The more pieces we add,
the better the picture.

AIFUL CORPORATIONANNUAL REPORT 2002

PROFILE

A

IFUL CORPORATION is a leader in Japan’s consumer finance industry. Since its establishment, the Company
has striven to create value for all its stakeholders—customers, shareholders and employees—in line with its
corporate philosophy of obtaining community support for all its activities. Over the years, AIFUL has expanded
its operations, while ensuring that it continues to meet the expectations of all its customers.
In fiscal 2001, ended March 31, 2002, AIFUL served its more than two million customers through 1,592
branches and a network of 35,904 cash dispensers and automated teller machines (ATMs). On a consolidated
basis, the balance of loans outstanding at March 31, 2002, was ¥1,482,796 million ($11,148,842 thousand).
The Company is listed on the first sections of the Tokyo Stock Exchange (TSE) (Code: 8515) and the Osaka
Securities Exchange (OSE).
In March 2001, AIFUL acquired LIFE Co., Ltd., a leading Japanese consumer credit company. At March 31,
2002, this subsidiary had 8,710,000 cardholders and 76,000 member merchants accepting its cards. This broadcustomer base and extensive marketing channel have allowed AIFUL to accelerate its drive to become a comprehensive provider of financial services. The AIFUL Group comprises the parent company and seven consolidated
subsidiaries, including LIFE, which are working together to expand the Group’s foundations in comprehensive
financial services and build long-term asset value for AIFUL’s shareholders.

CONSOLIDATED FINANCIAL HIGHLIGHTSAIFUL CORPORATION and Consolidated Subsidiaries
Years Ended March 31, 2002 and 2001

Millions of Yen

2002

Thousands of
U.S. Dollars

02/01

2002

For the Year:
Total income ........................................................................... ¥ 400,014 ¥ 281,719
Total expenses .........................................................................
338,166
189,145
Income before income taxes and minority interests.............
61,84892,574
Net income ..............................................................................
35,064
48,253

42.0%
78.8
-33.2
-27.3

$ 3,007,624
2,542,601
465,023
263,639

At Year-End:Balance of loans outstanding ................................................. 1,482,796 1,261,042
Installment accounts receivable .............................................
120,756
86,642
Total assets............................................................................... 2,029,634 1,865,537
Long-term debt, including current portion thereof .............. 1,291,781 1,191,942
Total shareholders’ equity ......................................................
421,343306,550
Number of shares outstanding............................................... 93,376,000 84,876,000

17.6
39.4
8.8
8.4
37.4
10.0

11,148,842
907,940
15,260,406
9,712,639
3,167,992

Per Share Data:
Net income ..............................................................................
Cash dividends........................................................................

2001

Percentage
ChangePercentage
ChangeYen¥390.00
50.00¥569.32
50.00

U.S. Dollars-31.5%
0.0

$2.93
0.38

Notes: 1. The U.S. dollar amounts have been translated, for convenience only, at ¥133=$1, the approximate rate of exchange at March 29, 2002.
2. Net income per share has been computed based on the weighted average number of shares outstanding during each period, after retroactive
adjustment for stock splits.

Contents
Noteworthy Events .................................................................. 1
Message from the President ................................................... 2
Special Feature......................................................................... 4
Review of Operations ............................................................ 18
Financial Section ................................................................... 23
Board of Directors .................................................................. 68
Investor Information ...................................... inside back cover
Cautionary Remark Regarding Forward-Looking Statements
Statements made in this annual report with respect to AIFUL’s plans, strategies and beliefs and other statements that are not historical facts
are forward-looking statements based on the assumptions and beliefs of the Company’s management in light of the information currently
available to it and involve risks and uncertainties that may affect the Company’s future performance. Potential risks and uncertainties in
AIFUL’s areas of business include, without limitation, social, economic and financial conditions.

NOTEWORTHY EVENTSFirst Quarter

Second Quarter

April 2, 2001

New Start for LIFE,
Businext Launched
LIFE started operating as a wholly
owned subsidiary. Businext
Corporation, a joint venture withThe Sumitomo Trust & Banking Co.,
Ltd., began offering financing services for small businesses.

June 4, 2001

Sanyo Shinpan Becomes Wholly
Owned Subsidiary
Sanyo Shinpan Co, Ltd., a 100%owned consumer credit and credit
card firm, became a wholly owned
subsidiary.

August 25, 2001

Third Quarter

New Shares Issued
AIFUL raised ¥87 billion through apublic offering of 3.5 million sharesand 5 million shares of common
stock in Japan and overseas, respectively. AIFUL used these funds toimprove its equity ratio, which had
declined as a consequence of its
acquisition of LIFE, and reinforce
the Company’s financial position to
support further business expansion.

Fourth Quarter

November 8, 2001 LIFE Share Parcel Transferred
The Company transferred 4.12% of
its stake in LIFE to financial institutions with which it conducts transactions, to help LIFE obtain funding
more easily.
November 27, 2001 AsTry Loan Services Established
AIFUL and Aozora Bank, Ltd.,
jointly created AsTry Loan Services
Corporation, a debt-servicing
company that harnesses AIFUL’s
expertise in retail credit management and collections and Aozora
Bank’s sales network.

January 27, 2002

Fixed Assets Transferredto Subsidiary
AIFUL transferred all its rental andcommercial property to MARUTOH
Co., Ltd., a wholly owned subsidiary,as part of a drive to optimally allocate Group management resources.
At the same time, AIFUL reclassified
unused property as held for sale,cutting prices to reflect current
market values.

March 20, 2002

Businext Buys Lending BusinessIn keeping with an expansionary
drive, Businext acquired the building contractor lending operationsof Misawa Homes Co., Ltd., for¥3.7 billion.

December 7, 2001 Employee Stock Options Granted
The Company granted stock options
to employees and directors toencourage them to boost revenues
and earnings.

AIFUL CORPORATION Annual Report 2002

1

MESSAGE FROM THE PRESIDENTI

am pleased to report on our achievements in fiscal
2001. During this period, we continued do our utmost
to serve Japan’s ¥65 trillion consumer credit market,
while building value in line with our long-term management vision of becoming a comprehensive retail financial
services group.

Yoshitaka Fukuda
President and CEO

Operating Environment
In the final decade of the 20th century, Japan’s consumer
finance market tripled in size, to around ¥9 trillion. Under
our medium-term management plan, we expect the market
to continue expanding, before flattening out at ¥13 trillion
in 2010. As the market heads toward maturity, we are
already witnessing an intense battle for market share thatcrosses traditional business boundaries. For example,
major consumer finance institutions are entering the consumer credit and credit card businesses and establishingjoint ventures with banks. Foreign players are entering theindustry through mergers and acquisitions (M&A).
The operating environment greatly affected our business performance during the year under review. We strove
to overcome unfavorable macroeconomic conditions andattract new customers for our unsecured loans. Despiteextensive advertising campaigns, centered on televisioncommercials, unsecured loan volume declined in the second half of the term, as personal consumption stagnatedamid concerns about Japan’s economic prospects. Bad
debt write-offs continued to increase, owing to a surge inbankruptcies and record highs in the unemployment rate.
History suggests that our results should recover in linewith a pickup in the economy, as new lending and badloans tend to fluctuate with the economy.
On the legal front, in June 2003 the Japanese government plans to once again review the interest rate ceilingunder the Distributions Law. The maximum interest rate
under this law has already been reduced from 40.004% to29.2% in response to concerns over the unethical collection methods of some commercial lenders. AIFUL andother members of the consumer finance industry havecontinued to lobby lawmakers to enhance their understanding of the sector, and are doing their best to eliminate
the collection problems that prompted the previous
revision to the regulations.

AIFUL CORPORATION Annual Report 2002

2

Management Strategy
The medium-to-long-term management strategy of the
AIFUL Group is to strengthen its foundations ahead of thematuration of the consumer finance market by becoming acomprehensive retail financial services provider.
To realize this goal, we are diversifying both our product lineup and distribution channels for securing customers. In addition, we are striving to become a leading
player as competition spills across traditional businessboundaries by prioritizing M&A and forming alliances that
help us bolster Group competitiveness and brand value.
We did much in the year under review as part of ourstrategic drive to become a comprehensive retail financial services provider. Our achievements included theacquisition of LIFE, a leading Japanese consumer credit
company, and the establishment of a joint venture with
Sumitomo Trust & Banking to specialize in lending tomedium-risk small business owners and corporations.
Through our acquisition of LIFE, we expanded our customer base to more than 8 million people. Immediately
after the purchase, we swiftly implemented management
improvements to enhance the AIFUL Group’s competitiveness in the consumer credit market, while improving
LIFE’s performance.
Operating Achievements
To complement our diversification strategies under ourcomprehensive retail financial services vision, we havealso focused on reinforcing LIFE’s management, launching new businesses and forming partnerships with banks
in the assurance field.
Under our product diversification strategy, we areemphasizing unsecured loans, home equity loans andsmall business loans, and developing products that meetcustomer needs. These offerings include loans that help tostreamline company cash flows.
Through our strategy of diversifying distribution channels to attract more customers, we are working to improvecustomer convenience by developing the existing distribution channels of Group companies and exploiting theprestige of the AIFUL brand in consumer finance. We aredoing this by forging alliances with companies in otherfields, pursuing M&A, offering Internet cashing andimplementing other new approaches.

Since taking over LIFE, we have concentrated onrevamping its poor earnings structure by building a highreturn assets portfolio. These efforts led to LIFE posting¥2.4 billion in ordinary income just a year after bankruptcy. We intend to keep increasing LIFE’s profitability byallocating more resources to it so LIFE can become a highearnings business in the consumer credit and other fields.
Examples include shopping and cashing services under
the LIFE Credit Card and unsecured loans through the
LIFE Play Card.
Future Challenges
Competition between the major players, increased rivalry
with foreign firms and banks newly entering the market
have led to unprecedented competition in the consumer
finance industry. Through our acquisition of LIFE, wehave branched out from our roots in consumer financeand entered Japan’s ¥65 trillion consumer credit market.
In our drive to become a leading player in this market,
we are endeavoring to expand our customer base andbroaden the scope of our operations, while pursuing an
M&A strategy covering consumer finance and credit firms.
At the same time, we are pursuing synergies throughGroup management so that we can streamline operational
efficiency and more effectively deploy our resources togreatly reduce costs.
To achieve further progress in the consumer financemarket, we have prioritized the building of an AIFULGroup brand over the three years of our medium-term
management plan.
As we prepare to meet new challenges, we will
urgently work to bolster LIFE’s profitability so it can help
drive Group growth.
I look forward to your continuing support andencouragement in the year ahead.

AIFUL CORPORATION Annual Report 2002

Yoshitaka Fukuda
President and CEO
June 26, 2002

3

SPECIAL FEATURE

Interview with

President
Yoshitaka Fukuda

Theme One: Operating Environment

Q Please outline your views on the consumer
finance market. Also, what are your growthtargets in that market?

AIFUL CORPORATION Annual Report 2002

4

Overview of Japan’s Consumer Credit Market – The Breaking Down of Traditional Business Barriers(As of the end of calendar 2000; Trillion of yen)

Credit sales(Credit sales andcredit card companies)

Credit card

Single payment (¥2.0)(¥3.2)

Installment (¥1.2)(¥15.9)Installment credit

Single payment (¥0.7)(¥12.6)

Installment (¥11.9)

Consumer financeDeposited collateral (¥13.5)

Post offices and financial institutions (¥13.5)(¥49.2)

Consumer loans

Banks and other financial institutions (¥21.0)(¥35.6)

Consumer finance companies (¥8.8)
Credit sales and credit card companies (¥5.3)
Other (¥0.5)

Source: Consumer Credit Market Statistics, Japan Consumer Credit Industry Association

A

Around 10 years ago, the consumer finance mar-

Our medium-term management plan assumes that

ket was worth ¥3 trillion, or just 4.9% of thethe rate of growth in the industry will decelerate overconsumer credit market. By 2000, it had

the next two to three years as customers will probably

expanded to ¥9 trillion, accounting for 13.6% of the con-borrow less in response to the currently poor economic

sumer credit market. In the decade since Japan’s bubble

conditions, and falling interest rates should lead to aeconomy burst, apart from consumer finance, the only

long-term slowdown in industry growth. In the medium-growth has been in credit sales and credit cards. But the

to-long term, we think that the industry will grow until

companies in the latter two fields are relatively small, so I

2010, when the consumer finance market will be worth

believe that consumer finance players have been the big¥13 trillion. The market should remain at that level

winners amid these changes.

thereafter.

That said, growth is now stabilizing in the consumer
finance market, which has driven consumer credit expansion to date. I think the consumer finance market will
mature over the next few years.

AIFUL CORPORATION Annual Report 2002

5

SPECIAL FEATURE

Q What do you think of the players newly
entering the consumer finance industry andthe industry’s increasingly borderless nature?
In terms of new entries, it would have been

A

Banks are focusing their consumer finance strategies

unthinkable just a few years ago that banks

on accepting loan applications through unmanned lend-

would form alliances with players in ouring centers, the Internet and fax services. But these setups

industry to start offering cashing services, creating suchare merely sales support tools. It is impossible to provide

companies as Mobit Co., Ltd., and At-Loan Co., Ltd. Fiscal

the comprehensive cashing services critical to consumer

2001 saw the launch of the bank-owned Tokyo-Mitsubishi

finance if you do not maintain a branch network. The

Cash One Ltd.

keys to success in retail finance are a strong brand that

Foreign institutions have also made inroads into thehighlights a readiness to provide unsecured loans and aJapanese consumer finance market. In 1998, for example,

solid branch network. Furthermore, we believe that theGeneral Electric Capital Corporation acquired Lake Co.,risk pricing prospects are extremely limited at the 18%

Ltd., and deployed aggressive television commercial cam-interest rates that banks are offering.

paigns aimed particularly at marketing secured loans. The

Foreign institutions do, admittedly, have global

ING Group invested in consumer finance company NICE

brand names. Nonetheless, they operate through JapaneseCo., Ltd., while Ripplewood Holdings LLC invested in

mid-tier consumer finance firms that they have acquired,

Shinki Co., Ltd., the consumer finance arm of Shinsei

and those businesses still use their pre-acquisition names.

Bank, Limited, in which Ripplewood is a major investor.

In other words, the foreign players have not unified their

Still, the player most in the spotlight has been Citigroupbrands.

Inc. for its consumer finance acquisitions strategy. OverThe new entrants do not seem serious rivals tothe past two years, Citigroup has bought a number ofJapan’s well-established, large consumer finance firms,

small and medium-sized firms, such as AIC Corporation,although bank- and foreign-owned companies do have

DIC Finance Corporation and Unimat LIFE Corporation

the potential to cultivate and reinvigorate the consumer

as part of efforts to build a top presence in the consumer

finance market.

finance market in Japan.
AIFUL CORPORATION Annual Report 2002

6

Theme Two: New Customer Trends

Q How is the changing business environment
affecting your new customer levels?

In fiscal 2001, the number of new customers rose

applications in the second half of the fiscal year were suc-just 2.0%, to 462,000 accounts, and we actually

cessful, compared with 74.8% in the first half of the fiscal

posted a decline in the number of new cus-year. In addition, we moved away from “soft-sell” com-

A

tomers in the second half of the term, for the first time in

mercials to those presenting more specifics and withthree years.

greater impact. Consumers did not like the new approach,Our industry suffered an overall drop in new customer numbers mainly because concerns over the econ-

which likely contributed to the decrease in new loan
applications.

omy’s prospects prompted people to refrain from borrow-

I think that our operating environment will remain

ing. Possible market saturation was less of a factor. During

severe until corporate restructuring run their course andthe year, average worker incomes fell 1.2%, the first drop

unemployment begins to fall, leading to an improvementin three years, which is largely why consumer confidence

in consumer confidence. Because of internal factors, I

has been weakened. In addition, the aggressive televisionbelieve it will be hard for us to raise the percentage of suc-commercial campaigns that consumer finance firms

cessful loan applications in the current economic climate.

mounted from 1999, after lifting a voluntary ban on such

Still, we will return to running soft-sell commercials andadvertising, have become less effective.

continue to improve customer service.

Another factor—an internal one for AIFUL—is thatin the second half of fiscal 2001 we tightened lending toconstrain loan write-offs. Accordingly, only 71.8% of loan

AIFUL CORPORATION Annual Report 2002

7

SPECIAL FEATURE

Q What are your reflections on AIFUL’S
change in marketing approach?

A

Consumer finance marketing is “pull” oriented,
centering on television commercials, newspaper
advertising and signboards. Marketing tech-niques have varied depending on the phase.
The first phase involved the use of branch networks.

reliability, propelling us to the top in terms of new
customer numbers.
Today, commercials seem to have lost much of their
original impact, indicating that we have overmarketed on
television. Our advertising and sales operations are cur-For example, when Acom Co., Ltd., developed its auto-

rently working together to develop new products and themated lending machines the company was able to quickly

next marketing phase.

set up a nationwide network of unmanned lending centers. The increased convenience boosted new customer
numbers.
The next major development was in 1999, when theban on consumer finance advertising on prime-time television was lifted. Promise Co., Ltd., ran an intensive soft-sellcommercial campaign that highlighted images of traditional Japan. We rolled out our commercial strategy after
that. Instead of taking Promise’s approach, we opted to present AIFUL as a provider of peace of mind, with our commercials showing employees dealing in person with customers at our loan centers. This more personal technique
was a first in the domestic consumer finance industry, andmany viewers accepted the message of trustworthiness and

AIFUL CORPORATION Annual Report 2002

8

Theme Three: Loan Write-Offs

Q How do you interpret loan write-off risks?

The state of the macroeconomy is an increasinglyA

Personal bankruptcies will probably remain at a highsignificant factor in the current surge in loanlevel until the 2003 revision, although the increasing num-

write-offs. Also, changes in the legal frame-

ber of loan write-offs owing to macroeconomic factors will

work have prompted more people to seek legal advice inprobably abate as the Japanese economy recovers. Thisan attempt to avoid discharging their debt obligations.

improvement, combined with revisions to AIFUL’s scoring

At the macroeconomic level, unemployment rates

system, should lead to a gradual decline in loan write-offs

and loan write-offs correlate quite closely. A decade ago,and delinquencies.

when the unemployment rate was 2%, loan write-offs
were 2.5%. Now, with unemployment at a record high of
5.6%, loan write-offs have risen to 4.1%. In other words, a
one percentage point increase in the unemployment rate
boosts loan write-offs approximately half a percentage
point.
The legal environment changed with the April 2001
introduction of the Code of Personal Bankruptcy Rehabilitation, which lifted a ban on attorney advertising. With
more attorneys becoming active in the bankruptcy fieldahead of the government’s scheduled June 2003 review of
the Distribution Law’s interest rate ceiling, we are seeing
more personal bankruptcies being declared. Such declarations hit a record high of 160,000 in fiscal 2001.

