide how resources are allocated among the Group. Therefore, the Group consists of theGroup’s major operating companies, “AIFUL Corporation”, “LIFE Co., Ltd.” and “LIFECARD Co., Ltd.”. AIFUL Corporation engages mainlyin the loan business and the credit guarantee business. LIFE Co., Ltd. engages mainly in the loan business, the credit card business and thecredit guarantee business. Effective July 1, 2011, the Group changed its operating segments from “AIFUL Corporation” and “LIFE Co., Ltd.”
to “AIFUL Corporation”, “LIFE Co., Ltd.” and “LIFECARD Co., Ltd.” because AIFUL Corporation implemented subsidiary spin-off and merger.
The segment information for the year ended March 31, 2011 is also disclosed using the new operating segments. LIFECARD Co., Ltd.
engages mainly in the credit card business and the credit guarantee business.
2. Methods of measurement for the amounts of sales, profit (loss), assets, liabilities and other items for each reportablesegment
The accounting policies of each reportable segment are consistent to those disclosed in Note 2, “Summary of Significant Accounting
Policies”.
3. Information about sales, profit (loss), assets, liabilities and other items is as follows:

32

AIFUL CORPORATION Annual Report 2012

Notes to Consolidated Financial Statements

Millions of Yen
2012
Reportable Segment
AIFUL

LIFE

LIFECARD

Total

Other
(Note 1)

Total

¥ 72,181¥ 10,079¥ 19,277¥ 101,537¥ 12,465¥ 114,002

Reconciliations

Consolidated

Operating revenue:
Operating revenue from external customers¥ 114,002

11

9

293

313

20

333

¥ (333)72,192

10,08819,570101,850

12,485

114,335(333)

Segment profit (loss) (Note 2)

13,407766

2,207

16,3801,836

18,216(824)

17,392

Segment assets (Note 3)

533,713

181,829715,542

63,248

778,790(113,605)

665,185

Segment liabilities (Note 4)453,952

94,956548,908

50,487599,395(15,854)583,541

1,393

1,393

1,393

(1)

1,392

Intersegment operating revenue or transfers
Total

114,002

Other:
Provision for credit card point redemption
Reversal of allowance (provision) forinvestment losses
Provision (reversal) for doubtful accounts(520)
23,935

2,643

2,529

(520)

131

(389)

543

154

29,1073,453

32,560377

32,937

1

Provision for losses on interest refunds
Provision for accrued bonuses

592

183

5

780

51

831

Depreciation and amortization

3,688

805

2,409

6,882

20

6,902

612

3

615

118

11

129

Interest on advances to subsidiaries and other

612

Dividends income

98

9

11

(610)

Interest on advances from parent company and
other

102

102

5
129

218

Amortization of negative goodwill

832
6,902

218

(102)

815

815

815

815

Gain on purchase of borrowings

2,902

2,902

2,902

2,902

Gain on negative goodwill

1,115

1,115

1,115

1,115

Loss on impairment of long-lived assets

322

322

322

322

Loss on sales of investment securities

1,453

1,453

1,453

1,453

Loss from and provision for businessrestructuring

2,008

91

36

2,135

21

2,156

2,156

Current

41

3

186

230

11

241

241

Deferred

(9)

(9)

(9)

2,408

2,408

Gain on retirement of bonds

Losses from a natural disaster
Loss on adjustment for application of accounting
standard for asset retirement obligations
Income taxes:

Increase in property, plant and equipment
and intangible assets

1,352

(9)
37

999

2,388

20

(Notes)1. ”Other” items are business segments excluded from reportable segments and include BUSINEXT CORPORATION, AsTry Loan Services Corporation, and other.
2. ”Reconciliations” are elimination of intersegment transactions.
3. ”Reconciliations” are elimination of intersegment assets.
4. ”Reconciliations” are elimination of intersegment liabilities.

AIFUL CORPORATION Annual Report 201233

Notes to Consolidated Financial Statements

Millions of Yen
2011
Reportable Segment
AIFUL

LIFE

LIFECARD¥ 86,203¥ 44,033

Total

Other
(Note 1)

Total

¥ 130,236¥ 14,726¥ 144,962

Reconciliations

Consolidated

Operating revenue:
Operating revenue from external customers
Intersegment operating revenue or transfers
Total¥ 144,962

20

76

96

127

223

¥ (223)86,223

44,109130,332

14,853

145,185(223)

144,962

Segment profit (loss) (Note 2)(70,169)(31,148)¥ (5)(101,322)(3,523)(104,845)

72,909(31,936)

Segment assets (Note 3)

578,153

281,340

192

859,685

73,769933,454(75,437)

858,017

Segment liabilities (Note 4)

513,318

248,73697762,151

68,176

830,327(35,915)

794,412

Other:

2,006

Provision for credit card point redemption
Reversal of allowance (provision) forinvestment losses
Provision (reversal) for doubtful accounts

