Rakuten, Inc. andConsolidated Subsidiaries
Consolidated Financial Statements for theYears Ended December 31, 2009 and 2008

Rakuten, Inc. and Consolidated Subsidiaries
Consolidated Balance Sheets
December 31, 2009 and 2008
Thousands of
U.S. Dollars(Note 1)2009

ASSETS

Millions of Yen
2009
2008

CURRENT ASSETS:
Cash and deposits (Note 4)
Notes and accounts receivable — trade
Accounts receivable — installment (Note 4)
Accounts receivable — installment sales — credit guarantee (Note 6)
Beneficial interests in securitized assets (Note 5)
Cash segregated as deposits for securities businessMargin transactions assets for securities business
Operating loans (Notes 4, 5)
Short-term investment securities
Securities for banking business (Note14)
Loans for banking business
Deferred tax assets
Other
Allowance for doubtful accounts
Total current assets¥ 96,233
37,842
93,111
2,834
41,774
223,909
119,060
177,806
18,014524,379
92,877
13,680114,682(42,078)
1,514,125¥ 88,588
32,241
93,631
3,551
101,572
214,892
81,154
188,696
2,629——
12,82966,557(36,073)
850,267$ 1,044,878
410,885
1,010,980
30,767453,574
2,431,148
1,292,729
1,930,579
195,597
5,693,588
1,008,434
148,536
1,245,195(456,877)
16,440,012

19,525

21,115211,994

87,04733,481
120,52865,083
28,23093,313

945,139
363,530
1,308,669

59,314
26,13623,990(4,381)
105,059
245,11282,846
15,51029,294(5,408)122,243
236,671644,019
283,773
260,478(47,568)
1,140,703
2,661,365¥ 1,759,237¥ 1,086,938$ 19,101,377

NONCURRENT ASSETS:
Property, plant and equipment
Intangible assets
Goodwill (Note 7)
Other
Total intangible assets
NVESTMENTS AND OTHER ASSETS:
Investment securities (Notes 4, 14)Deferred tax assets (Note 18)
Other
Allowance for doubtful accounts
Investments assets and other assets
Total noncurrent assets

TOTAL ASSETS

The translations of Japanese yen amounts into U.S. dollar amounts are included solely for the convenience of readers
outside Japan and have been made at ¥92.10 to $1, the rate prevailing of exchange at December 31, 2009.

2

Rakuten, Inc. and Consolidated Subsidiaries
Consolidated Balance Sheets
December 31, 2009 and 2008
Thousands of
U.S. Dollars(Note 1)2009

LIABILITIES AND NET ASSETS

Millions of Yen
2009
2008

CURRENT LIABILITIES:
Short-term debts (Note 3)
Current portion of long-term debts (Note 3)
Notes and accounts payable — trade (Note 4)
Deposits for banking businessAccounts payable — credit guarantee (Note 6)
Income taxes payable (Note 18)
Deposits received for securities businessMargin transactions liabilities for securities business (Note 4)
Guarantee deposits received for securities business
Collateralized guarantee borrowings for securities business (Note 4)
Provision (Note 6)
Other (Note 4)
Total current liabilities¥ 83,090
89,81028,232
698,354
2,834
12,565
142,600
59,016
89,122—
12,318149,106
1,367,044¥ 156,150
134,156
20,210—3,551
10,697
142,60953,53988,7494,607
13,45275,135
702,855$ 902,171
975,132
306,534
7,582,561
30,767
136,426
1,548,315
640,779
967,666—
133,741
1,618,952
14,843,043

158,067
10,275
460
357
1,674
170,833

197,081
15,365
8,266
375
1,051
222,138

1,716,253
111,564
4,998
3,875
18,177
1,854,866

2,728
11
2,740
1,540,617

3,206
11
3,217
928,210

29,624122
29,746
16,727,655

107,606
115,899(20,411)

107,535
119,565(76,409)