AIFUL CORPORATION Annual Report 2002

9

SPECIAL FEATURE

Q What are your views on changes to the legal
framework for consumer finance?
The government lowered the Distribution Law’s

Ainterest rate ceiling in 2000 in response to social
uproar about the dubious collection practices

of some commercial lenders—which operate in a completely different industry to ours—concluding that highinterest rates were the cause of the problem. Neither
AIFUL nor other leading consumer finance firms had
engaged in contentious collection practices. Since then,we have done our utmost to ensure that society does notagain confuse us with these commercial lenders. To
improve understanding of our industry’s position, we areworking with counterpart firms to maintain proactive disclosure through the media, approach lawmakers and act
through the Liaison Group of Consumer Finance
Companies, which is chaired by a Waseda University professor. Through these efforts, we and other members of
our industry have been striving to convince the government that further reinforcing interest rate regulations
would make no sense. While there is a risk that the government will cut the interest rate ceiling even further in
2003, we will continue to work with other firms in theindustry to prevent this happening.

AIFUL CORPORATION Annual Report 2002

10

Theme Four: Management Strategies for a New
Operating Environment

Q Why did you decide to pursue a vision of
becoming a comprehensive retail financial
services provider?
As I mentioned earlier, we expect the rate ofA

growth in the consumer finance market todecelerate, and then stabilize in the near

future. Nonetheless, we want to maintain and expand ourpresence in the consumer finance market, while diversifying our product lineup and customer acquisition channels. Four firms currently dominate the oligopolistic consumer finance market. The need to seek new vehicles for
growth beyond this ¥9 trillion market underscored ouracquisition of LIFE and our creation of Businext, which
serves middle-risk business owners and corporations.
These moves have given us greater access to the ¥65 trillion consumer credit market. In other words, we want tobuild an overall capability in retail finance so we canemerge as a winner from an inevitable restructuring of ourindustry.

AIFUL CORPORATION Annual Report 2002

11

SPECIAL FEATURE

Q What type of comprehensive retail financeplayer do you aim to become, and what are
your main priorities in launching Groupmanagement?
The pursuit of efficiency through selective con-A

centration is very popular at the present time.
We believe it is better to duplicate and dis-perse our resources under our comprehensive retailconsumer finance vision.
Selective concentration seems critical for companies
facing stagnation in maturing industries. In our view, sucha policy would prevent us from seizing the opportunities
available to us by expanding beyond consumer financeinto the ¥65 trillion consumer credit market.
In the consumer credit market, the boundaries havebroken down between consumer finance, credit cards andcredit sales, with players scrambling for a share. Rather
than limiting our horizons, we are promoting “diffusionand duplication” through M&A and alliances and doing
our utmost to broaden our operating base before thebattle for market share intensifies. That said, in our
next medium-term management plan we intend to harness selective concentration principles in assessing the
profitability and efficiency of our expanded businesses.

AIFUL CORPORATION Annual Report 2002

12

Low risk

AIFUL Group Business Activities – Diffusion and Duplication“Super Dunk”

Personal loan
guarantee partnerships
with local banks,
credit unions andcredit associations

business loan
guarantee partnershipwith The Daiwa Bank, Ltd.

Businext

High risk

Credit card,a installment credit
and guaranteerpartnerships

Sinwa
Happy Credit

Consumer financeCash Plaza

Sanyo Shinpan

Credit sales and credit card

AIFUL CORPORATION Annual Report 2002

Business loans

13

SPECIAL FEATURE

Q Why is brand image so important for
AIFUL, and how are you deploying it?
As a comprehensive retail finance player, we con-

These gatherings encompass debate over policies tosider the AIFUL brand an important tool in sig-

improve the clout of our television commercials ornificantly differentiating ourselves from thesponsorship of sporting and other events as part of ourAcompetition as we expand into the consumer credit mar-commitment to corporate citizenship.

ket. The leading consumer finance firms have done much

One unique advantage we have over our consumer

to enhance their brands. Despite all that, they have not yet

finance rivals is the increased brand awareness we secured

altered the ratio of male customers to female customers,by taking over leading consumer credit company LIFE.

which currently stands at 7:3. But if you look at credit card

Roughly half of LIFE’s customers are female, which is ancompanies, such as Credit Saison Co., Ltd., you see that

advantage other consumer finance firms do not enjoy.

the ratio is fairly balanced. This implies that women do

This acquisition and other moves are part of our strategy

not like to borrow from consumer finance firms, but are

to increase overall Group brand value.

quite happy to obtain cash on credit cards, such as the
LIFE Card.
Consumer credit firms have formed alliances with awide range of top companies to help secure new customers, but AIFUL does not have access to such acquisition
channels. That is why improving the Group’s brand image
is central to our medium-term management plan goal of
successful expansion as we move beyond our consumer
finance roots.
The AIFUL Group is striving to reinforce its corporate
brand by holding monthly Groupwide brand meetings.

AIFUL CORPORATION Annual Report 2002

14

Q How did you create the revenues and earnings

model you used to rebuild LIFE, and what
approaches are you considering to further strengthen
LIFE so it can deliver high returns?

A

Following our takeover of LIFE, we reshuffled its

In areas outside the card cashing business, we trans-

portfolio so it could provide high returns based

ferred settlement authority from LIFE’s headquarters to its

on stronger operating assets. The first step was

branches. This has allowed LIFE to rapidly increase per-to have LIFE completely withdraw from the low-profit

item shopping sales, which offer high returns, thereby

automobile loan and home loan guarantee businesses

enhancing profitability. In its first year of operations

and focus on the high-return card cashing and consumer

under the AIFUL umbrella, LIFE has gone from bank-finance businesses. Like AIFUL, LIFE offers loan card ser-ruptcy to ordinary income of ¥2.4 billion. Our target forvices, so we had LIFE adopt our scoring system in that

fiscal 2002 is ordinary income of ¥8.0 billion.

area to allow it to achieve high growth in outstanding

Over the next two to three years, through our initia-

loans. LIFE also has a card cashing business—in contrast

tives we are aiming for LIFE to build solid earnings foun-

to AIFUL—so it is not so straightforward to apply our

dations. The goal thereafter is for LIFE to expand its coreexpertise to help LIFE increase its usage rates and cashingcredit sales and credit card businesses. In credit cards, weper customer. That said, LIFE has been able to expand its

want LIFE to secure more large merchants and expand its

customer base through alliances for the LIFE Card.

customer base, while diversifying its settlement approaches
and usage channels to build value by becoming more
attractive, thereby increasing its capacity utilization.

LIFE’s Complete Rehabilitation only One Year after Acquisition
and Looking to Dominate the Credit Sales and Credit Card Businesses

Card membership (Thousands)
Receivables (Millions of yen)
Loans outstanding (Millions of yen)

Fiscal 2000
(Acquisition)

Fiscal 2001
(Results)

Fiscal 2002
(Targets)

7,480
606,313
196,559

8,710
612,509250,90379,8242,404

9,780
687,641
312,550
101,076
8,000

Ordinary income

Notes: 1.
2. LIFE’s figures are on a receivables basis that includes receivables dropped from the balance sheet through securitization.

AIFUL CORPORATION Annual Report 200215

’s consolidated accounts.

SPECIAL FEATURE

Q Please describe your efforts to increase
the efficiency and profitability of yourbusiness processes.

To achieve success in the consumer credit market,

This facility will centralize everything from applications to

the AIFUL Group pursues the benefits possible

collections. Within a very short time frame, all Group com-from the organic synergies between all Group

panies will transfer their loans and claims management toAmembers.

this new center, thereby cutting costs considerably. By tak-

We are cultivating sales synergies by having all Grouping a Group approach to developing and sharing products

members diversify their product lineups and customer

and systems, we are seeking to bolster Group profitability.

distribution channels. For example, all Group companies

Through such endeavors, we seek a consolidated return onmarket AIFUL’s secured loans and take advantage of LIFE’s

assets of more than 3.0%.

credit card system to issue credit cards. In these and otherways we are ensuring that Group companies use resources
more efficiently.
In terms of cost synergies, we have already transferred the back office operations of Happy Credit
Corporation, Sinwa Co., Ltd., and Sanyo Shinpan Co.,
Ltd., to AIFUL’s headquarters. A single advertising company produces all the AIFUL Group’s television commercials, which has allowed us to maintain advertising volume at a lower cost.
We are building systems synergies by jointly developing and using new setups. A good example of this is anoperating center that we plan to open in October 2002.

AIFUL CORPORATION Annual Report 2002

16

Q Please outline your corporate citizenship efforts.

We sponsor a variety of sports events throughout

A

Japan as part of our contribution to society.
In fiscal 2001, we sponsored the AIFULOur social involvement extends beyond the sponsorship of sporting events. For example, we support groupand individual volunteers through the Volunteer Heartful

Cup Golf Tournament 2001, which was held at thePrize and will continue to support community activities

Ajigasawa Country Club in July 2001 and was the Japan

in keeping with the spirit of the United Nations’ Inter-

Golf Tour Organization’s 16th event for the year. The

national Year of Volunteers 2001.

Ajigasawa Athletics Association helped run the tournament,

AIFUL plans to continue seeking as many opportuni-

and we sought other ways to involve the local community.

ties as possible to interact with society through a variety

AIFUL also sponsored the 11th Fukuchiyama

of activities—centered on sports events—in line with its

Marathon in Kyoto Prefecture, sanctioned by the Japan

corporate philosophy of obtaining community support

Association of Athletics Federations. This annual event isfor its operations.

one of the few in Japan to attract around 10,000 runners,
and has increasingly become a favorite among amateur
athletes.
Also in fiscal 2001, we sponsored the International
Judo Federation’s World Judo Championships, held in
Munich, Germany. More than 670 judoka from 90 nations
competed at this event, which entertained countless fansaround the globe.

AIFUL CORPORATION Annual Report 200217

REVIEW OF OPERATIONS

AIFUL

T

he Company has been pursuing strategies to

Unsecured Loansdiversify its product lineup and customer market-

At the end of the first half of the fiscal year, the number ofing channels in keeping with its vision of becom-

new unsecured loans had climbed 11.1% compared withing a provider of comprehensive retail financial services.

the previous corresponding period, to 245,000 accounts,

Our product diversification strategy encompasses

reflecting the impact of an aggressive television commer-

meeting the sophisticated needs of our customers bycial campaign. In the second half of the period, the com-developing derivatives for unsecured loans, home equity

mercials were less effective, as customers refrained fromloans and small business loans.

borrowing in response to worsening economic conditions.

We are diversifying our distribution channels and

The number of new unsecured loans decreased 6.7% year-

enhancing convenience to attract more customers byon-year in the second half of the period, to 216,000

forming partnerships with companies in other industries,

accounts. At the end of fiscal 2001, therefore, the number

pursuing M&A, engaging in bank assurance and offeringof new unsecured loans rose just 2.0%, to 462,000

cashing services over the Internet.

accounts, compared with the end of the previous fiscal

In fiscal 2001, these efforts helped boost the balance

year. The number of new accounts declined, owing toof loans outstanding at year-end 13.3%, to ¥1,313.7 bil-changing employment patterns among the young, anlion. The number of customer accounts was up 5.8%, at

unfavorable macroeconomic environment and the2,244,283 accounts.

Company’s tightened lending controls.
The average yield on unsecured loans outstanding
decreased 0.3 percentage point compared with the previous term, to 25.7%, as we lowered interest rates for customers with high creditworthiness in response tointensified competition and increased larger loans as aproportion of total lending. Unsecured loans outstandingat year-end averaged ¥472,000 per customer, up 5.2%.
These factors resulted in a 10.6% rise in unsecuredloans outstanding at year-end, to a record high of¥1,019,293 million, with the number of unsecured loanaccounts at year-end gaining 5.1%, to 2,155,000 accounts.
Home Equity Loans
We launched home equity loans in 1985, and are currently researching the home equity loans business in the
United States. In contrast to unsecured loans, where writeoffs are increasing, the write-off ratio for home equity
loans in fiscal 2001 remained low, at just over 1%, underlining the advantage of property-secured lending.

AIFUL CORPORATION Annual Report 2002

18

Another key factor in the low write-off rate was thatafter launching operations in this category in 1998 to take

AIFUL limited the ratio of unsecured loans to customers

advantage of rising discontent among small business own-in Tokyo, Nagoya, Osaka and Fukuoka to 30% of theers with regular loan providers and the increasing difficul-

nationwide total, as home prices have fluctuated in thoseties the self-employed faced in obtaining finance as thefour major cities. We distributed the balance among areas

state of the Japanese economy worsened. We have built

where land prices are much more stable. Approximately

our funding on solid assessment grounds.
At the end of fiscal 2001, small business loans out-

half our home equity loans use first mortgages. We also
reinforced stability by limiting about 80% of secured

standing rose 37.1% from the end of the previous fiscalloans to less than 70% of appraised collateral value.

year, to ¥16,726 million. The number of accounts
increased 37.6%, to 13,000 accounts.

At the end of the period under review, home equity
loans outstanding stood at ¥277,671 million, up 23.1%
from the end of the previous period. The number of

Other Businesses

accounts also rose 23.1%, to 75,000 accounts. These fig-

During the period under review, we pursued guarantee

ures show that secured loans are now an important factor

partnerships with banks in line with our drive to diversify

in AIFUL’s growth.

our customer distribution channels and lending options.
Under these alliances, we screen and guarantee applicants

Small Business Loansfor bank loans and handle claims management, both on a

In this third major area, the average loan was relatively

fee basis. At March 31, 2002, we had guarantee partner-

low, at ¥1,190,000 per account. We focus on funding

ships with six banks, with the value of guarantees totaling

small business owners with unsecured and secured loans,¥2,700 million.

Total Balance of Loans
Outstanding

Number ofCustomer Accounts(Millions of Yen)
1,500,000(Thousands)
2,500

2,000

1,200,000

2,000

1,600

900,000

1,500

1,200

600,000

1,000

800

300,000

500

400

0

98

99

00

01

02

0

98

99

00

01

Small Business Loans
Home Equity Loans

Small Business Loans
Home Equity Loans

Unsecured Loans

Unsecured Loans

AIFUL CORPORATION Annual Report 2002

19

02

Number of Branches andUnsecuredLoan-Contracting
Machines

0

98

99

00

01

02

Unstaffed Branches
Staffed Branches
Unmanned Loan-Contracting
Machines

REVIEW OF OPERATIONS

LIFE

T

his review of LIFE’s operations for fiscal 2001

based on our credit expertise and expanded services tofocuses on our four basic strategies for that

cardholders by upgrading LIFE’s web site. LIFE’s stronger

subsidiary.

financial position enhanced its standing among its business partners, prompting them to more readily accept

Strengthening Consumer Credit Operations

LIFE’s cards.
In per-item shopping loans, the number of member

through Credit Cards
During the period under review, we continued tomerchants accepting its cards increased about 3,000 dur-strengthen LIFE’s credit card and credit sales operations.

ing the year under review, with average monthly purchases

The number of cardholders rose 1,230,000, to 8,710,000

increasing more than 30%, to over ¥10 billion. The yield

customers. Cardholders increased their shopping andfrom these operations improved 0.5 percentage point.

cashing usage between 15% and 20%. The main driver of

Our reorganization of LIFE’s business structure was thethis growth was an increase in the number of cards issued

prime driver of this growth. For example, we transferredon the back of stronger links with such leading retailers as

considerable authority to branches, which helped clarify

Aoyama Co., Ltd., which sells men’s apparel, andstandard yields when concluding merchant agreements

DEODEO CORPORATION, a consumer electronics firm.

and allowed us to consolidate LIFE’s back-office opera-

Another factor was the success of a card that features

tions. Another benefit was that branch employees weremembers of the GLAY pop group. In addition, we madebetter able to monitor merchants.

LIFE’s cards more attractive by increasing loan limits
Revamping the Portfolio to Enhance Profitability
LIFE has stopped accepting new applications for automobile and home loans, as these businesses are unlikely
to become profitable. It is now concentrating its resourceson key areas that generate earnings, notably the LIFE Cash
Plaza loan card, credit card cashing services and installment sales finance loans. Loans through the LIFE Cash
Plaza loan card increased 39.1% in the year under review,reflecting the addition of new loan offices and the introduction of AIFUL’s scoring system as well as other benefits
derived from the synergies arising from its association
with AIFUL. Card cashing advances jumped 23.2%, due tomore effective management, which boosted lending precision. Installment sales finance operations performed
solidly in the near absence of outstanding automobileloans.

AIFUL CORPORATION Annual Report 200220

Personnel and Organizational Reforms

LIFE’s Challenges

LIFE has instituted a performance-based employee remu-In the card business, LIFE is striving to make its offerings

neration system that balances the responsibilities under-

even more attractive for customers, thereby building card-taken by branch managers and other executives withholder numbers and usage rates. Growth strategies include

incentives. On the organizational front, LIFE has elimi-

diversifying access channels, offering customer-specificnated the knowledge gap between executives and employ-interest rates, diversifying repayment options and han-ees in the field by ensuring the sharing of information atdling collections more efficiently.

strategic management meetings. In addition, LIFE has

In the installment sales finance loans business, thestrengthened top executives’ organizational controls inmain efforts are targeted at greater organizational efficiency

keeping with efforts to bolster profitability centered on

to improve operating capacity and the cultivation of new

installment sales finance loans.

markets. LIFE has launched a special web site to increase
its attractiveness to merchants. The site offers an array of

Cost-Cutting

information, such as information on popular products,

LIFE’s first step in cutting costs was to relocate branches

and provides timely merchant support services.

from buildings with high rents to more reasonably priced

The objective of the LIFE Cash Plaza loan card is topremises. It also vacated one floor at its Tokyo headquar-achieve high growth by continuing to strengthen lending

ters and streamlined work flows. These initiatives haveand expand the office network.

lowered annual running costs about ¥3.5 billion. LIFE
next focused on improving its collections structure byadopting AIFUL’s expertise and installing new computer
systems. This endeavor greatly enhanced collections efficiency and halved the number of employees needed forsuch operations.
LIFE has also greatly reinforced its cost structure byoverhauling its sources of funding. In the first half of fiscal
2001, for example, it obtained ¥274.0 billion in funds
through high-cost nonrecourse loans. From October 2001,
however, LIFE switched to securitizing loans, thus lowering the interest rate on ¥245.0 billion in funding to lessthan 1%. LIFE also procured a total of ¥52.5 billion from
10 financial institutions with which it regularly does business. As a result of these efforts, Rating and Investment
Information, Inc., assigned a BBB+ rating to LIFE immediately after rehabilitation procedures ended, which has
allowed the company to greatly diversify its sources offunding.