244
48,539Provision for losses on interest refunds

2,006

2,006

2,006
271

244

27

271

13,106

61,645

7,245

68,89027,211

27,211(3,821)

27,21165,06927,211

Provision for accrued bonuses

735

373

1,108

86

1,194

1,194

Depreciation and amortization

4,219

3,468

7,687

121

7,808

7,808

Interest on advances to subsidiaries and other

1,678

4

1,682

8

1,690

159

35

194

5

199

Dividends income
Amortization of negative goodwill
Interest on advances from parent
company and other
Gain on retirement of bonds

268
1,537

1,537

268

(1,680)

10

218

218

199

(268)

1,537

1,537

1,243

1,243

64

64

Gain on purchase of borrowings
Loss on impairment of long-lived assets

211

Loss on sales of investment securities

54

10

211
64

1,032

Loss from and provision for businessrestructuring

173

132

305

56

361

Losses from a natural disaster

3,613

2,484

6,097

505

6,602

6,602

Loss on adjustment for application of accounting
standard for asset retirement obligations

1,277

1,277

1

1,278

1,278

28

389

Income taxes:
Current

43

16

59

19

78

78

Deferred

119

(200)

(81)

2

(79)

(79)

2,437

1,960

4,397

28

4,425

4,425

Increase in property, plant and equipment
and intangible assets(Notes)1. “Other” items are business segments excluded from reportable segments and include BUSINEXT CORPORATION, AsTry Loan Services Corporation, and other.
2. “Reconciliations” include elimination of intersegment transactions of ¥72,691 million (Loss on write-down of investments in subsidiaries of ¥67,782 million) andamortization of negative goodwill of ¥218 million.
3. “Reconciliations” are elimination of intersegment assets.
4. “Reconciliations” are elimination of intersegment liabilities.

34

AIFUL CORPORATION Annual Report 2012

Notes to Consolidated Financial Statements

Thousands of U.S. Dollars
2012
Reportable Segment
AIFUL

LIFE

LIFECARD

Total

Other
(Note 1)

Total

Reconciliations

Consolidated

Operating revenue:
Operating revenue from external customers
Intersegment operating revenue or transfers
Total$ 880,256$ 122,914 $ 235,086$1,238,256$ 152,012 $ 1,390,268$ 1,390,268

134

110

3,573

3,817

244

4,061

$ (4,061)

880,390123,024

238,659

1,242,073

152,256

1,394,329(4,061)

163,500

9,341

1,390,268

26,915

199,756

22,390222,146(10,048)

212,098

Segment assets (Note 3)

6,508,695

2,217,427

8,726,122

771,317

9,497,439(1,385,427)

8,112,012

Segment liabilities (Note 4)

5,536,000

1,158,000

6,694,000

615,695

7,309,695(193,341)

7,116,354

16,98816,98816,988(12)

16,976

Segment profit (loss) (Note 2)

Other:
Provision for credit card point redemption
Reversal of allowance (provision) forinvestment losses(6,341)

1,597(4,744)

6,622

1,878

354,963

42,110397,073

4,598

401,67112

291,890

32,232

Provision for accrued bonuses

7,220

2,232

60

9,512

622

10,134

Depreciation and amortization

44,732

9,817

29,37883,927244

84,171

Interest on advances to subsidiaries and other

7,463

7,463

37

7,500

Dividends income

1,195

1,439

134

1,573

Provision (reversal) for doubtful accounts

30,841(6,341)

Provision for losses on interest refunds

110

134

Amortization of negative goodwill
Interest on advances from parent company and
other

1,244

1,244

10,146
84,171(7,439)

61

2,658

2,658

1,573

(1,244)Gain on retirement of bonds

9,939

9,939

9,939

9,939

Gain on purchase of borrowings

35,39035,39035,39035,390Gain on negative goodwill

13,59813,59813,59813,598Loss on impairment of long-lived assets

3,927

3,927

3,927

3,927

Loss on sales of investment securities

17,72017,72017,72017,720Loss from and provision for businessrestructuring

24,4881,110

439

26,037

256

26,293

26,293Current

500

37

2,268

2,805

134

2,939

2,939

Deferred

(110)

(110)

(110)

29,36629,366

Losses from a natural disaster
Loss on adjustment for application of accounting
standard for asset retirement obligations
Income taxes:

Increase in property, plant and equipment
and intangible assets

16,488(110)451

12,18329,122

244(Notes)1. “Other” items are business segments excluded from reportable segments and include BUSINEXT CORPORATION, AsTry Loan Services Corporation, and other.
2. “Reconciliations” are elimination of intersegment transactions.
3. “Reconciliations” are elimination of intersegment assets.
4. “Reconciliations” are elimination of intersegment liabilities.