1,168,357
1,258,408(221,615)(11)
203,083(11)
150,681(120)
2,205,030

1,842
(305)
(1,275)
261

656
(336)
(1,298)(978)19,995(3,316)(13,843)
2,836

609

243

6,610

14,666
218,620

8,781
158,727

159,245
2,373,721¥1,759,237¥1,086,938$ 19,101,377

NONCURRENT LIABILITIES:Long-term debts (Notes 3, 4)
Provision for loss on interest repayments
Deferred tax liabilities (Note 18)
Other provision
Other
Total noncurrent liabilities
RESERVES UNDER THE SPECIAL LAWS:
Reserve for financial instrument transaction liabilities
Reserve for commodities transaction liabilities
Reserves under the special laws
TOTAL LIABILITIESNET ASSETS:SHAREHOLDERS’ EQUITY
Capital stock — authorized, 39,418,000 shares;
issued, 13,096,980 shares in 2009 and 13,087,064 shares in 2008
Capital surplus
Retained earnings
Treasury stock — at cost, 979.50 shares in 2009 and 979.50
shares in 2008
Total shareholders’ equity
VALUATION AND TRANSLATION ADJUSTMENTS:
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges
Foreign currency translation adjustments
Total valuation and translation adjustments
SUBSCRIPTION RIGHTS TO SHARESMINORITY INTERESTSTOTAL NET ASSETSTOTAL LIABILITIES AND NET ASSETS

3

Rakuten, Inc. and Consolidated Subsidiaries
Consolidated Statements of Income
Years Ended December 31, 2009 and 2008

Millions of Yen
2009
2008
NET SALES

Thousands of
U.S. Dollars(Note 1)2009

¥ 298,252¥ 249,883$ 3,241,518

70,03955,347761,214228,213

194,537

2,480,304

171,564

147,385

1,864,621

56,64947,151

615,683

OTHER INCOME (EXPENSES):Interest income
Dividend income
Foreign exchange gain (loss)
Equity in earnings (losses) of affiliates
Interest expenses
Commission fee
Gain on receipt of investment securities
Gain on change in equity
Reversal of provision for loss on business liquidation
Reversal of reserve for financial instruments transaction liabilities
Loss on sales of noncurrent assets (Note 9)
Loss on retirement of noncurrent assets
Office transfer expenses
Provision for loss on business liquidation
Loss on valuation of investment securities
Restructuring loss
Impairment loss (Note 10)
Other — net
Other expenses — net

183
185
15
527
(2,216)
(645)
—
4,034
352
478
—
(1,087)——(1,773)(696)(2,125)(1,353)(4,119)

171
867
(68)
(116)
(2,224)(1,244)
267
31
185
714
(145)
(1,855)(691)(4,481)(67,177)—(5,418)(1,791)(82,141)

1,991
2,015
166
5,731
(24,080)(7,012)—
43,846
3,823
5,197
—
(11,810)——(19,273)(7,561)(23,098)(14,705)(44,771)

INCOME (LOSS) BEFORE INCOME TAXES AND MINORITY INTERESTS

52,530(34,989)

570,913

INCOME TAXES (Note 18)
Income taxes — current
Income taxes — deferred

17,452(18,059)

15,695
4,911

189,672(196,270)

Income taxes(607)

20,606(6,598)

(428)

(618)

(4,645)¥ 53,564¥ (54,978)$ 582,155

COST OF SALES
Gross profit
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES (Note 8)
Operating income

MINORITY INTERESTS IN LOSSNET INCOME (LOSS)

See notes to consolidated financial statements.

4

Rakuten, Inc. and Consolidated Subsidiaries
Consolidated Statements of Changes in Net Assets
Year Ended December 31, 2009
Millions of Yen
As of Dec.
31, 2008

As of Dec.
31, 2009

Changes in fiscal year 2009

Capital stock¥107,535

¥71

—

—

—

—

—

Net changes
in items otherthan those inshareholders’equity—Capital surplus

119,56571¥ (1,309)¥ (2,428 )

—

—

—

Retainedearnings(76,409 )

—

—

2,428

¥53,564¥5Issuanceof
capitalstock

Dividends
from surplusother capitalsurplus

Deficitdisposition

Net
incomeChanges inthe scope of
consolidation

Disposalof treasury
stock

Total ofchanges infiscal 2009
¥71

¥107,606—(3,666)

115,899¥0—55,998(20,411)

Treasury stock
Shareholders’equity

(11 )

—

—

—

—

—

—

—

0

(11)

150,68142(1,309)—53,5645

0—52,403203,083

Valuationdifference on
available -forsale securities(656 )

—

—

—

—

—

—

¥1,186

1,186

1,842

Deferred gains
or losses onhedges(336 )