AIFUL CORPORATION Annual Report 200221

REVIEW OF OPERATIONSOTHER GROUP COMPANIESThe AIFUL Group includes several other companies

in fiscal 2001 was that small business owners andthat allow it to serve the entire consumer credit

corporations cut capital expenditure and refrained frommarket. They include consumer finance subsidiaries

borrowing in response to the government’s economic

Sinwa and Happy Credit. Another is Sanyo Shinpan, whichreform efforts.

has refocused its business model from credit sales to con-

Another development was that Businext used thecentrate on consumer finance. Other key Group members

advertising approach that has been so successful for

are AsTry Loan Services, which is engaged in debt-servicing,

AIFUL over the years in its unsecured loans business.

and Businext, which serves middle-risk small business own-

Unfortunately, this “pull” marketing approach attracted

ers and corporations.

more high-risk applicants and fewer medium-riskHappy Credit and Sinwa both offer unsecured loans
and draw on AIFUL’s lending expertise and branch net-

clientele than envisaged.
Based on that experience, from the start of fiscal 2002

work to develop products that take advantage of the syn-Businext has switched to a “push” marketing program

ergies with Group operations. They also aim to build newcentered on visiting sales representatives who were partbusiness models and streamline costs to become non-of AIFUL’s claim acquisition from Misawa Homes, tobanks with a superior reputation for customer satisfac-

focus on cultivating business from fewer, higher quality

tion in the retail sector. At the end of fiscal 2001, Happyborrowing prospects.

Credit’s loans outstanding increased 19.6% comparedwith the end of the previous fiscal year, to ¥32,428 million, and the number of customer accounts increased
20.6%, to 105,000 accounts. Loans outstanding for Sinwa
jumped 25.5%, to ¥21,169 million, with the number ofcustomer accounts gaining 21.3%, to 57,000 accounts.
Sanyo Shinpan boosted its loans outstanding 5.1%, to¥11,387 million, and the number of customer accounts
increased 8.3%, to 26,000 accounts.
At the end of the period under review, Businext’s
outstanding loans stood at ¥8,116 million, with 5,000
customer accounts. In March 2002, Businext acquired¥3.7 billion in claims from Misawa Homes, helping
Businext become profitable that month. Nevertheless,the operating environment was much harsher than initially expected. One critical factor in Businext’s operations

AIFUL CORPORATION Annual Report 2002

22

FINANCIAL SECTION

Contents
Management’s Discussion and Analysis ofOperations and Financial Condition ...................................... 24
Consolidated Balance Sheets ........................................................ 28
Consolidated Statements of Income ............................................ 30
Consolidated Statements of Shareholders’ Equity ...................... 31
Consolidated Statements of Cash Flows...................................... 32
Notes to Consolidated Financial Statements............................... 34
Independent Auditors’ Report ...................................................... 50
Non-Consolidated Statements of Income ................................... 51
Non-Consolidated Balance Sheets ............................................... 52
Non-Consolidated Statements of Shareholders’ Equity ............. 54
Notes to Non-Consolidated Financial Statements...................... 55
Independent Auditors’ Report ...................................................... 65
Non-Consolidated Six-Year Summary ........................................ 66

AIFUL CORPORATION Annual Report 2002

23

Management’s Discussion and Analysisof Operations and Financial Condition
AIFUL CORPORATION and Consolidated Subsidiaries

Consolidated Performance
Earnings
In fiscal 2001, ended March 31, 2002, total income soared 42.0%,
to ¥400,014 million ($3,008 million). Interest on loans
accounted for 89.8% of this amount, at ¥359,318 million ($2,702
million). Aggregate interest on credit card shopping loans, peritem shopping loans and loan guarantees was ¥21,171 million($159 million), representing 5.3% of total income.
The increase in total income was primarily due to theinclusion of the operations of LIFE in the consolidated statements
of income from fiscal 2001. Prior to the fiscal year under review,that subsidiary’s figures were only reflected in the consolidatedbalance sheets.
Owing to the consolidation of LIFE’s operations, total
expenses in fiscal 2001 jumped 78.8%, to ¥338,166 million($2,543 million).
This increase stemmed partly from extraordinary costs. For
example, the Group posted a ¥31,241 million ($235 million) loss
on write-down of property, plant and equipment as a result of thesale, at market price, of AIFUL properties (excluding theheadquarters building) to MARUTOH, a real estate subsidiary.
Another factor was the reclassification of unused real estate asproperty for sale, which contributed ¥2,147 million ($16 million)
to the write-down of inventories.
In addition, AIFUL posted ¥4,235 million ($32 million) instock issue costs in August 2001.
Depreciation and amortization was ¥19,269 million ($145
million), including ¥12,310 million ($93 million) to amortize
goodwill of newly acquired subsidiaries. This amount wassignificantly higher than in the previous term as the Group wrote
down ¥9,131 million ($69 million) in goodwill of LIFE in the
consolidated adjustment account to offset deferred tax assets in
LIFE’s accounts and recognize losses carried forward from thatsubsidiary after bankruptcy. As a result, goodwill amortization of
LIFE in fiscal 2001 was ¥11,869 million ($89 million),comprising ¥2,738 million ($21 million) based on annual
straight-line amortization and the goodwill write-down
mentioned above. Goodwill amortization of the Group’s
consumer finance subsidiaries was ¥441 million ($3 million).
As a result of these factors, income before income taxes andminority interests fell 33.2%, to ¥61,848 million ($465 million).
Net income dropped 27.3%, to ¥35,064 million ($264 million).
AssetsAt the end of the period under review, total assets were up 8.8%
from the end of the previous period, at ¥2,029,634 million($15,260 million). Total current assets rose 11.6%, to ¥1,871,400
million ($14,071 million). Loans jumped 17.6%, to ¥1,482,796
million ($11,149 million), with loans made by AIFUL
representing 88.6% of that amount. Installment accounts
receivable surged 39.4%, to ¥120,756 million ($908 million).
Loan guarantees fell 24.2%, to ¥140,143 million ($1,054
million), owing to LIFE’s withdrawal from the automobile andhome loan guarantee businesses. LIFE’s installment accounts
receivable included ¥153,158 million ($1,152 million) in offbalance sheet securitized loans and ¥89,550 million ($673
million) in off-balance sheet securitized installment accounts
receivable.
Within property, plant and equipment, land declined 67.0%,
to ¥15,163 million ($114 million). Buildings and structures were
down 16.3%, to ¥41,819 million ($314 million), due to the writedown of property mentioned previously.
Within investments and other assets, goodwill, net, dropped
36.9%, to ¥23,240 million ($175 million), mainly as a result of
the amortization of goodwill of LIFE. Deferred tax assets jumped
133.2%, to ¥21,264 million ($160 million), reflecting the
adoption of tax effect accounting for the loss carryforwards of
LIFE.
Liabilities
Total current liabilities increased 5.8%, or ¥39,855 million ($300
million), to ¥729,114 million ($5,482 million). This was mainly
the result of a 25.2% jump in the combined amount of short-termborrowings and current portion of long-term debt, to ¥498,763
million ($3,750 million). Obligations under loan guarantees was
down 24.2%, to ¥140,143 million ($1,054 million), to offset
installment accounts receivable.
Total long-term liabilities increased 0.8%, to ¥875,666
million ($6,584 million). Long-term debt, less the current portion
thereof, was up 0.6%, to ¥845,510 million ($6,357 million).
The Group aims to diversify its sources of funding to balance
the risks and costs of interest-bearing debt.
During the term, AIFUL issued ¥81,000 million ($609
million) in bonds, ¥39,000 million ($293 million) in securitized
real-estate assets and ¥50,000 million ($376 million) in assetbacked commercial paper. The Company also had commitmentsof ¥100,000 million ($752 million).
In October 2001, LIFE replaced its high-interest nonrecourse
loans with securitizations that lowered the interest rate to lessthan 1%, thus removing ¥245,000 million ($1,842 million) fromthe accounts. Despite having filed for bankruptcy only a year
earlier, LIFE was able to secure ¥52,500 million ($395 million) in
funds from a total of 10 financial institutions. It also obtained a
BBB+ rating from Rating and Investment Information, which has
allowed that subsidiary to further diversify its funding sources.
Shareholders’ Equity
AIFUL issued new shares in August 2001 to improve its equity
ratio, which had declined as a consequence of its acquisition of
LIFE. Thanks to the cooperation of investors, this issue raised¥87,048 million ($654 million), of which ¥43,528 million ($327
million) was credited to common stock and ¥43,520 million($327 million) to paid-in capital. As a consequence, total
shareholders’ equity was ¥421,343 million ($3,168 million). The
consolidated equity ratio was 20.8% and the return on assets(ROA) was 1.8%.

AIFUL CORPORATION Annual Report 2002

24

Total Balance of Loans
Outstanding

Number ofCustomer Accounts

Income before Income Taxes
and Minority Interests(Millions of Yen)
2,000,000(Thousands)
4,000(Millions of Yen)
100,000(%)
50

1,600,000

3,200

80,00040

1,200,000

2,400

60,00030

800,000

1,600

40,00020

400,000

800

20,000

10

0

98

99

00

01

0

02

98

Guarantees

99

00

01

0

02

98

Unsecured Loans

Small Business Loans
Secured Loans(Millions of Yen)
50,000(%)
20

40,000

16

01

02

0

Ratio of Income before Income Taxes
and Minority Interests to Total Income(Right Scale)

Unsecured Loans

Net Income

00

Income before Income Taxes
and Minority Interests(Left Scale)

Small Business Loans
Secured Loans

Installment Accounts Receivable

99

Net Income per ShareTotal Expenses

(Yen)
800

(Millions of Yen)
400,000(%)
100

320,00080

240,000

60

160,000

40

80,00020

600

30,00012400

20,0008

10,000

4

200

0

98

99

00

01

02

Net Income (Left Scale)
Ratio of Net Income toTotal Income (Right Scale)

0

0

98

99

00

01

0

02

98

99

00

02

Total Expenses (Left Scale)
Ratio of Total Expenses toTotal Income (Right Scale)

Net Income per Share
Adjusted Net Income per Share

Note: Figures from 1998 to 2000 are on a non-consolidated basis. Figures for 2001 and 2002 are on a consolidated basis.

AIFUL CORPORATION Annual Report 2002

01

25

0

Management’s Discussion and Analysisof Operations and Financial Condition
AIFUL CORPORATION

Non-Consolidated Performance
Earnings
In fiscal 2001, interest on loans climbed 12.7%, to ¥296,034
million ($2,226 million). This was the major factor in the increase
in total income of 14.4%, which rose to ¥311,843 million($2,345 million).
Largely owing to a 10.6% increase in the balance of unsecuredloans at year-end, to ¥1,019,293 million ($7,664 million),interest on these loans increased 10.8%, to ¥249,088 million($1,873 million). At the end of the period under review, securedloans were 23.1% higher than at the end of the previous period, at¥277,671 million ($2,088 million), with interest on these loans
climbing 23.1%, to ¥43,054 million ($324 million).
At the end of the period, small business loans were up 37.1%
from a year earlier, at ¥16,726 million ($126 million). Interest
from these loans increased 34.7%, to ¥3,891 million ($29
million).
Sales of property for sale totaled ¥2,824 million ($21 million),reflecting disposals in line with AIFUL’s decision to withdraw fromthe real estate business. Interest on loans to LIFE and othersubsidiaries skyrocketed 348.5%, to ¥3,633 million ($27 million),owing to the significant amount of loans to subsidiaries that wasused to replace high interest rate borrowing.
Total expenses were up 32.8%, to ¥239,189 million ($1,798
million). One of the major factors in this change was a 24.0%
jump in charge-offs and provision for doubtful loans, advances tosubsidiary and claims in bankruptcy, which rose to ¥67,931
million ($511 million). Advertising expenses increased 13.1%, to¥19,274 million ($145 million), reflecting the mounting of
aggressive television commercial campaigns during the period.
Extraordinary expenses included, as explained in the
consolidated discussion and analysis, stock issue costs and a net
loss on sales of property resulting from the disposal of property atmarket price and the reclassification of unused real estate asproperty for sale.
Consequently, income before income taxes fell 21.4%, to¥72,654 million ($546 million). Total income taxes were down
22.0%, to ¥34,305 million ($258 million), because of the
adoption of tax effect accounting. Net income fell 20.9%, to¥38,349 million ($288 million), while net income per sharedeclined 25.5%, to ¥426.54 ($3.21).

The combined amount of land and buildings and structures
declined 62.8%, to ¥28,368 million ($213 million), owing tosales at market value to a subsidiary.
Total investments and other assets climbed 16.3%, to¥325,543 million ($2,448 million). Investments in and advances
to subsidiaries and associated companies were up 17.1%, to¥266,814 million ($2,006 million), principally as a result of theacquisitions of LIFE, Happy Credit and Sinwa.
Liabilities
Total current liabilities climbed 16.7%, to ¥492,370 million($3,702 million), mainly as a result of a 20.8%, or ¥79,028
million ($594 million), increase in the combined amount ofshort-term borrowings and current portion of long-term debt. This
included repayments of ¥65,000 million ($489 million) in bondsand ¥6,000 million ($45 million) in medium-term notes. Total
long-term liabilities declined 3.9%, to ¥828,005 million ($6,226
million).
AIFUL’s basic interest-bearing debt policy is to diversify its
sources of financing, sourcing 40% directly and the rest indirectly.
Long-term borrowings, including the current portion thereof,
accounted for 97.7% of funding. To minimize interest rate risk,
the Company has fixed interest on 65.4% of its borrowings
through fixed interest loans, interest rate caps and swaps.
During the term under review, AIFUL securitized its securedloans and established commitment lines to reduce funding costs
and lower vulnerability to unforeseen developments.
Shareholders’ Equity
At the end of fiscal 2001, total shareholders’ equity was ¥420,493
million ($3,162 million), up 39.0%, or ¥117,892 million ($886
million), from the end of fiscal 2000. The non-consolidated
equity ratio increased 5.1 percentage points, to 24.2%. This was
because the Company made a global offering of 8.5 million
shares in August 2001 to strengthen capitalization in light of theacquisition of LIFE, thereby raising ¥87,048 million ($654
million). ROA declined 1.2 percentage points, to 2.3%, while
return on equity (ROE) fell 6.9 percentage points, to 10.6%,
compared with the previous term.

AssetsAt the end of fiscal 2001, total assets were up 9.7% comparedwith the end of the previous fiscal year, at ¥1,740,868 million($13,089 million). Total current assets increased 12.3%, to¥1,392,018 million ($10,466 million). This was mainly due to a
13.3% increase in loans, to ¥1,313,690 million ($9,877 million).

AIFUL CORPORATION Annual Report 2002

26

Total Assets

Balance of Borrowings(Millions of Yen)
2,000,000(Millions of Yen)
1,500,000(%)
100(Millions of Yen)
500,000(%)
25

1,600,000

1,200,000

80

400,000

20

1,200,000

900,000

60

300,000

15

800,000

600,000

40

200,000

10

400,000

300,000

20

100,000

5

0

0

0

98

99

00

01

0

02

98

99

00

01

Total Shareholders’ Equity

02

98

Balance of Borrowings (Left Scale)
Ratio of Long-Term Debt toTotal Borrowings (Right Scale)

ROE/ROA

99

00

01

02

0

Shareholders’ Equity (Left Scale)
Shareholders’ Equity Ratio(Right Scale)

Net Income per Employee

Number of Branches/Balance ofLoans Outstanding per Branch

(%)
50

(%)
5.0

(Thousands of Yen)
10,000

2,000

40

4.0

8,000

1,600

800

30

3.0

6,000

1,200

600

20

2.0

4,000

800

400

10

1.0

2,000

400

200

0

98

99

00

01

02

0

0

98

99

00

01

0

02

(Millions of Yen)
1,000

98

99

00

01

02

0

Number of Branches (Left Scale)
Balance of Loans Outstanding
per Branch (Right Scale)ROE (Left Scale)
ROA (Right Scale)Note: Figures from 1998 to 2000 are on a non-consolidated basis. Figures for 2001 and 2002 are on a consolidated basis.

AIFUL CORPORATION Annual Report 2002

27

CONSOLIDATED BALANCE SHEETSAIFUL CORPORATION and Consolidated Subsidiaries
March 31, 2002 and 2001

Thousands of
U.S. Dollars(Note 3)

Millions of Yen

ASSETS
CURRENT ASSETS:
Cash and cash equivalents ...................................................................................
Time deposits (Note 9).........................................................................................
Loans (Notes 4 and 9) ..........................................................................................
Installment accounts receivable (Notes 5 and 9)................................................
Loan guarantees (Note 6).....................................................................................
Other receivables...................................................................................................
Allowance for doubtful loans and receivables ....................................................
Inventories (Notes 7 and 9) .................................................................................
Prepaid expenses ...................................................................................................
Deferred tax assets (Note 12) ...............................................................................
Other current assets (Note 9) ...............................................................................
Total current assets ..........................................................................................
PROPERTY, PLANT AND EQUIPMENT (Note 9):Land .......................................................................................................................
Buildings and structures .......................................................................................
Machinery and equipment ...................................................................................
Construction in progress ......................................................................................
Subtotal .............................................................................................................
Accumulated depreciation....................................................................................
Net property, plant and equipment ...............................................................

2002

2001

2002

¥ 139,126
1,632
1,482,796
120,756
140,143
16,113(92,117)
1,215
4,075
9,971
47,6901,871,400¥ 153,435
2,056
1,261,042
86,642
184,778
23,138(82,562)
3,036
4,799
12,86527,8401,677,069$ 1,046,060
12,271
11,148,842
907,940
1,053,707
121,150(692,609)
9,135
30,63974,970358,571
14,070,676

15,16341,81911,375

114,008
314,429
85,526

68,357(27,249)
41,10845,95649,984
12,071
25
108,036(32,156)
75,880513,963(204,880)
309,083

9,028

8,232

67,8804,836
14,268

4,381
11,85936,361
107,278

INVESTMENTS AND OTHER ASSETS:
Investment securities (Notes 8 and 9) .................................................................
Investments in and advances to unconsolidated subsidiaries
and associated companies (Note 13) ................................................................
Claims in bankruptcy (Note 4) ............................................................................
Allowance for advances to an unconsolidated subsidiaryand claims in bankruptcy ...................................................................................
Goodwill, net ........................................................................................................
Software, net..........................................................................................................
Long-term loans receivable (less current portion)..............................................
Lease deposits........................................................................................................
Long-term prepayments........................................................................................
Deferred tax assets (Note 12) ...............................................................................
Deferred losses on hedging instruments,
mainly interest rate swaps (Note 2 r.).............................................................
Other assets (Note 9)............................................................................................
Total investments and other assets ................................................................

(17,220)
23,2407,429
8,727
10,898
3,983
21,264(15,833)
36,835
7,178
8,809
10,9442,798
9,120(129,474)
174,737
55,85765,617
81,94029,947
159,880

22,931
7,742
117,126

20,091
8,174
112,588

172,41458,210880,647

TOTAL .......................................................................................................................

¥2,029,634¥1,865,537$15,260,406

See Notes to Consolidated Financial Statements.

AIFUL CORPORATION Annual Report 2002

28

Thousands of
U.S. Dollars(Note 3)

Millions of Yen

2002

LIABILITIES AND SHAREHOLDERS’ EQUITYCURRENT LIABILITIES:
Short-term borrowings (Note 9) ..........................................................................
Current portion of long-term debt (Note 9) .......................................................
Trade notes payable ..............................................................................................
Trade accounts payable (Note 9) .........................................................................
Obligations under loan guarantees (Note 6) ......................................................
Income taxes payable............................................................................................
Accrued expenses...................................................................................................
Other current liabilities (Notes 5 and 6).............................................................
Total current liabilities ....................................................................................