AIFUL CORPORATION Annual Report 201235

Notes to Consolidated Financial Statements

Related Information
1. Information about products and services
Millions of Yen

2012
Operating revenue from external customers

Loan Business

Other

Total

¥ 75,993¥ 38,009¥ 114,002

Millions of Yen

2011
Operating revenue from external customers

Loan Business

Other

Total

¥ 103,784¥ 41,178¥ 144,962

Thousands of U.S. Dollars

2012
Operating revenue from external customers

Loan Business

Other

Total

$ 926,744$ 463,524$ 1,390,268

2. Information about geographical areas(1) Operating revenue
Information about geographic area is omitted, as the Group does not operate outside Japan for the years ended March 31, 2012 and2011.
(2) Property, plant and equipment
Information about geographic area is omitted, as no property, plant and equipment are located outside Japan for the years ended March
31, 2012 and 2011.
3. Information about major customers
Information about major customers is omitted, as no single external customer accounted for more than 10% of operating revenue forthe years ended March 31, 2012 and 2011.
(Information regarding amortization of goodwill and unamortized amount of each reportable segment)
Millions of Yen

2012

Amortization of goodwill (Note 1)

AIFUL

LIFE

LIFECARD

Other

Elimination/
Corporate

Total¥ 1,115

¥

¥

¥ 218

¥

¥ 1,333

Goodwill at March 31, 2012 (Note 2)

435

435

Millions of Yen

2011

Amortization of goodwill (Note 1)

AIFUL

LIFE

LIFECARD

Other

Elimination/
Corporate

Total

¥

¥

¥

¥ 218

¥

¥218

Goodwill at March 31, 2012 (Note 2)

653

653

Thousands of U.S. Dollars

2012

Amortization of goodwill (Note 1)
Goodwill at March 31, 2012 (Note 2)

AIFUL

LIFE

LIFECARD

Other

Elimination/
Corporate

Total$ 13,598$$$ 2,658$$ 16,256

5,305(Notes)1. One of AIFUL is amortization of negative goodwill that arise as a result of the merger of LIFE on July 1, 2011.
2. “Other” is negative goodwill of New Frontier Partners Co., Ltd.

36

AIFUL CORPORATION Annual Report 2012

5,305

AIFUL CORPORATION Annual Report 201237

Group Network(As of July 1, 2012)

http://aiful.jp (Japanese only)
Business Classification
Unsecured loans
Secured loans
Small business loans
Credit guarantees

AIFUL CORPORATION
Investor Relations Website
http://www.ir-aiful.com/english

http://www.lifecard.co.jp (Japanese only)
Business Classification
Credit card shopping
Credit guarantees

Life Card Co., Ltd.

Voting Rights Held100%

http://www.businext.co.jp (Japanese only)

Businext Corporation

Business Classification
Secured loans
Small business loans
Voting Rights Held
60.0%

Companies

38

Business Classification

Voting Rights Held (%)

AsTry Loan Services Corporation

Debt collection (Servicer)

100.0

New Frontier Partners Co., Ltd.

Venture capital

100.0

AIFUL CORPORATION Annual Report 2012Investor Information(As of March 31, 2012)

Principal Shareholders
Corporate NameAIFUL CORPORATION

Address of Head Office381-1, Takasago-cho,
Gojo-Agaru, Karasuma-Dori,
Shimogyo-ku,
Kyoto 600-8420, Japan

Date of Establishment

April 1967

Common Stock¥143,324 million

Number of Employees

Non-consolidated: 1,340
Consolidated: 1,898

Corporate Officers (As of June 26, 2012)
President andRepresentative Director

Yoshitaka Fukuda

Representative Director

Taichi Kawakita

Directors

Masayuki Sato
Nobuyuki Wakuta
Kazumitsu Oishi
Tsuguo Nakagawa
Toshikazu Moriwaki
Mitsuhide Fukuda

Standing Corporate
Auditors

Masanobu Hidaka
Minoru Kobayashi

Corporate Auditor

Masanori Nagasawa (outside)

Principal Shareholders
Number of Percentage ofSharesTotal Shares(Thousands) Outstanding

AMG Co., Ltd.

47,407

19.68

Mitsuhide Fukuda

31,072

12.90

Marutaka Co., Ltd.

12,271

5.09

Daiwa Securities Capital Markets Co., Ltd.

10,044

4.17

J.P. MORGAN CLEARING CORP-CLEARING

4,670

1.94

Composition of Shareholders
Domestic Financial
Institutions
5.87%
Financial
Instruments Firms
9.33%
Individuals
and Other
46.38%

Other
Companies
25.45%

Foreign Investors
12.97%

Stock Listing
Tokyo Stock Exchange

The First Section

Securities Code8515

Shareholder Information
Number of Shares of Common Stock
Authorized

568,140,000 shares

Issued and Outstanding

240,933,918 shares

Number of Shareholders

26,849

Independent Auditors

Deloitte Touche Tohmatsu LLC

Transfer Agent andRegistrar

Sumitomo Mitsui Trust Bank,
LimitedContact Address
Investor Relations Section
Tokyo Office
2-31-19 Shiba, Minato-ku, Tokyo 105-0014, Japan
E-mail: spokesperson@aiful.co.jp

AIFUL CORPORATION Annual Report 201239