¥

52,492446,271
9,580
23,475140,143
16,892
9,147
31,114
729,114

2001¥

47,323351,200
13,04827,942
184,778
25,861
7,135
31,972689,2592002$

394,677
3,355,421
72,030176,503
1,053,707
127,008
68,774
233,940
5,482,060

LONG-TERM LIABILITIES:Long-term debt (less current portion) (Note 9)..................................................
Liability for retirement benefits (Note 10)..........................................................
Interest rate swaps (Note 2 r.) ..............................................................................
Other long-term liabilities....................................................................................
Total long-term liabilities................................................................................

845,510
7,026
22,305
825
875,666

840,742
7,144
20,091
602
868,579

6,357,218
52,827
167,7076,203
6,583,955

MINORITY INTERESTS ...........................................................................................

3,511

1,149

26,399SHAREHOLDERS’ EQUITY (Notes 11 and 16):
Common stock,authorized, 224,000,000 shares;
issued, 93,376,000 shares at March 31, 2002,
84,876,000 shares at March 31, 2001 ..............................................................
Additional paid-in capital ....................................................................................
Retained earnings..................................................................................................
Net unrealized gain (loss) on available-for-sale securities .................................
Treasury stock, at cost ...........................................................................................
Total shareholders’ equity...............................................................................

83,317
94,048
246,240(216)(2,046)421,343

39,78950,528215,978255—
306,550

626,444
707,128
1,851,428(1,625)(15,383)
3,167,992

TOTAL .......................................................................................................................

¥2,029,634¥1,865,537$15,260,406

AIFUL CORPORATION Annual Report 2002

29

CONSOLIDATED STATEMENTS OF INCOMEAIFUL CORPORATION and Consolidated Subsidiaries
Years Ended March 31, 2002 and 2001

Thousands of
U.S. Dollars(Note 3)

Millions of Yen

2002

2001

2002

INCOME:Interest on loans....................................................................................................
Interest on credit card shopping loans ................................................................
Interest on per-item shopping loans....................................................................
Interest on loan guarantees ..................................................................................
Interest on deposits, securities and other ............................................................
Sales of property for sale ......................................................................................
Income from restaurant business and other........................................................
Recovery of loans previously charged off ............................................................
Other income ........................................................................................................
Total income .....................................................................................................

¥359,318
6,742
10,353
4,076
582
2,824
1,247
5,715
9,157
400,014¥272,237
—
—
—
538
40
1,303
3,510
4,091
281,719$2,701,639
50,692
77,84230,647
4,376
21,233
9,376
42,97068,8493,007,624

EXPENSES:Interest on borrowings .........................................................................................
Charge-offs and provision for doubtful loans, receivables, advances
to an unconsolidated subsidiary and claims in bankruptcy ............................
Salaries and other employees’ benefits ................................................................
Advertising expenses .............................................................................................
Rental expenses .....................................................................................................
Commissions and fees .........................................................................................
Depreciation and amortization............................................................................
Stock issue costs ....................................................................................................
Loss on write-down of property, plant and equipment .....................................
Provision for accrued pension and severance costs (Note 10)...........................
Charge for full amount of transitional obligations for retirement benefits ......
Provision for retirement benefits to directors and corporate auditors ..............
Other expenses ......................................................................................................
Total expenses...................................................................................................

31,697

26,863

238,323

92,57642,234
26,84622,961
19,667
19,2694,235
31,241
1,353—
114
45,973
338,166

59,19425,402
17,653
15,662
10,791
4,717
—
—
1,992
1,025
72
25,774
189,145

696,060
317,549
201,850
172,639
147,872
144,880
31,842
234,895
10,173—
857
345,6612,542,601

INCOME BEFORE INCOME TAXES AND MINORITY INTERESTS ....................

61,84892,574

465,023

Current...................................................................................................................
Deferred .................................................................................................................
Total income taxes............................................................................................

36,293(8,908)27,385

46,204(1,833)44,371

272,880(66,977)
205,903

MINORITY INTERESTS IN NET LOSS ...................................................................

601

50

4,519

NET INCOME ...........................................................................................................

¥ 35,064¥ 48,253$ 263,639

INCOME TAXES (Note 12):

U.S. Dollars(Note 3)Yen

AMOUNTS PER COMMON SHARE (Note 2 s.):
Net income ............................................................................................................
Cash dividends applicable to the year .................................................................

¥390.00
50.00

See Notes to Consolidated Financial Statements.

AIFUL CORPORATION Annual Report 2002

30

¥569.32
50.00

$2.93
0.38

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITYAIFUL CORPORATION and Consolidated Subsidiaries
Years Ended March 31, 2002 and 2001

Thousands

BALANCE AT APRIL 1, 2000 ...................................
Net income............................................................
Cash dividends paid, ¥50 per share ....................
Bonuses to directors and corporate auditors ......
Stock split (Note 11) ............................................
Acquisition of Sinwa Co., Ltd (Note 11). ...........
Net unrealized gain on
available-for-sale securities ................................
Net decrease in treasury stock ..............................
BALANCE AT MARCH 31, 2001..............................
Adjustment of retained earnings for
newly consolidated subsidiaries ........................
Net income............................................................
Cash dividends paid, ¥50 per share ....................
Bonuses to directors and corporate auditors ......
Issuance of common stock (Note 11) .................
Net unrealized loss onavailable-for-sale securities ................................
Net increase in treasury stock ..............................
BALANCE AT MARCH 31, 2002..............................

Millions of Yen

Number of Sharesof Common Stock
IssuedCommonStock

Additional
Paid-in
Capital56,103¥39,752¥41,91328,052
721

37

8,615

Retained
Earnings

Net Unrealized
Gain (Loss) on
Available-for-sale
Securities¥171,238
48,253(3,381)(132)000

Treasury
Stock,
at Cost¥¥ 255
84,87639,78950,528215,978

1
Nil

255

166
35,064(4,881)(87)
8,500

43,52843,520(471)

93,376¥83,317¥94,048¥246,240¥(216)(2,046)¥(2,046)

Thousands of U.S. Dollars (Note 3)

BALANCE AT MARCH 31, 2001..............................
Adjustment of retained earnings for
newly consolidated subsidiaries ........................
Net income............................................................
Cash dividends paid, $0.38 per share ................
Bonuses to directors and corporate auditors ......
Issuance of common stock (Note 11)...................
Net unrealized loss onavailable-for-sale securities ................................
Net increase in treasury stock .............................
BALANCE AT MARCH 31, 2002..............................

(1)

CommonStock

Additional
Paid-in
Capital$299,166$379,910

Retained
Earnings

Net Unrealized
Gain (Loss) on
Available-for-sale
Securities

Treasury
Stock,
at Cost$1,623,894$1,917

Nil

1,248
263,639(36,699)(654)
327,278

327,218(3,542)$626,444$707,128 $1,851,428

See Notes to Consolidated Financial Statements.

AIFUL CORPORATION Annual Report 2002

31$(15,383)$(1,625) $(15,383)

CONSOLIDATED STATEMENTS OF CASH FLOWSAIFUL CORPORATION and Consolidated Subsidiaries
Years Ended March 31, 2002 and 2001

Thousands of
U.S. Dollars(Note 3)

Millions of Yen

2002

2001

61,848¥ 92,574(45,268)
19,269(46,008)
4,717(340,361)
144,880

10,6406,463

80,000

(118)
4,235
976
707
31,241
121
901

2,070
—
939
1,531
—
1,554
382

(887)
31,842
7,338
5,316
234,895
910
6,774(221,754)(34,114)7,024(2,409)2,155
528(1,615)(12,829)(7,023)
1,730(166,813)
—
—
4,167
(297)
434
(530)
(3,538)4,702
93(1,667,323)(256,496)
52,812(18,113)
16,203
3,970(12,143)(96,459)(52,805)
13,007

Total adjustments .......................................................................................

(245,603)(190,134)(1,846,640)

Net cash used in operating activities .........................................................

(183,755)(97,560)(1,381,617)

INVESTING ACTIVITIES:Capital expenditures .............................................................................................
Decrease (increase) in loans.................................................................................
Purchases of investment securities.......................................................................
Proceeds from sale of investment in a subsidiary ...............................................
Acquisitions of businesses (net of cash acquired) ..............................................
Increase in loans by acquisition of business .......................................................
Decrease (increase) in investment in trust ..........................................................
Other—net.............................................................................................................

(8,274)(7,029)(3,666)
4,200
—
—
(1)
3,565

(5,868)
5,495
(19)
—
(48,547)(22,095)
2,000
(443)

(62,210)(52,850)(27,564)
31,579——(8)
26,805

Net cash used in investing activities—(Forward) .....................................

(11,205)(69,477)(84,248)OPERATING ACTIVITIES:
Income before income taxes and minority interests...........................................
Adjustments for:
Income taxes—paid .......................................................................................
Depreciation and amortization.....................................................................
Increase in allowance for doubtful loans and receivables, advances toan unconsolidated subsidiary and claims in bankruptcy ..........................
Provision for accrued pension and severance costs
and retirement benefits................................................................................
Stock issue costs .............................................................................................
Amortization of bonds issue costs ................................................................
Loss on write-down of investment securities ...............................................
Loss on write-down of property, plant and equipment...............................
Loss on sales of property, plant and equipment ..........................................
Loss on disposal of property, plant and equipment ....................................
Changes in assets and liabilities:
Increase in loans ................................................................................................
Increase in installment accounts receivable and loan guarantees ..................
Decrease in other receivables ............................................................................
Decrease (increase) in claims in bankruptcy ...................................................
Decrease (increase) in inventories....................................................................
Decrease in prepaid expenses ...........................................................................
Increase in long-term prepayments ..................................................................
Increase in other current assets .........................................................................
Increase (decrease) in other current liabilities.................................................
Other—net.............................................................................................................

AIFUL CORPORATION Annual Report 2002

¥

32

2002

$

465,023

Thousands of
U.S. Dollars(Note 3)

Millions of Yen

2002

2001

2002

Net cash used in investing activities—(Forward) .....................................

(11,205)(69,477)(84,248)

FINANCING ACTIVITIES:Net increase (decrease) in short-term borrowings ..............................................
Proceeds from long-term debt (net of bonds issue costs) ..................................
Repayments of long-term debt.............................................................................
Proceeds from public offering (net of stock issue costs) ....................................
Cash dividends paid .............................................................................................
Acquisition of treasury stock ................................................................................
Proceeds from minority shareholders..................................................................

5,168
525,491(426,105)
82,814(4,881)(2,046)70(74,647)641,688(326,756)—(3,413)—1,200

38,857
3,951,060(3,203,797)
622,662(36,699)(15,383)
526

Net cash provided by financing activities .................................................

180,511238,072

1,357,226

FOREIGN CURRENCY TRANSLATION ADJUSTMENTS
ON CASH AND CASH EQUIVALENTS................................................................

16

—

120

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS ................

(14,433)

71,035(108,519)

CASH AND CASH EQUIVALENTS OF NEWLY CONSOLIDATEDSUBSIDIARIES, BEGINNING OF YEAR ..............................................................

124

1,381

932

CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR ................................

153,435

81,0191,153,647

CASH AND CASH EQUIVALENTS, END OF YEAR..............................................

¥ 139,126¥ 153,435$ 1,046,060

NONCASH INVESTING ACTIVITIES:
During the year ended March 31, 2001, the Company acquired
LIFE Co., Ltd., Sanyo Shinpan Co., Ltd., Businext Corporation,and Sinwa Co., Ltd. (“Sinwa”) as follows:
Fair value of assets acquired..............................................................................
Cash paid for capital stock, less acquired cash and cash equivalents ............
Liabilities assumed ............................................................................................
Value of 721,500 common shares issued for Sinwa........................................

¥417,519
48,547360,320
8,652

See Notes to Consolidated Financial Statements.

AIFUL CORPORATION Annual Report 2002

33

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AIFUL CORPORATION and Consolidated Subsidiaries
Years Ended March 31, 2002 and 2001

1. BASIS OFPRESENTINGCONSOLIDATEDFINANCIALSTATEMENTS

The accompanying consolidated financial statements have been prepared in accordance with the provisions
set forth in the Japanese Securities and Exchange Law and its related accounting regulations, and in
conformity with accounting principles and practices generally accepted in Japan, which are different incertain respects as to application and disclosure requirements of International Accounting Standards. The
consolidated financial statements are not intended to present the financial position, results of operations
and cash flows in accordance with accounting principles and practices generally accepted in countries andjurisdictions other than Japan.
In preparing these consolidated financial statements, certain reclassifications and rearrangements havebeen made to the consolidated financial statements issued domestically in order to present them in a form
which is more familiar to readers outside Japan.
Certain reclassifications have been made to the prior year’s consolidated financial statements toconform to the classifications used for the year ended March 31, 2002.

2. SUMMARY OF
SIGNIFICANTACCOUNTINGPOLICIES

a. Consolidation – The consolidated financial statements as of March 31, 2002 include the accounts of
AIFUL CORPORATION (the “Company”) and its seven (five in 2001, including LIFE Co., Ltd. and Sanyo
Shinpan Co., Ltd. for which only the balance sheets were consolidated at March 31, 2001) significant subsidiaries (together, the “Group”). The accounts of AsTry Loan Services Corporation and Marutoh KK are
newly consolidated for the year ended March 31, 2002. Consolidation of the remaining subsidiaries
would not have a material effect on the accompanying consolidated financial statements. Investments infour (five in 2001) unconsolidated subsidiaries and one (two in 2001) associated company are accounted
for on the cost basis. The effect on the consolidated financial statements of not applying the equity
method is immaterial. Goodwill on acquisition of subsidiaries is amortized using the straight line method
over ten years. However, when the excess of cost over net assets of subsidiaries acquired is not material,
it is charged to income when incurred. All significant intercompany balances and transactions have been
eliminated in consolidation. All material unrealized profit included in assets resulting from transactions
within the Group is eliminated.
As for two subsidiaries, LIFE Co., Ltd. (“LIFE”) and Sanyo Shinpan Co., Ltd. (“Sanyo Shinpan”), which
are consumer-credit companies, only the balance sheets were consolidated for the year ended March 31,
2001, since the constructive date of acquisition was March 31, 2001. On March 28, 2001, the Company
acquired all the shares of LIFE. On March 31, 2001, Sanyo Shinpan was a wholly-owned subsidiary of
LIFE. On June 4, 2001, the Company acquired all the shares of Sanyo Shinpan from LIFE, and Sanyo
Shinpan became a directly owned subsidiary of the Company.
On November 19, 2001, the Company and Aozora Bank, Ltd. established AsTry Loan Services
Corporation, a new joint corporation, which engages in management and collection services for various
specified loans.
Marutoh KK, which engages in real estate lease management, has become financially influenced by theCompany.
b. Cash Equivalents – Cash equivalents are short-term investments that are readily convertible into cash andthat are exposed to insignificant risk of changes in value. Cash equivalents include time deposits and certificates of deposit which mature or become due within three months of the date of acquisition.
c. Inventories – Inventories include property for sale, property for sale under construction and supplies.
Property for sale is stated at the lower of cost or market, cost being determined by the specific identification method. Depreciation of property for sale currently rented is computed by the same method, asapplied to property, plant and equipment. Property for sale under construction is stated at cost, cost being
determined by the specific identification method. Supplies are stated at the most recent purchase price,which approximates cost determined by the first-in, first-out method.

AIFUL CORPORATION Annual Report 2002

34

d. Investment Securities – Held-to-maturity debt securities are reported at amortized cost and availablefor-sale securities are reported at fair value, with unrealized gains and losses, net of applicable taxes,
reported in a separate component of shareholders’ equity. The cost of securities sold is determined basedon the moving-average method. Non-marketable available-for-sale securities are stated at cost determinedby the moving-average method. For other than temporary declines in fair value, investment securities are
reduced to net realizable value by a charge to income.
e. Property, Plant and Equipment – Property, plant and equipment are stated at cost. Depreciation iscomputed by the declining-balance method. The range of useful lives is from 3 to 50 years for buildings
and structures and from 2 to 20 years for machinery and equipment.
f. Software – Expenditures for the purchase of software, which meet certain future-tests, are capitalized assoftware and amortized by the straight-line method over the estimated useful lives of five years.
g. Liability for Retirement Benefits – The Company and certain of its consolidated subsidiaries have contributory and non-contributory funded pension plans covering substantially all employees.
The Group accounted for the net liability for retirement benefits based on projected benefit obligations
and plan assets at the balance sheet date.
Liability for retirement benefits to directors and corporate auditors are provided at the amount which
would be required if they retired at each balance sheet date.
h. Allowances for Doubtful Accounts – The allowance for doubtful accounts is stated in amounts considered to be appropriate based on the Group’s past credit loss experience and an evaluation of potential
losses in the receivables outstanding.
i. Leases – All leases are accounted for as operating leases. Under Japanese accounting standards for leases,
finance leases that deem to transfer ownership of the leased property to the lessee are to be capitalized,
while other finance leases are permitted to be accounted for as operating lease transactions if certain “asif capitalized” information is disclosed in the notes to the lessee’s consolidated financial statements.
j. Income Taxes – The provision for income taxes is computed based on the pretax income included in the
consolidated statements of income. The asset and liability approach is used to recognize deferred tax assets
and liabilities for the expected future tax consequences of temporary differences between the carrying
amounts and the tax bases of assets and liabilities. Deferred taxes are measured by applying currently
enacted tax laws to the temporary differences.
k. Appropriations of Retained Earnings – Appropriations of retained earnings are reflected in the consolidated financial statements for the following year upon shareholders’ approval.
l. Foreign Currency Transactions – All short-term and long-term monetary receivables and payables
denominated in foreign currencies are translated into Japanese yen at the exchange rates at the balance
sheet date. The foreign exchange gains and losses from translation are recognized in the consolidated
statements of income.
m. Interest on Loans – Interest on loans is recorded on an accrual basis. In accordance with the practiceprevailing in the industry, the Group records accrued interest to the extent that the realization of suchincome is considered to be certain.
n. Installment Revenue – Fees from customers and member stores applying the add-on method are generally recorded collectively as unearned income when credit contracts become effective and are recognizedin equal installments over the lives of contracts. Fees from customers applying the remaining principal
method or revolving method are generally recognized in equal installments over the lives of contracts.
No installment revenue is recorded in the consolidated statement of income for the year ended March
31, 2001 since the constructive date of acquisition of the two consumer credit subsidiaries was March
31, 2001.
o. Interest on Borrowings – Interest on financial liabilities is accounted for as operating expenses whileother interest is included in other expenses.
p. Stock Issue Costs – Stock issue costs are charged to income as incurred.
q. Bonds Issue Costs – Bonds issue costs, which are included in other assets, are amortized ratably overperiods up to three years.
AIFUL CORPORATION Annual Report 2002

35

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AIFUL CORPORATION and Consolidated Subsidiaries

r. Derivatives and Hedging Activities – The Group uses derivative financial instruments to manage its exposures to fluctuations in interest rates. Interest rate swaps and caps are utilized by the Group to reduce interest rate risks. The Group does not enter into derivatives for trading or speculative purposes. The accounting standard for derivative financial instruments requires that: a) all derivatives are recognized as either
assets or liabilities and measured at fair value, and gains or losses on derivative transactions are recognizedin the consolidated statements of income, and b) for derivatives used for hedging purposes, if derivatives
qualify for hedge accounting because of high correlation and effectiveness between the hedging instruments
and the hedged items, gains or losses on derivatives are deferred until maturity of the hedged transactions.
The interest rate swaps and caps which qualify for hedge accounting and meet specific matching criteria are not remeasured at market value but the differential paid or received under the swap or cap
agreements is recognized and included in interest expense or income.
s. Per Share Information – The computation of net income per share is based on the weighted average number of shares of common stock outstanding during each period retroactively adjusted for stock splits.
The weighted average number of common shares used in the computation for the years ended March 31,
2002 and 2001 was as follows:
2002
2001

Average Number of Shares
89,908,062
84,775,313

Diluted net income per share is not presented because no dilutive securities were outstanding for theyears ended March 31, 2002 and 2001.
Cash dividends per share presented in the accompanying consolidated statements of income are dividends applicable to the respective years including dividends to be paid after the end of the year without
giving retroactive adjustment for any subsequent stock split.

3. TRANSLATIONThe consolidated financial statements are stated in Japanese yen, the currency of the country in which the
INTO U.S. DOLLARS Company is incorporated and operates. The translation of Japanese yen amounts into U.S. dollar amounts areincluded solely for the convenience of readers outside Japan and have been made at the rate of ¥133=$1,
the approximate rate of exchange at March 29, 2002. Such translations should not be construed as representations that the Japanese yen amounts could be converted into U.S. dollars at that or any other rate.

4. LOANS

Loans at March 31, 2002 and 2001 consisted of the following (before allowance for doubtful loans):Millions of Yen

Unsecured ..........................................................................
Secured...............................................................................
Small business loans .........................................................
Subotal .....................................................................
Off-balance sheet securitized loans..................................
Net ............................................................................

Thousands of
U.S. Dollars

2002

2001

2002

¥1,332,218
278,893
24,843
1,635,954(153,158)¥1,482,796¥1,167,837
227,601
12,1981,407,636(146,594)¥1,261,042$10,016,677
2,096,940
186,789
12,300,406(1,151,564)$11,148,842

Registered moneylenders are required to disclose the following information under the Non-Bank
Bond Law.

AIFUL CORPORATION Annual Report 2002

36

Thousands of
U.S. Dollars

Millions of Yen

Loans in legal bankruptcy .....................................................
Nonaccrual loans ...................................................................
Accruing loans contractually past due three months
or more as to principal or interest payments .....................
Restructured loans .................................................................
Total...................................................................................

2002

2001

2002

¥16,457
28,723¥13,071
25,644$123,737
215,962

11,94537,729¥94,854

7,196
34,002¥79,91389,812
283,677$713,188

Loans in legal bankruptcy are loans in which accruals of interest are discontinued (excluding the
portion recognized as bad debts), based on management’s judgment as to the collectibility of principal orinterest resulting from the past due payment of interest or principal and other factors. Allowance for claims
in bankruptcy is stated at such amount less net realizable value of collateral.
Nonaccrual loans are loans in which accruals of interest are discontinued and those other than loans inlegal bankruptcy and loans granting deferral of interest payment to the debtors in financial difficulties to assist
them in their recovery where such deferred payments are regularly received. Accruing loans contractually past
due three months or more as to principal or interest payments are loans for which payments of principal orinterest have not been received for a period of three months or more beginning with the next business day
following the last due date for such payments. Loans classified as loans in legal bankruptcy and nonaccrualloans are excluded from accruing loans contractually past due three months or more.
Restructured loans are loans on which creditors grant concessions (e.g., reduction of the stated interest
rate, deferral of interest payment, extension of maturity date, waiver of the face amount, or other concessive
measures) to the debtors in financial difficulties to assist them in their recovery and eventually enable themto pay creditors. Loans classified as loans in legal bankruptcy, nonaccrual loans and accruing loans
contractually past due three months or more are excluded.
The securitized loans, which were not recognized on the consolidated balance sheets, amounted to¥153,158 million ($1,151,564 thousand) and ¥146,594 million at March 31, 2002 and 2001, respectively.
At March 31, 2002, the Group had a balance related to revolving loan contracts of ¥1,326,652 million($9,974,827 thousand) whereby a commitment was set up for each loan customer and the Group was
obligated to advance funds up to a predetermined amount upon request. At March 31, 2002, the balance of
unadvanced commitments was ¥3,680,028 million ($27,669,383 thousand). The loan contract contains
provisions that allow the Group to reduce the contract amount of the commitment or refuse to advancefunds to loan customers under certain conditions.

AIFUL CORPORATION Annual Report 2002

37

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AIFUL CORPORATION and Consolidated Subsidiaries

5. INSTALLMENT
ACCOUNTSRECEIVABLE

Installment accounts receivable and unearned income, included in other current liabilities at March 31,
2002 and 2001, consisted of the following:Thousands of
U.S. Dollars

Millions of Yen

2002

2001

2002

Receivables

Unearned
IncomeUnearned
Receivables Income

Receivables

Unearned
IncomeCredit card shopping loans ..............
Per-item shopping loans...................
Other..................................................
Subotal.....................................

¥ 61,687
148,59227
210,306¥1,044
6,283
—
7,327

¥ 63,490 ¥ 164
142,798 1,968
35—
206,323 2,132$ 463,812
1,117,233
203
1,581,248$ 7,850
47,241—55,091Off-balance sheet securitizedinstallment accounts receivable .....
Net ............................................

(89,550)—¥120,756 ¥7,327(119,681)—¥ 86,642 ¥2,132(673,308)—$ 907,940 $55,091

In addition, the Group has unearned income of ¥258 million ($1,940 thousand) and ¥201 million atMarch 31, 2002 and 2001, respectively, related to loans other than those shown in the above table.
The securitized installment accounts receivable, which were not recognized in the balance sheets,
amounted to ¥89,550 million ($673,308 thousand) and ¥119,681 million at March 31, 2002 and 2001,
respectively.

6. LOAN GUARANTEES The Group, as guarantor, recorded loan guarantees as a contra account of obligations under loan
AND OBLIGATIONS guarantees. Unearned income relating to loan guarantees was ¥1,294 million ($9,279 thousand) and¥2,949 million at March 31, 2002 and 2001, respectively.
UNDER LOAN
GUARANTEES
7. INVENTORIESInventories at March 31, 2002 and 2001 consisted of the following:
Millions of Yen

Property for sale .....................................................................
Property for sale under construction ....................................
Supplies ..................................................................................
Total ..............................................................................

AIFUL CORPORATION Annual Report 2002

38

Thousands of
U.S. Dollars

2002

2001

2002

¥1,025—190¥1,215¥1,175
1,622
239¥3,036$7,707—
1,428$9,135

8. INVESTMENT
SECURITIESInvestment securities as of March 31, 2002 and 2001 consisted of the following:Thousands of
U.S. Dollars

Millions of Yen

2002

2001

2002

Current:
Government and corporate bonds ....................................

¥ 269

¥

—

$ 2,023

Non-current:
Marketable equity securities ..............................................
Government and corporate bonds ....................................
Total ..............................................................................

¥9,01810¥9,028¥7,942
290¥8,232$67,80575$67,880

Information on the marketable securities classified as available-for-sale at March 31, 2002 and 2001 is
as follows:
Millions of Yen

2002

Available-for-sale:
Equity securities .......................................................
Debt securities ..........................................................

Cost

Unrealized
Gains

Unrealized
LossesFair
Value¥6,679270¥6,949

¥267
—
¥267

¥842
—
¥842

¥6,104270¥6,374

Millions of Yen

2001

Available-for-sale:
Equity securities .......................................................
Debt securities ..........................................................

Cost

Unrealized
Gains

Unrealized
LossesFair
Value¥5,773280¥6,053

¥830
1
¥831

¥591
—
¥591

¥6,012281¥6,293Thousands of U.S. Dollars

2002

Available-for-sale:
Equity securities .......................................................
Debt securities ..........................................................

AIFUL CORPORATION Annual Report 2002

Cost

Unrealized
Gains

Unrealized
LossesFair
Value$50,218
2,030$52,248$2,008—$2,008$6,331—$6,331$45,895
2,030$47,925

39

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AIFUL CORPORATION and Consolidated Subsidiaries

Available-for-sale securities and held-to-maturity securities whose fair values are not readily
determinable as of March 31, 2002 and 2001 were as follows:
Carrying AmountThousands of
U.S. Dollars

Millions of Yen

Available-for-sale equity securities........................................
Held-to-maturity securities....................................................
Total ..............................................................................

2002

2001

2002

¥2,9139¥2,922¥1,9309¥1,939$21,90268$21,970

Proceeds from sales of available-for-sale securities for the years ended March 31, 2002 and 2001 were
¥1,517 million ($11,406 thousand) and ¥11 million, respectively. Gross realized gains on these sales,
computed on the moving average cost method, were ¥140 million ($1,053 thousand) for the year ended
March 31, 2002, and gross realized losses were ¥2 million ($15 thousand) and ¥5 million for the years
ended March 31, 2002 and 2001, respectively.
The carrying values of debt securities by contractual maturities for securities classified as available-forsale and held-to-maturity at March 31, 2002 are as follows:
Thousands of
U.S. Dollars

Millions of Yen

Due within one year .......................................................
Due after one year through five years ............................

Availablefor-sale

Held-tomaturity

Availablefor-sale

Held-tomaturity

¥260
10

¥9
—

$1,95575$68—

9. SHORT-TERM
Short-term borrowings at March 31, 2002 and 2001 consisted of the following:
BORROWINGS AND
LONG-TERM DEBT

Thousands of
U.S. Dollars

Millions of Yen

Commercial paper, 0.7880%(0.828% to 0.912% at March 31, 2001) ............................
Loans from banks, 0.8363% to 2.600%(1.12% to 3.0% at March 31, 2001)...................................
Loans from other financial institutions, 1.475%(1.6% to 2.45% at March 31, 2001)...................................
Other (principally from leasing and factoring companies),
2.5% to 3.3% (2.4% to 2.9% at March 31, 2001).............
Total ..............................................................................

AIFUL CORPORATION Annual Report 2002

40

2002

2001

2002

¥15,000¥15,000$112,782

15,21124,800114,368

2,000

2,500

15,03820,281¥52,492

5,023¥47,323

152,489$394,677

Long-term debt at March 31, 2002 and 2001 consisted of the following:Thousands of
U.S. Dollars

Millions of Yen

2002

Loans from banks, 1.0846% to 4.200%,
due serially to 2007 (1.001% to 4.2%,
due serially to 2006 at March 31, 2001) ............................ ¥ 463,160
Loans from other financial institutions, 1.750% to4.200%, due serially to 2007 (1.6% to 2.45%,
due serially to 2006 at March 31, 2001) ...............................
219,885
Syndicated loans, 2.5%, due 2004
(2.1%, due 2004 at March 31, 2001) .................................
46,667
Unsecured 2.6% yen straight bonds, due 2001 ...................
—
Unsecured 2.425% yen straight bonds, due 2002
(2.35% to 2.425% at March 31, 2001) ..............................
10,000Unsecured 1.5% to 3.2% yen straight bonds, due 2003 .....
75,000Unsecured 2.0% to 2.53% yen straight bonds, due 2004 ...
135,000
Unsecured 1.75% to 1.86% yen straight bonds, due 2005
(1.86% at March 31, 2001).................................................
30,000Unsecured 1.7% to 3.27% yen straight bonds, due 2006
(3.27% at March 31, 2001).................................................
60,000Unsecured 2.51% yen straight bonds, due 2007 .................
20,000Unsecured 2.48% yen straight bonds, due 2008 .................
15,000Unsecured 3.28% yen straight bonds, due 2009 .................
8,000
Unsecured 2.93% to 3.0% yen straight bonds, due 2010 ...
20,000Unsecured 3.65% Euro-yen straight bonds, due 2003 ........
9,500
Unsecured variable rate Euro-yen straight bonds,
due 2006 (1.825% at March 31, 2002,
2.136% at March 31, 2001) ................................................
15,000Unsecured 1.73% medium-term notes, due 2002...............
3,000
Unsecured variable rate medium-term notes, due 2002
(1.75% at March 31, 2002 and 2001)................................
3,000
Unsecured 2.21% medium-term notes, due 2007...............
1,000
Unsecured 3.0% medium-term notes, due 2008.................
3,000
Unsecured 3.5% medium-term notes, due 2015.................
15,000
Other (principally from leasing and factoring companies),
2.0% to 4.8%, due serially to 2008 (0.98% to 5.4%,
due serially to 2006 at March 31, 2001) ............................
139,569
Subtotal ........................................................................
1,291,781
Less current portion ...............................................................
(446,271)
Long-term debt, less current portion ................................. ¥ 845,510

2001

2002

¥ 400,165$ 3,482,406

245,434

1,653,271

70,0006,000

350,880—

40,00075,000135,000

75,188563,9101,015,037

10,000225,564

15,00020,000—8,000
20,0009,500

451,128
150,376
112,782
60,150150,376
71,42915,0003,000

112,782
22,556

3,000
—
3,000
15,00022,556
7,519
22,556
112,782

98,843
1,191,942

1,049,391
9,712,639(351,200)¥ 840,742(3,355,421)$ 6,357,218

The Company has an interest rate swap agreement that effectively converts variable rate interest payableon ¥3,000 million ($22,556 thousand) of medium-term notes, due 2002, to a fixed rate of 1.75%.

AIFUL CORPORATION Annual Report 2002

41

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AIFUL CORPORATION and Consolidated Subsidiaries

The aggregate annual maturities of long-term debt at March 31, 2002 were as follows:Year ending March 31

2003 .....................................................................................................
2004 .....................................................................................................
2005 .....................................................................................................
2006 .....................................................................................................
2007 .....................................................................................................
2008 and thereafter .............................................................................
Total ............................................................................................

Millions of Yen

Thousands of
U.S. Dollars¥ 446,271
336,830
232,490
67,65775,333
133,200¥1,291,781$3,355,421
2,532,556
1,748,045
508,699
566,4141,001,504$9,712,639

At March 31, 2002, the following assets were pledged as collateral for short-term borrowings and longterm debt (including current portion of long-term debt):
Millions of Yen

Time deposits .......................................................................................
Loans ....................................................................................................
Installment accounts receivable..........................................................
Property for sale...................................................................................
Investment securities ...........................................................................
Property, plant and equipment,
net of accumulated depreciation ......................................................
Other assets ..........................................................................................
Total ............................................................................................
Related liabilities:
Short-term borrowings....................................................................
Long-term debt (including current portionof long-term debt).........................................................................
Trade accounts payable...................................................................
Total ............................................................................................

Thousands of
U.S. Dollars¥
351
559,827
50,918
153
413

$

2,639
4,209,226
382,842
1,150
3,105

2,744
2
¥614,408

20,632
15$4,619,609¥ 20,210$ 151,955

497,083274¥517,567

3,737,466
2,060$3,891,481

In addition, if requested by lending financial institutions the Group has committed to pledge collateral forloans other than those shown in the above table. At March 31, 2002, related liabilities for which lending
financial institutions can request the Group to pledge collateral consisted of the following:
Millions of Yen

Short-term borrowings...................................................................
Long-term debt (including current portion of long-term debt) ....
Total .......................................................................................

¥

5,211
140,257¥145,468

Thousands of
U.S. Dollars$

39,1801,054,564$1,093,744

At March 31, 2002, other current assets amounting to ¥6,764 million ($50,857 thousand) were
pledged as collateral for the interest rate swap contracts.

AIFUL CORPORATION Annual Report 2002

42

10. RETIREMENT ANDPENSION PLANS

The Company and certain of its consolidated subsidiaries have contributory and non-contributory
funded pension plans covering substantially all employees. Under the pension plans, employees terminating their employment are, in most circumstances, entitled to pension payments based on theiraverage pay during their employment, length of service and certain other factors. If the termination is
involuntary, employees are usually entitled to larger payments than in the case of voluntary termination.
The liability for retirement benefits includes retirement benefits to directors and corporate auditorsof ¥1,068 million ($8,030 thousand) and ¥954 million at March 31, 2002 and 2001, respectively.
The liability for employees’ retirement benefits at March 31, 2002 and 2001 consisted of thefollowing:Thousands of
U.S. Dollars

Millions of Yen

Projected benefit obligation..................................................
Fair value of plan assets.........................................................
Unrecognized prior service cost ............................................
Unrecognized actuarial loss ..................................................
Net liability.....................................................................

2002

2001

2002

¥ 19,542(12,350)
1,394(2,628)¥ 5,958¥ 18,361(11,424)—(747)¥ 6,190$146,932(92,857)
10,481(19,759)$ 44,797

The components of net periodic benefit costs for the years ended March 31, 2002 and 2001 were as
follows:
Thousands of
U.S. Dollars

Millions of Yen

Service cost .............................................................................
Interest cost ............................................................................
Expected return on plan assets ..............................................
Amortization of prior service cost.........................................
Recognized actuarial loss.......................................................
Net periodic benefit costs .............................................

2002

2001

2002

¥1,373
528
(291)
(573)
316
¥1,353

¥ 814
125
(92)
—
1,145
¥1,992$10,323
3,970(2,188)(4,308)2,376$10,173

Assumptions used for the years ended March 31, 2002 and 2001 were set forth as follows:

Discount rate..........................................................
Expected rate of return on plan assets ..................
Amortization period of prior service cost.............
Recognition period of actuarial gain/loss:
Company ...........................................................
One consolidated subsidiary............................
Amortization period oftransitional obligation.........................................

AIFUL CORPORATION Annual Report 2002

2002

2001

2.5% to 3.0%
1.5% to 2.5%
Full amount charged toincome as incurred

3.0%
3.0% to 3.5%

Full amount charged toincome as incurred
10 years

Full amount charged toincome as incurred
10 years
Full amount charged toincome as incurred

—

43

—

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AIFUL CORPORATION and Consolidated Subsidiaries

11. SHAREHOLDERS’
EQUITYJapanese companies are subject to the Japanese Commercial Code (the ‘‘Code’’) to which certain
amendments became effective from October 1, 2001.
Prior to October 1, 2001, the Code required at least 50% of the issue price of new shares, with aminimum of the par value thereof, to be designated as stated capital as determined by resolution of theBoard of Directors. Proceeds in excess of amounts designated as stated capital were credited to additional
paid-in capital. Effective October 1, 2001, the Code was revised and common stock par values were
eliminated resulting in all shares being recorded with no par value.
Prior to October 1, 2001, the Code also provided that an amount at least equal to 10% of the aggregate
amount of cash dividends and certain other cash payments which are made as an appropriation of retained
earnings applicable to each fiscal period shall be appropriated and set aside as a legal reserve until suchreserve equals 25% of stated capital. Effective October 1, 2001, the revised Code allows for suchappropriations to be set aside as a legal reserve until the total additional paid-in capital and legal reserve
equals 25% of stated capital. The excess of total additional paid-in capital and legal reserve over 25% of thestated capital can be available for dividends by resolution of the shareholders. The Company’s legal reserveamount, which is included in retained earnings, totals ¥1,566 million ($11,774 thousand) and ¥1,301
million as of March 31, 2002 and 2001, respectively. Under the Code, companies may issue new commonshares to existing shareholders without consideration as a stock split pursuant to a resolution of the Boardof Directors. Prior to October 1, 2001, the amount calculated by dividing the total amount of shareholders’equity by the number of outstanding shares after the stock split could not be less than ¥1,000 for theCompany. The revised Code eliminated this restriction.
Prior to October 1, 2001, the Code imposed certain restrictions on the repurchase and use of treasury
stock. Effective October 1, 2001, the Code eliminated these restrictions allowing companies to repurchasetreasury stock by a resolution of the shareholders at the general shareholders’ meeting and dispose of suchtreasury stock by resolution of the Board of Directors after March 31, 2002. The repurchased amount oftreasury stock cannot exceed the amount available for future dividends plus amount of stated capital,
additional paid-in capital or legal reserve to be reduced in the case where such reduction was resolved at thegeneral shareholders’ meeting.
The Code permits companies to transfer a portion of additional paid-in capital and legal reserve tostated capital by resolution of the Board of Directors. The Code also permits companies to transfer a
portion of unappropriated retained earnings, available for dividends, to stated capital by resolution of theshareholders.
Under the Code, the amount available for dividends is based on retained earning as recorded on the
Company’s books, subject to the approval of the shareholders and legal reserve requirements.
Dividends are approved by the shareholders at a meeting held subsequent to the fiscal year to which
the dividends are applicable. Semiannual interim dividends may also be paid upon resolution of the Boardof Directors, subject to certain limitations imposed by the Code.
On May 22, 2000, the Company made a three-for-two stock split to shareholders of record on March
31, 2000. As a result, the number of shares issued increased by 28,051,500 shares.
On June 1, 2000, the Company acquired all 650,000 shares of the common stock of Sinwa Co., Ltd. in
exchange for 721,500 shares of the Company’s common stock, according to an agreement dated April 27,
2000. On the exchange of common stock, ¥37 million and ¥4,398 million were credited to common stock
and additional paid-in capital, respectively, based on the book value of the acquired net assets. In addition,effective June 1, 2000, the above shares were revalued at market in accordance with the purchase method of
accounting which resulted in an increase to additional paid-in capital of ¥4,217 million.
At the Shareholders’ General Meeting held on June 27, 2001, the Company’s shareholders approved
the following stock option plan for the Company’s directors and key employees.

AIFUL CORPORATION Annual Report 2002

44

The plan provides for granting options to directors and key employees to purchase up to 223 thousand
shares of the Company’s common stock. The options were granted to purchase common stock at the higherof 103% of the average fair market price for the month previous to the grant, or the fair market price at thetime of grant. The stock options are exercisable from July 1, 2003 to June 30, 2006. The Company plans to
issue acquired treasury stock upon exercise of the stock options. The treasury stock will be purchased fromthe open market for a total consideration not to exceed ¥4,100 million ($30,827 thousand). No options
have been granted at March 31, 2002.
On August 25, 2001, the Company issued 8,500 thousand shares of its common stock at ¥10,241($77) per share, for gross proceeds of approximately ¥87,048 million ($654,496 thousand). On theissuance of common stock, ¥43,528 million ($327,278 thousand) and ¥43,520 million ($327,218
thousand) were credited to common stock and additional paid-in capital, respectively.

12. INCOME TAXESThe Company and its domestic subsidiaries are subject to Japanese national and local income taxes which,in the aggregate, resulted in a normal effective statutory tax rate of approximately 41.9% for the years ended
March 31, 2002 and 2001.
The tax effects of significant temporary differences and tax loss carryforwards which resulted in deferred
tax assets and liabilities at March 31, 2002 and 2001 are as follows:
Thousands of
U.S. Dollars

Millions of Yen

2002

2001

2002

Current deferred tax assets:
Tax loss carryforwards ........................................................
Provision for doubtful loans .............................................
Enterprise tax payable ........................................................
Accrued bonuses.................................................................
Charge-offs for doubtful loans ..........................................
Other ...................................................................................
Total.................................................................................
Less valuation allowance ...................................................
Net ...................................................................................

—¥ 6,629
940
1,145
1,058
452
10,224
(253)
9,971

¥

229
8,565
1,846
937
516
826
12,919(53)
12,866—$49,842
7,068
8,609
7,955
3,398
76,872(1,902)
74,970Current deferred tax liabilities:
Other ...................................................................................
Net deferred tax assets...................................................

—¥ 9,9711¥12,865—$74,970

AIFUL CORPORATION Annual Report 2002

45

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AIFUL CORPORATION and Consolidated Subsidiaries

Millions of Yen

Thousands of
U.S. Dollars

2002

2001

2002

Non-current deferred tax assets:
Tax loss carryforwards ........................................................
Provision for doubtful loans .............................................
Provision for employees’ retirement benefits ...................
Depreciation and amortization .........................................
Other ...................................................................................
Subtotal...........................................................................
Less valuation allowance ...................................................
Net ...................................................................................

¥32,657
1,995
2,462
2,489
1,579
41,182(19,918)
21,264¥30,215
—
2,499
2,287
2,084
37,085(27,781)
9,304$245,541
15,00018,511
18,714
11,873309,639(149,759)
159,880

Non-current deferred tax liabilities:
Unrealized gain on available-for-sale securities ...............
Net deferred tax assets...................................................

—¥21,264184¥ 9,120—$159,880

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 rate for the years ended March 31, 2002 and2001 and the actual effective tax rates reflected in the accompanying consolidated statements of income isas follows:

Normal effective statutory tax rates...............................................
Additional taxation on undistributed income .............................
Inhabitant’s taxes ...........................................................................
Expenses not deductible for income taxes purposes....................
Decrease of valuation allowance...................................................
Other, net........................................................................................
Actual effective tax rates.................................................................

13. RELATED PARTY
TRANSACTIONS

2002

2001

41.9%
5.8
0.5
8.3
(12.6)
0.2
44.2%

41.9%
4.5
0.9
0.2
—
0.4
47.9%

The balance due from an unconsolidated subsidiary at March 31, 2002 and 2001 was as follows:
Thousands of
U.S. Dollars

Millions of Yen

Advances to an unconsolidated subsidiary ..........................

2002

2001

2002

¥4,305¥4,003$32,368

An allowance has been provided for the entire amount of the advances to this unconsolidated
subsidiary.
In consideration of the unconsolidated subsidiary’s financial condition, the Company does not chargeinterest on such advances.

AIFUL CORPORATION Annual Report 2002

46

14. LEASESThe Group leases vehicles, computer equipment, furniture and fixtures, office space and other assets.
Total rental expense including lease payments under finance leases for the years ended March 31, 2002
and 2001 were as follows:
Millions of Yen

Year Ended March 31:
2002 .....................................
2001 .....................................

Thousands of U.S. Dollars

Total
RentalExpenses

Lease Payments
under FinanceLeases

Total
RentalExpenses

Lease Payments
under FinanceLeases¥22,961
15,662¥7,014
6,322$172,639$52,737

Pro forma information of leased property such as acquisition cost, accumulated depreciation,
obligations under finance leases, depreciation expense, and interest expense of finance leases that do nottransfer ownership of the leased property to the lessee on an “as if capitalized” basis for the years ended
March 31, 2002 and 2001 were as follows:

Thousands of
U.S. Dollars
Machinery andEquipment

Millions of Yen
Machinery andEquipment

Acquisition cost......................................................................
Accumulated depreciation.....................................................
Net leased property........................................................

2002

2001

2002

¥33,146
21,921¥11,225¥30,213
21,481¥ 8,732$249,218
164,820$ 84,398

Obligations under finance leases:
Thousands of
U.S. Dollars

Millions of Yen

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

2002

2001

2002

¥ 6,086
8,181¥14,267¥ 5,251
6,505¥11,756$ 45,759
61,512$107,271

Depreciation expense and interest expense, which are not reflected in the accompanying consolidated
statements of income, computed under a declining-balance method and the interest method, respectively
for the years ended March 31, 2002 and 2001 were as follows:
Thousands of
U.S. Dollars

Millions of Yen

Depreciation expense.............................................................
Interest expense......................................................................

AIFUL CORPORATION Annual Report 2002

47

2002

2001

2002

¥6,704488¥5,533414$50,406
3,669

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AIFUL CORPORATION and Consolidated Subsidiaries

The minimum rental commitments under noncancellable operating leases at March 31, 2002 and 2001
were as follows:
Thousands of
U.S. Dollars

Millions of Yen

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

15. DERIVATIVES

2002

2001

2002

¥15
17
¥32

¥ 51
93
¥144

$113
128
$241

The Group enters into interest rate swap and interest rate cap contracts as a means of managing its interest
rate exposures on certain liabilities.
Such derivative transactions are entered into to hedge interest exposures incorporated within its
business. Accordingly, market risk in these derivatives is theoretically offset by opposite movements in thevalue of hedged liabilities. The Group does not hold or issue derivatives for trading and speculative
purposes.
Because the counterparties to these derivatives are limited to major financial institutions, the Group
does not anticipate any losses arising from credit risk.
Derivative transactions entered into by the Group have been made in accordance with internal policies,
which regulate the authorization and credit limit amount.
The fair value of the Group’s derivative financial instruments at March 31, 2001, other than those towhich hedge accounting is applied, is as follows:
Millions of Yen

2001

Interest rate caps:
Purchased interest rate caps ....................................................

Notional
AmountFair Value¥1,500¥2

Unrealized
Loss

¥24

The Group had no derivative instruments outstanding at March 31, 2002.
Estimated fair values were obtained from banks.
A portion of interest rate caps which either qualify for hedge accounting or meet specific matching
criteria is excluded from the disclosure of market value information.
The notional amounts of derivatives which are shown in the above table do not represent the amounts
exchanged by the parties and do not measure the Group’s exposure to credit or market risk.

AIFUL CORPORATION Annual Report 2002

48

16. SUBSEQUENTEVENTSa. On May 27, 2002, the Board of Directors of the Company resolved to propose the following plan ofappropriation of retained earnings for the year ended March 31, 2002 for approval at the Shareholders’
General Meeting held on June 26, 2002:

Cash dividends, ¥25 ($0.19) per share ........................................
Bonuses to directors and corporate auditors................................

Millions of Yen

Thousands of
U.S. Dollars¥2,329103$17,511774

b. At the Shareholders’ General Meeting held on June 26, 2002, the Company’s shareholders approved thepurchase of treasury stock for retirement and the related reduction of retained earnings. The Company isauthorized to repurchase up to 9 million shares of the Company’s common stock (aggregate amount of¥90,000 million ($676,692 thousand)) in the period from the closing of this Shareholders’ General
Meeting to that of the next Shareholders’ General Meeting.
c. On May 27, 2002, the Board of Directors resolved that the number of common shares the Company isauthorized to issue was increased from 224 million shares to 373.5 million shares. This resolution wasapproved at the Shareholders’ General Meeting held on June 26, 2002.

17. SEGMENT
INFORMATION

Most of the Group’s business is related to a single segment, lending. The Group does not operate outside
Japan. Accordingly, information about industry and geographic segments was not presented.

AIFUL CORPORATION Annual Report 2002

49

INDEPENDENT AUDITORS’ REPORTTo the Board of Directors and Shareholders of
AIFUL CORPORATION:
We have examined the consolidated balance sheets of AIFUL CORPORATION and consolidated
subsidiaries as of March 31, 2002 and 2001, and the related consolidated statements of income,shareholders’ equity, and cash flows for the years then ended, all expressed in Japanese yen. Our
examinations were made in accordance with auditing standards, procedures and practices generally
accepted and applied in Japan and, accordingly, included such tests of the accounting records and suchother auditing procedures as we considered necessary in the circumstances.
In our opinion, the consolidated financial statements referred to above present fairly the financial positionof AIFUL CORPORATION and consolidated subsidiaries as of March 31, 2002 and 2001, and the results of
their operations and their cash flows for the years then ended in conformity with accounting principles andpractices generally accepted in Japan applied on a consistent basis.
Our examinations also comprehended the translation of Japanese yen amounts into U.S. dollar amounts
and, in our opinion, such translation has been made in conformity with the basis stated in Note 3. Such
U.S. dollar amounts are presented solely for the convenience of readers outside Japan.

DELOITTE TOUCHE TOHMATSU
Kyoto, JapanSHIMBASHI & CO.
Osaka, Japan

June 26, 2002

AIFUL CORPORATION Annual Report 2002

50

NON-CONSOLIDATED STATEMENTS OF INCOMEAIFUL CORPORATION
Years Ended March 31, 2002 and 2001

Millions of Yen

2002

Thousands of
U.S. Dollars(Note 3)

2001

2002

¥296,034
3,912
2,824
1,247
3,779
4,047
311,843¥262,581
1,237
40
1,303
3,325
4,067
272,553$2,225,820
29,413
21,2339,376
28,41430,4282,344,684

INCOME:Interest on loans....................................................................................................
Interest on deposits, securities and other ............................................................
Sales of property for sale ......................................................................................
Income from restaurant business and other........................................................
Recovery of loans previously charged off ............................................................
Other income ........................................................................................................
Total income .....................................................................................................
EXPENSES:Interest on borrowings .........................................................................................
Cost of sales of property for sale ..........................................................................
Charge-offs and provision for doubtful loans, advances to subsidiaryand claims in bankruptcy ...................................................................................
Salaries and other employees’ benefits ................................................................
Advertising expenses .............................................................................................
Rental expenses .....................................................................................................
Commissions and fees..........................................................................................
Supplies .................................................................................................................
Loss on write-down of investment securities ......................................................
Loss on write-down of inventories.......................................................................
Depreciation and amortization............................................................................
Provision for accrued pension and severance costs ............................................
Charge for full amount of transitional obligations for retirement benefits ......
Provision for retirement benefits to directors and corporate auditors ..............
Stock issue costs ....................................................................................................
Loss on sales of property, net ...............................................................................
Other expenses ......................................................................................................
Total expenses...................................................................................................

30,8292,678

26,76757

231,797
20,13567,931
23,114
19,27415,004
9,723
1,295
549
2,195
4,515
369
—
111
4,235
31,18526,182
239,189

54,772
24,06517,04315,001
10,463
1,166
1,531
103
4,205
1,982
992
67
—
1,552
20,312
180,078

510,759
173,790
144,917
112,812
73,1059,737
4,128
16,50433,947
2,774—
835
31,842
234,474
196,857
1,798,413

INCOME BEFORE INCOME TAXES.......................................................................

72,654

92,475546,271

INCOME TAXES (Note 8):
Current...................................................................................................................
Deferred .................................................................................................................
Total income taxes............................................................................................

35,001(696)
34,30545,011(1,048)43,963

263,166(5,233)257,933

NET INCOME ...........................................................................................................

¥ 38,349¥ 48,512$ 288,338

U.S. Dollars(Note 3)Yen

AMOUNTS PER COMMON SHARE (Note 2 s.):
Net income ............................................................................................................
Cash dividends applicable to the year .................................................................

¥426.54
50.00

See Notes to Non-Consolidated Financial Statements.

AIFUL CORPORATION Annual Report 2002

51

¥572.38
50.00

$3.21
0.38

NON-CONSOLIDATED BALANCE SHEETSAIFUL CORPORATIONMarch 31, 2002 and 2001

Thousands of
U.S. Dollars(Note 3)

Millions of Yen

2002

ASSETS
CURRENT ASSETS:
Cash and cash equivalents ...................................................................................
Time deposits ........................................................................................................
Loans (Notes 4 and 7) ..........................................................................................
Allowance for doubtful loans...............................................................................
Net loans ...........................................................................................................
Inventories (Notes 5 and 7) .................................................................................
Prepaid expenses ...................................................................................................
Deferred tax assets (Note 8) .................................................................................
Advances to associated company .........................................................................
Other current assets (Note 7) ...............................................................................
Total current assets ..........................................................................................

¥

93,255138
1,313,690(58,689)
1,255,001
680
3,495
7,589
—
31,8601,392,018

2001¥

95,391378
1,159,734(45,115)
1,114,619
2,454
4,172
9,240
200
12,763
1,239,217

2002$

701,165
1,038
9,877,369(441,271)
9,436,098
5,113
26,27857,060—239,549
10,466,301

PROPERTY, PLANT AND EQUIPMENT:Land .......................................................................................................................
Buildings and structures .......................................................................................
Machinery, vehicles and equipment ....................................................................
Construction in progress ......................................................................................
Subtotal .............................................................................................................
Accumulated depreciation ...................................................................................
Net property, plant and equipment ...............................................................

5,284
23,08410,007—38,375(15,068)
23,307

41,21235,146
10,57625
86,959(19,569)
67,39039,729173,564
75,241—
288,534(113,293)
175,241

INVESTMENTS AND OTHER ASSETS:
Investment securities (Notes 6 and 7) .................................................................
Investments in and advances to subsidiaries and associated companies ..........
Claims in bankruptcy (Note 4) ............................................................................
Allowance for advances to subsidiary and claims in bankruptcy ......................
Software, net..........................................................................................................
Long-term loans (less current portion) ...............................................................
Lease deposits........................................................................................................
Long-term prepayments........................................................................................
Deferred tax assets (Note 8) .................................................................................
Deferred losses on hedging instruments, mainly interest rate swaps (Note 2 r.) ..
Other assets ...........................................................................................................
Total investments and other assets ................................................................

6,539
266,814
14,267(17,220)
2,354
8,671
8,652
1,566
4,348
22,931
6,621
325,543

4,888
227,805
11,845(15,829)
2,365
8,706
8,549
2,172
1,645
20,091
7,566
279,803

49,1652,006,120
107,271(129,474)
17,69965,19565,053
11,77432,692
172,41449,782
2,447,691

TOTAL ......................................................................................................................

¥1,740,868¥1,586,410$13,089,233

See Notes to Non-Consolidated Financial Statements.

AIFUL CORPORATION Annual Report 2002

52

Thousands of
U.S. Dollars(Note 3)

Millions of Yen

2002

LIABILITIES AND SHAREHOLDERS’ EQUITYCURRENT LIABILITIES:
Short-term borrowings (Note 7) ..........................................................................
Current portion of long-term debt (Note 7) .......................................................
Trade notes payable ..............................................................................................
Trade accounts payable.........................................................................................
Income taxes payable............................................................................................
Accrued expenses...................................................................................................
Other current liabilities ........................................................................................
Total current liabilities ....................................................................................
LONG-TERM LIABILITIES:Long-term debt (less current portion) (Note 7)..................................................
Liability for retirement benefits (Note 2 g.) ........................................................
Interest rate swaps (Note 2 r.) ..............................................................................
Other long-term liabilities....................................................................................
Total long-term liabilities................................................................................

¥

29,000430,785
3,572
5,408
15,912
6,449
1,244
492,370

2001¥

32,500348,257
3,774
5,449
25,5305,040
1,345
421,895

2002$

218,045
3,238,984
26,857
40,662
119,639
48,4899,354
3,702,030

803,194
2,395
22,305111
828,005

838,417
3,061
20,091
345
861,914

6,039,053
18,007
167,707834
6,225,601

SHAREHOLDERS’ EQUITY (Notes 9 and 12):
Common stock,authorized, 224,000,000 shares;
issued, 93,376,000 shares at March 31, 2002
and 84,876,000 shares at March 31, 2001 ........................................................
Additional paid-in capital ....................................................................................
Legal reserve ..........................................................................................................
Retained earnings..................................................................................................
Net unrealized gain (loss) on available-for-sale securities .................................
Treasury stock, at cost—220,585 shares in 2002 ................................................
Total shareholders’ equity...............................................................................

83,317
89,831
1,566
248,086(261)(2,046)420,493

39,78946,311
1,301
214,969231—
302,601

626,444675,421
11,774
1,865,308(1,962)(15,383)
3,161,602

TOTAL .......................................................................................................................

¥1,740,868¥1,586,410$13,089,233

CONTINGENT LIABILITIES (Note 11)

AIFUL CORPORATION Annual Report 2002

53

NON-CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITYAIFUL CORPORATION
Years Ended March 31, 2002 and 2001

Thousands

Millions of Yen

Number of
Shares of Common
Stock Issued

BALANCE AT APRIL 1, 2000................................
Net income .......................................................
Cash dividends paid, ¥50 per share.................
Transfer to legal reserve ...................................
Bonuses to directors and corporate auditors ...
Stock split (Note 9)...........................................
Acquisition of Sinwa Co., Ltd. (Note 9) ..........
Net unrealized gain on
available-for-sale securities .............................
BALANCE AT MARCH 31, 2001 ..........................
Net income .......................................................
Cash dividends paid, ¥50 per share.................
Transfer to legal reserve ...................................
Bonuses to directors and corporate auditors ...
Net increase in treasury stock(220,585 shares) (Note 9)..............................
Public offering (Note 9) ...................................
Net unrealized loss onavailable-for-sale securities .............................
BALANCE AT MARCH 31, 2002 ..........................

56,103

CommonStock

Additional
Paid-in
Capital¥39,752¥41,913 ¥Legal
Reserve

952

349
28,052
721

37

4,398

84,87639,78946,311

1,301

265

Net Unrealized
Gain (Loss) on
Available-for-sale
Securities

Retained
Earnings¥170,286
48,512(3,381)(349)(99)

214,969
38,349(4,880)(265)(87)

Treasury
Stock,
at Cost

Nil

¥ 231
231

Nil

¥(2,046)
8,500

43,52843,52093,376¥83,317¥89,831¥1,566(492)¥(261) ¥(2,046)¥248,086

Thousands of U.S. Dollars (Note 3)

BALANCE AT MARCH 31, 2001 ..........................
Net income .......................................................
Cash dividends paid, $0.38 per share..............
Transfer to legal reserve ...................................
Bonuses to directors and corporate auditors ...
Net increase in treasury stock(220,585 shares) (Note 9)..............................
Public offering (Note 9) ...................................
Net unrealized loss onavailable-for-sale securities .............................
BALANCE AT MARCH 31, 2002 ..........................

Net Unrealized
Gain (Loss) on
Available-for-sale
Securities

CommonStock

Additional
Paid-in
CapitalLegal
Reserve

Retained
Earnings$299,166$348,203$ 9,782$1,616,308
288,338(36,692)(1,992)
(654)

1,992

$1,737

Treasury
Stock,
at CostNil$(15,383)
327,278

327,218$626,444$675,421

See Notes to Non-Consolidated Financial Statements.

AIFUL CORPORATION Annual Report 2002

54

$11,774 $1,865,308(3,699)$(1,962) $(15,383)

NOTES TO NON-CONSOLIDATED FINANCIAL STATEMENTS
AIFUL CORPORATION
Years Ended March 31, 2002 and 2001

1. BASIS OFPRESENTING NONCONSOLIDATEDFINANCIALSTATEMENTS

The accompanying non-consolidated financial statements of AIFUL CORPORATION (the “Company”)
have been prepared from the Company’s non-consolidated financial statements issued for domestic
reporting purposes in accordance with the provisions set forth in the Japanese Securities and Exchange Law.
The Company maintains its accounts and records in accordance with the provisions set forth in theCommercial Code of Japan (the “Code”) and in conformity with accounting principles and practices
generally accepted in Japan, which are different in certain respects as to application and disclosure
requirements of International Accounting Standards. The non-consolidated financial statements are notintended to present the financial position and results of operations in accordance with accounting
principles and practices generally accepted in countries and jurisdictions other than Japan.
As consolidated statements of cash flows and certain disclosures are presented in the consolidated
financial statements of the Company, non-consolidated statements of cash flows and certain disclosures are
not presented herein in accordance with accounting procedures generally accepted in Japan.
In preparing these non-consolidated financial statements, certain reclassifications and rearrangements
have been made to the Company’s non-consolidated financial statements issued domestically in order topresent them in a form which is more familiar to readers outside Japan.
Certain reclassifications have been made to the prior year’s non-consolidated financial statements toconform to the classifications used for the year ended March 31, 2002.

2. SUMMARY OF
SIGNIFICANTACCOUNTINGPOLICIES

a. Non-Consolidation – The non-consolidated financial statements do not include the accounts of subsidiaries. Investments in subsidiaries and associated companies are stated at cost.
b. Cash Equivalents – Cash equivalents are short-term investments that are readily convertible into cash andthat are exposed to insignificant risk of changes in value.
Cash equivalents include time deposits and certificates of deposit which mature or become due within
three months of the date of acquisition.
c. Inventories – Inventories include property for sale, property for sale under construction and supplies.
Property for sale is stated at the lower of cost or market, cost being determined by the specific identification method. Depreciation of property for sale currently rented is computed by the same method, asapplied to property, plant and equipment. Property for sale under construction is stated at cost, cost being
determined by the specific identification method. Supplies are stated at the most recent purchase price,which approximates cost determined by the first-in, first-out method.
d. Investment Securities – Held-to-maturity debt securities are reported at amortized cost and availablefor-sale securities are reported at fair value, with unrealized gains and losses, net of applicable taxes,
reported in a separate component of shareholders’ equity. The cost of securities sold is determined basedon the moving-average method. Non-marketable available-for-sale securities are stated at cost determinedby the moving-average method. For other than temporary declines in fair value, investment securities are
reduced to net realizable value by a charge to income.
e. Property, Plant and Equipment – Property, plant and equipment are stated at cost. Depreciation iscomputed by the declining-balance method. The range of useful lives is from 7 to 50 years (3 to 50
years in 2001) for buildings and structures and from 2 to 20 years for machinery, vehicles and equipment.
f. Software – Expenditures for the purchase of software, which meet certain future-tests, are capitalized assoftware and amortized by the straight-line method over the estimated useful lives of five years.
g. Liability for Retirement Benefits - The Company has contributory and non-contributory funded pension
plans covering substantially all employees. Under the pension plans, employees terminating their employment are, in most circumstances, entitled to pension payments based on their average pay during theiremployment, length of service and certain other factors. If the termination is involuntary, employees areusually entitled to larger payments than in the case of voluntary termination.
The Company accounted for the net liability for retirement benefits based on projected benefit obligation and plan assets at the balance sheet date.

AIFUL CORPORATION Annual Report 2002

55

NOTES TO NON-CONSOLIDATED FINANCIAL STATEMENTS
AIFUL CORPORATION

Liability for retirement benefits to directors and corporate auditors are provided at the amount which
would be required if they retired at each balance sheet date.
The balances of retirement benefits include those to directors and corporate auditors in the amountof ¥1,056 million ($7,940 thousand) and ¥945 million for the years ended March 31, 2002 and 2001,
respectively.
h. Allowances for Doubtful Loans – The allowance for doubtful accounts is stated in amounts considered
to be appropriate based on the Company’s past credit loss experience and an evaluation of potential losses
in the receivables outstanding.
i. Leases – All leases are accounted for as operating leases. Under Japanese accounting standards for leases,
finance leases that deem to transfer ownership of the leased property to the lessee are to be capitalized,
while other finance leases are permitted to be accounted for as operating lease transactions if certain “as if
capitalized” information is disclosed in the notes to the lessee’s non-consolidated financial statements.
j. Income Taxes – The provision for income taxes is computed based on the pretax income included in the
non-consolidated statements of income. The asset and liability approach is used to recognize deferred
tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amounts and the tax bases of assets and liabilities. Deferred taxes are measured by applying currently
enacted tax laws to the temporary differences.
k. Related Party Transactions – Related party transactions other than those with subsidiaries and associatedcompanies are not presented herein, as they are disclosed in the consolidated financial statements of theCompany.
l. Appropriations of Retained Earnings – Appropriations of retained earnings are reflected in the nonconsolidated financial statements for the following year upon shareholders’ approval.
m. Foreign Currency Transactions – All short-term and long-term monetary receivables and payables
denominated in foreign currencies are translated into Japanese yen at the exchange rates at the balance
sheet date. The foreign exchange gains and losses from translation are recognized in the non-consolidated
statements of income.
n. Interest on Loans – Interest on loans is recorded on an accrual basis. In accordance with the practiceprevailing in the industry, the Company records accrued interest to the extent that the realization of suchincome is considered to be certain.
o. Interest on Borrowings – Interest on financial liabilities is accounted for as operating expenses whileother interest is included in other expenses.
p. Stock Issue Costs – Stock issue costs are charged to income as incurred.
q. Bonds Issue Costs – Bonds issue costs, which are included in other assets, are amortized ratably overperiods up to three years.
r. Derivatives and Hedging Activities – The Company uses derivative financial instruments to manage its
exposures to fluctuations in interest rates. Interest rate swaps and caps are utilized by the Company toreduce interest rate risks. The Company does not enter into derivatives for trading or speculative purposes.
The accounting standard for derivative financial instruments requires that: a) all derivatives are recognized
as either assets or liabilities and measured at fair value, and gains or losses on derivative transactions arerecognized in the non-consolidated statements of income, and b) for derivatives used for hedging purposes, if derivatives qualify for hedge accounting because of high correlation and effectiveness between thehedging instruments and the hedged items, gains or losses on derivatives are deferred until maturity of thehedged transactions.
The interest rate swaps and caps which qualify for hedge accounting and meet specific matching criteria are not remeasured at market value but the differential paid or received under the swap or cap
agreements is recognized and included in interest expense or income.

AIFUL CORPORATION Annual Report 2002

56

s. Per Share Information – The computation of net income per share is based on the weighted average
number of shares of common stock outstanding during each year, retroactively adjusted for stock splits.
The weighted average number of common shares used in the computation for the years ended March 31,
2002 and 2001 was as follows:
2002
2001

Average Number of Shares
89,908,062
84,755,420

Diluted net income per share is not presented because no dilutive securities were outstanding for theyears ended March 31, 2002 and 2001.
Cash dividends per share presented in the accompanying non-consolidated statements of income are
dividends applicable to the respective years including dividends to be paid after the end of the year without giving retroactive adjustment for any subsequent stock split.

3. TRANSLATIONThe non-consolidated financial statements are stated in Japanese yen, the currency of the country in which the
INTO U.S. DOLLARS Company is incorporated and operates. The translation of Japanese yen amounts into U.S. dollar amounts areincluded solely for the convenience of readers outside Japan and have been made at the rate of ¥133=$1,
the approximate rate of exchange at March 29, 2002. Such translations should not be construed as representations that the Japanese yen amounts could be converted into U.S. dollars at that or any other rate.

4. LOANS

Loans at March 31, 2002 and 2001 consisted of the following (before allowance for doubtful loans):Thousands of
U.S. Dollars

Millions of Yen

Unsecured .........................................................................
Secured...............................................................................
Small business loans .........................................................
Total ............................................................................

2002

2001

2002

¥1,019,293
277,671
16,726¥1,313,690¥ 921,891
225,645
12,198¥1,159,734$7,663,857
2,087,752
125,760$9,877,369

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

Millions of Yen

Loans in legal bankruptcy .....................................................
Nonaccrual loans ...................................................................
Accruing loans contractually past due three months
or more as to principal or interest payments .....................
Restructured loans .................................................................
Total.................................................................................

AIFUL CORPORATION Annual Report 2002

57

2002

2001

2002

¥16,457
23,334¥13,058
20,137$123,737
175,444

8,931
29,305¥78,027

6,874
23,814¥63,883

67,150220,338$586,669

NOTES TO NON-CONSOLIDATED FINANCIAL STATEMENTS
AIFUL CORPORATION

Loans in legal bankruptcy are loans in which accruals of interest are discontinued (excluding the
portion recognized as bad debts), based on management’s judgment as to the collectibility of principal orinterest resulting from the past due payment of interest or principal and other factors. Allowances forclaims in bankruptcy are stated at such amount less net realizable value of collateral.
Nonaccrual loans are loans in which accruals of interest are discontinued and those other than loans inlegal bankruptcy and loans granting deferral of interest payment to the debtors in financial difficulties to assist
them in their recovery where such deferred payments are regularly received. Accruing loans contractually past
due three months or more as to principal or interest payments are loans for which payments of principal orinterest have not been received for a period of three months or more beginning with the next business day
following the last due date for such payments. Loans classified as loans in legal bankruptcy and nonaccrualloans are excluded from accruing loans contractually past due three months or more.
Restructured loans are loans on which creditors grant concessions (e.g., reduction of the stated interest
rate, deferral of interest payment, extension of maturity date, waiver of the face amount, or other concessive
measures) to the debtors in financial difficulties to assist them in their recovery and eventually enable themto pay creditors. Loans classified as loans in legal bankruptcy, nonaccrual loans and accruing loans
contractually past due three months or more are excluded.
At March 31, 2002, the Company had a balance related to revolving loan contracts of ¥1,023,875
million ($7,698,308 thousand) whereby a commitment was set up for each loan customer, and theCompany was obligated to advance funds up to a predetermined amount upon request. At March 31, 2002,
the balance of unadvanced commitments was ¥444,662 million ($3,343,323 thousand). The loan contractcontains provisions that allow the Company to reduce the contract amount of the commitment or refuse toadvance funds to loan customers under certain conditions.

5. INVENTORIESInventories at March 31, 2002 and 2001 consisted of the following:
Millions of Yen

Property for sale .....................................................................
Property for sale under construction ....................................
Supplies ..................................................................................
Total.................................................................................

6. INVESTMENT
SECURITIESThousands of
U.S. Dollars

2002

2001

2002

¥668
—
12
¥680

¥ 819
1,622
13
¥2,454$5,023—90$5,113Disclosure of cost and fair value of marketable securities at March 31, 2002 and 2001 is not presented
herein, as such information is not required in non-consolidated financial statements.

7. SHORT-TERM
Short-term borrowings at March 31, 2002 and 2001 consisted of the following:
BORROWINGS AND
LONG-TERM DEBT
Millions of Yen
Commercial paper, 0.7880%(0.828% to 0.912% at March 31, 2001) ............................
Loans from banks, 0.8363% to 1.1100%(1.12% to 2.375% at March 31, 2001) ..............................
Loans from other financial institutions, 1.475%(1.6% to 2.45% at March 31, 2001)...................................
Total.................................................................................

AIFUL CORPORATION Annual Report 2002

58

Thousands of
U.S. Dollars

2002

2001

2002

¥15,000¥15,000$112,782

12,00015,00090,2252,000¥29,000

2,500¥32,500

15,038$218,045

Long-term debt at March 31, 2002 and 2001 consisted of the following:
Millions of Yen

2002

2001

Thousands of
U.S. Dollars

2002

Loans from banks, 1.0846% to 4.200%, due serially to 2007
(1.001% to 4.2%, due serially to 2006 at March 31, 2001) ....
Loans from other financial institutions,1.750% to 4.200%, due serially to 2007
(1.9% to 4.7%, due serially to 2006 at March 31, 2001 ...........
Syndicated loans, 2.5%, due 2004
(1.7% to 2.6%, due 2004 at March 31, 2001)..........................
Unsecured 2.6% yen straight bonds, due 2001 ..........................
Unsecured 2.425% yen straight bonds, due 2002
(2.35% to 2.425%, due 2002 at March 31, 2001) ...................
Unsecured 1.5% to 3.2% yen straight bonds, due 2003 ............
Unsecured 2.0% to 2.53% yen straight bonds, due 2004..........
Unsecured 1.75% to 1.86% yen straight bonds, due 2005
(1.86%, due 2005 at March 31, 2001)......................................
Unsecured 1.7% to 3.27% yen straight bonds, due 2006
(3.27% at March 31, 2001)........................................................
Unsecured 2.51% yen straight bonds, due 2007 ........................
Unsecured 2.48% yen straight bonds, due 2008 ........................
Unsecured 3.28% yen straight bonds, due 2009 ........................
Unsecured 2.93% to 3.0% yen straight bonds, due 2010..........
Unsecured 3.65% Euro-yen straight bonds, due 2003...............
Unsecured variable rate Euro-yen straight bonds, due 2006
(1.825% at March 31, 2002 and 2.136% at March 31, 2001) ...
Unsecured 1.73% medium-term notes, due 2002......................
Unsecured variable rate Euro-yen medium-term notes,
due 2002 (1.75% at March 31, 2002 and 2001) ......................
Unsecured 2.21% medium-term notes, due 2007......................
Unsecured 3.0% medium-term notes, due 2008........................
Unsecured 3.5% medium-term notes, due 2015........................
Other (principally from leasing and factoring companies),
2.0% to 4.3%, due serially to 2008 (0.98% to 4.5%,
due serially to 2006 at March 31, 2001) ...................................
Subtotal..................................................................................
Less current portion ......................................................................
Long-term debt, less current portion .................................

¥ 420,031¥ 398,990$ 3,158,128

219,047

245,434

1,646,970

46,666—70,0006,000

350,872—

10,00075,000135,000

40,00075,000135,000

75,188563,9101,015,037

30,00010,000225,564

60,00020,00015,0008,000
20,0009,500

15,00020,000—8,000
20,0009,500

451,128
150,376
112,782
60,150150,376
71,42915,0003,000

15,0003,000

112,782
22,556

3,000
1,000
3,000
15,000

3,000
—
3,000
15,00022,556
7,519
22,556
112,782

125,735
94,7501,233,979 1,186,674(430,785) (348,257)¥ 803,194 ¥ 838,417

945,376
9,278,037(3,238,984)$ 6,039,053

The Company has an interest rate swap agreement that effectively converts variable rate interest payableon ¥3,000 million ($22,556 thousand) of medium-term notes, due 2002, to a fixed rate of 1.75%.

AIFUL CORPORATION Annual Report 2002

59

NOTES TO NON-CONSOLIDATED FINANCIAL STATEMENTS
AIFUL CORPORATION

The aggregate annual maturities of long-term debt at March 31, 2002 were as follows:Year ending March 31

2003 .....................................................................................................
2004 .....................................................................................................
2005 .....................................................................................................
2006 .....................................................................................................
2007 .....................................................................................................
2008 and thereafter .............................................................................
Total ............................................................................................

Millions of Yen

Thousands of
U.S. Dollars¥ 430,785
321,700
205,304
67,65775,333
133,200¥1,233,979$3,238,984
2,418,797
1,543,639
508,699
566,4141,001,504$9,278,037

At March 31, 2002, the following assets were pledged as collateral for short-term borrowings and long-term
debt (including current portion of long-term debt):

Loans ....................................................................................................
Investment securities ...........................................................................
Property for sale...................................................................................
Total.................................................................................................
Related liabilities:
Long-term debt (including current portion of long-term debt)...

Millions of Yen

Thousands of
U.S. Dollars¥559,240
153
153¥559,546$4,204,813
1,150
1,150
$4,207,113¥467,766$3,517,038

In addition, if requested by lending financial institutions, the Company has committed to pledge collateral for loans other than those shown in the above table.
At March 31, 2002, related liabilities for which lending financial institutions can request the Company topledge collateral consisted of the following:

Short-term borrowings ........................................................................
Long-term debt (including current portion of long-term debt) .......
Total ............................................................................................

Millions of Yen

Thousands of
U.S. Dollars¥ 2,000
125,186¥127,186$ 15,038
941,248$956,286

At March 31, 2002, other current assets, which were pledged as collateral for interest rate swap contracts,
amounted to ¥6,764 million ($50,857 thousand).

AIFUL CORPORATION Annual Report 2002

60

8. INCOME TAXESThe Company is subject to Japanese national and local income taxes which, in the aggregate, resulted in anormal effective statutory tax rate of approximately 41.9% for the years ended March 31, 2002 and 2001.
The tax effects of significant temporary differences which resulted in deferred tax assets and liabilities at
March 31, 2002 and 2001 are as follows:
Thousands of
U.S. Dollars

Millions of Yen

Current deferred tax assets:
Charge-offs for doubtful loans ..........................................
Provision for doubtful loans .............................................
Unrecorded accrued interest on loans...............................
Accrued bonuses.................................................................
Enterprise tax payable ........................................................
Other ...................................................................................
Current deferred tax assets ...........................................
Non-current deferred tax assets:
Depreciation and amortization .........................................
Provision for doubtful loans .............................................
Provision for employees’ retirement benefits ...................
Provision for retirement benefits to directors
and corporate auditors .....................................................
Unrealized loss on available-for-sale securities ................
Other ...................................................................................
Total.................................................................................
Non-current deferred tax liabilities:
Unrealized gain on available-for-sale securities ...............
Net deferred tax assets...................................................

2002

2001

2002

¥ 862
4,896
—
716
888
227
¥7,589

¥ 516
6,164
122
501
1,839
98
¥9,240$ 6,481
36,812
—
5,383
6,677
1,707
$57,060

¥ 816
1,995
544

¥ 402
—
851

¥ 6,135
15,000
4,090

443
188
362
4,348

396
—
163
1,812

3,331
1,414
2,722
32,692—¥4,348167¥1,645—$32,692

A reconciliation between the normal effective statutory tax rate for the years ended March 31, 2002 and2001 and the actual effective tax rates reflected in the accompanying non-consolidated statements ofincome is as follows:

Normal effective statutory tax rates.......................................................
Increase in tax rate resulting from:
Additional taxation on undistributed income.................................
Other, net...........................................................................................
Actual effective tax rates..............................................................

AIFUL CORPORATION Annual Report 2002

61

2002

2001

41.9%

41.9%

4.7
0.6
47.2%

4.4
1.2
47.5%

NOTES TO NON-CONSOLIDATED FINANCIAL STATEMENTS
AIFUL CORPORATION

9. SHAREHOLDERS’
EQUITYJapanese companies are subject to the Japanese Commercial Code (the ‘‘Code’’) to which certain amendments
became effective from October 1, 2001.
Prior to October 1, 2001, the Code required at least 50% of the issue price of new shares, with a minimum of the par value thereof, to be designated as stated capital as determined by resolution of the Board of
Directors. Proceeds in excess of amounts designated as stated capital were credited to additional paid-in
capital. Effective October 1, 2001, the Code was revised and common stock par values were eliminated resulting in all shares being recorded with no par value.
Prior to October 1, 2001, the Code also provided that an amount at least equal to 10% of the aggregate
amount of cash dividends and certain other cash payments which are made as an appropriation of retained
earnings applicable to each fiscal period shall be appropriated and set aside as a legal reserve until such reserve
equals 25% of stated capital. Effective October 1, 2001, the revised Code allows for such appropriations tobe set aside as a legal reserve until the total additional paid-in capital and legal reserve equals 25% of statedcapital. The excess of total additional paid-in capital and legal reserve over 25% of the stated capital can beavailable for dividends by resolution of the shareholders. Under the Code, companies may issue new common shares to existing shareholders without consideration as a stock split pursuant to a resolution of theBoard of Directors. Prior to October 1, 2001, the amount calculated by dividing the total amount of shareholders’ equity by the number of outstanding shares after the stock split could not be less than ¥1,000. The
revised Code eliminated this restriction.
Prior to October 1, 2001, the Code imposed certain restrictions on the repurchase and use of treasury
stock. Effective October 1, 2001, the Code eliminated these restrictions allowing companies to repurchasetreasury stock by a resolution of the shareholders at the general shareholders’ meeting and dispose of suchtreasury stock by resolution of the Board of Directors after March 31, 2002. The repurchased amount of treasury stock cannot exceed the amount available for future dividend plus amount of stated capital, additional
paid-in capital or legal reserve to be reduced in the case where such reduction was resolved at the generalshareholders’ meeting.
The Code permits companies to transfer a portion of additional paid-in capital and legal reserve to statedcapital by resolution of the Board of Directors. The Code also permits companies to transfer a portion of unappropriated retained earnings, available for dividends, to stated capital by resolution of the shareholders.
Under the Code, the amount available for dividends is based on retained earning as recorded on the
Company’s books, subject to the approval of the shareholders and legal reserve requirements.
Dividends are approved by the shareholders at a meeting held subsequent to the fiscal year to which thedividends are applicable. Semiannual interim dividends may also be paid upon resolution of the Board of
Directors, subject to certain limitations imposed by the Code.
On May 22, 2000, the Company made a three-for-two stock split to shareholders of record on March
31, 2000. As a result, the number of shares issued increased by 28,051,500 shares.
On June 1, 2000, the Company acquired all 650,000 shares of the common stock of Sinwa Co., Ltd. in
exchange for 721,500 shares of the Company’s common stock, according to an agreement dated April 27,
2000. On the exchange of common stock, ¥37 million and ¥4,398 million were credited to common stock
and additional paid-in capital, respectively, based on the book value of the acquired net assets. In addition,effective June 1, 2000, the above shares were revalued at market in accordance with the purchase method of
accounting which resulted in an increase to additional paid-in capital of ¥4,217 million.
At the Shareholders’ General Meeting held on June 27, 2001, the Company’s shareholders approved thefollowing stock option plan for the Company’s directors and key employees.
The plan provides for granting options to directors and key employees to purchase up to 223 thousand
shares of the Company’s common stock. The options were granted to purchase common stock at the higherof 103% of the average fair market price for the month previous to the grant, or the fair market price at thetime of grant. The stock options are exercisable from July 1, 2003 to June 30, 2006. The Company plans to
issue acquired treasury stock upon exercise of the stock options. The treasury stock will be purchased fromthe open market for a total consideration not to exceed ¥4,100 million ($30,827 thousand). No options havebeen granted at March 31, 2002.
AIFUL CORPORATION Annual Report 2002

62

On August 25, 2001, the Company issued 8,500 thousand shares of its common stock at ¥10,241 ($77)
per share, for gross proceeds of approximately ¥87,048 million ($654,496 thousand). On the issuance ofcommon stock, ¥43,528 million ($327,278 thousand) and ¥43,520 million ($327,218 thousand) were credited to common stock and additional paid-in capital, respectively.

10. LEASESThe Company leases vehicles, computer equipment, furniture and fixtures, office space and other assets.
Total rental expenses including lease payments under finance leases for the years ended March 31, 2002
and 2001 were as follows:
Millions of Yen

Year Ended March 31:
2002 ......................................
2001 ......................................

Thousands of U.S. Dollars

Total
RentalExpenses

Lease Payments
under FinanceLeases

Total
RentalExpenses

Lease Payments
under FinanceLeases¥15,004
15,001¥5,7386,117$112,812$43,143

Pro forma information of leased property such as acquisition cost, accumulated depreciation,
obligation under finance leases, depreciation expense, and interest expense of finance leases that do nottransfer ownership of the leased property to the lessee on an “as if capitalized” basis for the years ended
March 31, 2002 and 2001 were as follows:
Millions of Yen
Machinery, Vehicles
and Equipment

Acquisition cost......................................................................
Accumulated depreciation.....................................................
Net leased property........................................................

Thousands of
U.S. Dollars
Machinery, Vehicles
and Equipment

2002

2001

2002

¥26,570
18,586¥ 7,984¥25,727
18,933¥ 6,794$199,774
139,744$ 60,030

Obligations under finance leases:
Thousands of
U.S. Dollars

Millions of Yen

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

2002

2001

2002

¥ 4,811
5,792¥10,603¥4,3905,139¥9,529$36,173
43,549$79,722

Depreciation expense and interest expense, which are not reflected in the accompanying nonconsolidated statements of income, computed under a declining-balance method and the interest method,respectively, for the years ended March 31, 2002 and 2001 were as follows:
Thousands of
U.S. Dollars

Millions of Yen

Depreciation expense.............................................................
Interest expense......................................................................

AIFUL CORPORATION Annual Report 2002

63

2002

2001

2002

¥5,474339¥5,360388$41,158
2,549

NOTES TO NON-CONSOLIDATED FINANCIAL STATEMENTS
AIFUL CORPORATION

11. CONTINGENT
LIABILITIESAt March 31, 2002, contingent liabilities were ¥12,246 million ($92,075 thousand) of guarantees and similar items of bank loans.

12. SUBSEQUENTEVENTSa. On May 27, 2002, the Board of Directors resolved to propose the following plan of appropriations ofretained earnings for the year ended March 31, 2002 for approval at the Shareholders’ General Meeting
held on June 26, 2002:

Cash dividends, ¥25 ($0.19) per share ........................................
Bonuses to directors and corporate auditors................................

Millions of Yen

Thousands of
U.S. Dollars¥2,329103$17,511774

b. At the Shareholders’ General Meeting held on June 26, 2002, the Company’s shareholders approved thepurchase of treasury stock for retirement and the related reduction of retained earnings. The Company isauthorized to repurchase up to 9 million shares of the Company’s common stock (aggregate amount of¥90,000 million ($676,692 thousand)) in the period from the closing of this Shareholders’ General
Meeting to that of the next Shareholders’ General Meeting.
c. On May 27, 2002, the Board of Directors resolved that the number of common shares the Company isauthorized to issue was increased from 224 million shares to 373.5 million shares. This resolution wasapproved at the Shareholders’ General Meeting held on June 26, 2002.

AIFUL CORPORATION Annual Report 2002

64

INDEPENDENT AUDITORS’ REPORTTo the Board of Directors and Shareholders of
AIFUL CORPORATION:
We have examined the non-consolidated balance sheets of AIFUL CORPORATION as of March 31, 2002
and 2001, and the related non-consolidated statements of income and shareholders’ equity for the years
then ended, all expressed in Japanese yen. Our examinations were made in accordance with auditing
standards, procedures and practices generally accepted and applied in Japan and, accordingly, included
such tests of the accounting records and such other auditing procedures as we considered necessary in thecircumstances.
In our opinion, the non-consolidated financial statements referred to above present fairly the financial
position of AIFUL CORPORATION as of March 31, 2002 and 2001, and the results of its operations for theyears then ended in conformity with accounting principles and practices generally accepted in Japanapplied on a consistent basis.
Our examinations also comprehended the translation of Japanese yen amounts into U.S. dollar amounts
and, in our opinion, such translation has been made in conformity with the basis stated in Note 3. Such
U.S. dollar amounts are presented solely for the convenience of readers outside Japan.

DELOITTE TOUCHE TOHMATSU
Kyoto, JapanSHIMBASHI & CO.
Osaka, Japan

June 26, 2002

AIFUL CORPORATION Annual Report 2002

65

NON-CONSOLIDATED SIX-YEAR SUMMARYAIFUL CORPORATION

Millions of Yen
2002

Results for the Fiscal Year:
Total income ........................................................................
Total expenses ......................................................................
Income before income taxes ...............................................
Income taxes ........................................................................
Deferred income taxes..........................................................
Net income ..........................................................................
At Year-End:Balance of loans outstanding .............................................
Total assets ...........................................................................
Short-term borrowings ........................................................
Long-term debt, including current portion thereof ...........
Total shareholders’ equity ...................................................
Per Share Data (Yen):
Net income ..........................................................................
Adjusted for stock splits ...................................................
Shareholders’ equity.............................................................
Adjusted for stock splits ...................................................
Cash dividends ....................................................................
Adjusted for stock splits ...................................................
Other Data:
Number of shares outstanding at year-end ........................
Number of customer accounts at year-end .........................
Number of branches at year-end .........................................
Number of employees at year-end .....................................

¥

2001

311,843
239,189
72,65435,001
696
38,349272,553
180,078
92,47545,011
1,048
48,512¥ 239,200
154,490
84,71042,3991,793
44,104¥ 1,313,690
1,740,868
29,0001,233,979
420,493¥ 1,159,734
1,586,410
32,5001,186,674
302,601¥1,001,080
1,182,468
28,700863,469
252,903

¥

¥

¥

426
—
4,514
—
50
—

93,376,000
2,244,293
1,601
3,576

AIFUL CORPORATION Annual Report 2002

66

¥

2000

572
—
3,565
—
50
—

84,876,000
2,121,446
1,529
3,477

786
524
4,508
3,005
60
40

56,103,000
1,975,068
1,311
3,263

Millions of Yen
1999

1998

1997

¥ 205,536
140,777
64,75936,311—
28,448¥ 180,181
117,080
63,101
38,097—25,004¥ 150,176
94,27655,90033,095—22,805¥ 837,982
996,524
58,900704,275
203,749¥ 702,446
876,727
98,000600,505
146,255¥ 591,630
724,31439,548557,963
93,055

¥

¥

¥

611
339
4,358
2,421
60
33

46,752,500
1,822,261
1,009
3,141

602
334
3,421
1,901
60
33

42,752,500
1,706,030
807
2,731

1,548
344
5,957
1,324
10
2

Notes:
1. Net income per share has been computed based on the weighted
average number of shares outstanding during each period, andshareholders’ equity per share is based on the number of shares
outstanding at the end of each period.
2. Stock split (10 for 1) on August 1, 1996.
3. Warrant exercised on September 27, 1996 (1,818,000 shares, ¥2,750).
4. Stock split (2.5 for 1) on May 20, 1997.
5. On June 18, 1997, by resolution of the Shareholders’ General Meeting,the number of common shares issued was increased from 55 million to
150 million.
6. Capital increased through issuance of shares by public offering on July
30, 1997 (3,700,000 shares, ¥56,832).
7. On April 16, 1998, the Company issued 4,000,000 shares of common
stock in the amount of ¥33,084 million, in offshore transactions underregulations of the U.S. Securities Act of 1993 (“the Securities Act”), andin the United States in accordance with Rule 144A of the Securities Act.
Of the total, ¥16,544 million and ¥16,540 million were credited tocommon stock and additional paid-in capital, respectively.
8. Stock split (1.2 for 1) on May 20, 1999.
9. Stock split (1.5 for 1) on May 22, 2000.
10. Capital increased through issuance of shares by public offering on
August 25, 2001 (8,500,000 shares, ¥10,241).

15,621,000
1,530,094
654
2,521

AIFUL CORPORATION Annual Report 2002

67

BOARD OF DIRECTORSAIFUL CORPORATIONAs of June 26, 2002

President/Representative Director

Yoshitaka Fukuda

Senior Managing Director/
Representative Director

Taichi Kawakita

Restaurant & Entertainment Department

Senior Managing Directors

Katsuhide Horiba

General Manager – Finance Division
Guarantee Business Department

Sadatoshi Kobayashi

Information Systems Department
Administration Office

Managing Director

Yuji Kataoka

General Manager – Personnel Division

Directors

Yasutaka Fukuda

Deputy General Manager – Finance Division
General Manager – Finance Department

Yoshimasa Nishimura

Inspection Department

Koji Imada

Administration Department
Credit Risk Management
Operations Department

Shintaro Hashima

General Affairs Department
Legal Department

Takashi Koumoto

General Manager – Accounting Department

Yoshinori Sogabe

Public Relations Department

Masami Munetake

General Manager – Management Planning Division

Yasuo Yanagibashi

General Manager – Loan Business Division

Masayuki Sato
Hiroshi Abe

General Manager – Business Management Department
Corporate Governance Department
Office of the President
Business Development Division

Kazumitsu Oishi
Takashi Noda
Standing Corporate Auditors

Masanobu Hidaka
Tadao Mushiake
Yoshitaka Ebisuzaki

Corporate Auditor

Yoshinobu Azuma

AIFUL CORPORATION Annual Report 2002

68

INVESTOR INFORMATIONAIFUL CORPORATIONAs of March 31, 2002

Corporate Name ........................................... AIFUL CORPORATION
Date of Establishment ................................. April 1967
Financial Year ............................................... April 1 to March 31
Independent Auditors.................................. Deloitte Touche Tohmatsu/Shimbashi & Co.
Transfer Agent and Registrar ...................... The Sumitomo Trust & Banking Co., Ltd.
Paid-in Capital.............................................. ¥83,317 million
Number of Shares of Common Stock........ Authorized: 224,000,000 shares
Issued and Outstanding: 93,376,000 shares
Number of Shareholders............................. 7,857
Number of Employees ................................. 3,576

For further information and additional copies of this annual report, please contact:
Financial Headquarters
Investor Relations Section
Tokyo Office
Tokyo-Ekimae Bldg., 5th Floor, 1-5, Yaesu 2-chome, Chuo-ku, Tokyo 104-0028, Japan
http://www.ir-aiful.com
e-mail: ir@aiful.co.jp
Corporate Headquarters
381-1, Takasago-cho, Gojo-Agaru, Karasuma-Dori, Shimogyo-ku, Kyoto 600-8420, Japan
Phone: 075-201-2000

Common Stock Price Range
Fiscal year

High (¥)
Low (¥)

2000
(1st)

2000
(2nd)

2000
(3rd)

2000
(4th)

12,450 12,450
8,840 8,840

10,4608,430

10,370
8,040

2001
(1st)

2001
(2nd)

2001
(3rd)

2001
(4th)

2002
(1st)

11,400 12,150
8,850
9,550

11,140
8,380

8,710
6,680

9,290
7,130

*Stock split (1.5 for 1) on May 22, 2000.

Copyright © 2002 AIFUL CORPORATION