—

—

—

—

—

—

30

30

(305 )(1,298 )

—

—

—

—

—

—

23

23

(1,275 )(978 )

—

—

—

—

—

—

1,239

1,239

(261 )

243

—

—

—

—

—

—

366

366

609

Minority
interests
Net assets

8,781¥158,727—¥142—¥ (1,309 )———¥53,564

—
¥5

—
¥0

5,885
¥7,4905,885¥ 59,892

14,666¥218,620

Net assets,
Dec.31, 2009
thousands of
U.S. dollars(Note 1)

$1,723,424$1,540$ (14,209 )$—$581,586$58$0$81,322$ 650,298$2,373,721

Foreigncurrencytranslation
adjustments
Valuation andtranslation
adjustments
Subscription
rights to shares

See notes to consolidated financial statements.

5Consolidated Statements of Cash Flows
Years Ended December 31, 2009 and 2008

Millions of Yen
2009
2008

Thousands of
U.S. Dollars(Note 1)2009

NET CASH USED IN OPERATING ACTIVITIES:
Income (loss) before income taxes and minority interests¥ 52,530¥ (34,989 )$ 570,355

Adjustments for:
Depreciation and amortization
Amortization of goodwill
Decrease in allowance for doubtful accounts
Decrease in provision for loss on interest repayments
Gain on change in equity
Interest expenses
Loss on valuation of securities for banking business
Gain on sales of securities for banking business
Loss on valuation of investment securities
Loss on retirement of noncurrent assets
Other loss
Increase in notes and accounts receivable — trade
Decrease (increase) in accounts receivable — installment
Decrease in beneficial interests in securitized assets
Increase in operating loans receivable
Increase in notes and accounts payable — trade
Decrease in deposits for banking business
Decrease in call loans for banking business
Decrease in loans for banking business(Increase) decrease in operating receivables for securities business
Decrease in cash segregated as deposits for securities business
Increase (decrease) in operating payable for securities business
Increase (decrease) in loans payable secured by securities for securities business
Other — net
Subtotal
Payments for guarantee deposits for business operation
Proceeds from guarantee deposits for business operation
Income taxes paid
Income taxes refund

14,361
5,524(6,919)(5,090)(4,034)
2,216
2,478
(110)
1,773
1,104
615
(3,470)520
39,798(81,434)
7,138(73,047)
21,0004,669(45,687)
4,700
5,842
5,505
12,789(37,228)(2,665)
41(16,420)
1,054

12,284
3,931(8,125 )(4,710 )
(31 )
2,224
—
—
67,177
1,855
4,004(4,146 )(22,892 )8,572(29,732 )
3,545
—
—
—
128,326—(77,630 )(36,059 )(4,768 )
8,836
(23 )
143
(23,453 )
1,031

155,929
59,976(75,120)(55,264)(43,803)
24,057
26,910(1,197)
19,254
11,987
6,682(37,681)5,646
432,117(884,190)
77,508(793,125)
228,01350,693(496,053)
51,031
63,43359,769138,859(404,216)(28,940)
444(178,281)
11,440Net cash used in operating activities — (Carried forward)¥ (55,219)¥ (13,467 )$ (599,553)

See notes to consolidated financial statements.

6

Rakuten, Inc. and Consolidated Subsidiaries
Consolidated Statements of Cash Flows
Years Ended December 31, 2009 and 2008

Millions of Yen
2009
2008
Net cash used in operating activities — (Brought forward)
NET CASH PROVIDED BY (USED IN) INVESTMENT ACTIVITIES:Payments into time deposits
Proceeds from withdrawal of time deposits
Purchase of securities for banking business
Proceeds from sales and redemption of securities for banking business
Proceeds from a exercise of appraisal rights for investment securities
Purchase of investments in subsidiaries
Purchase of investments in subsidiaries resulting in change inscope of consolidation
Purchase of property, plant and equipment
Proceeds from sales of property, plant and equipment
Purchase of intangible assets
Payments for lease and guarantee deposits
Proceeds from collection of lease and guarantee deposit
Other payments
Other proceeds
Interest and dividends income received
Net cash provided by (used in) investment activities
NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES:Net (decrease) increase in short-term loans payable
Increase in commercial papers
Proceeds from long-term loans payable
Repayment of long-term loans payable
Proceeds from issuance of bonds
Redemption of bonds
Repayments of lease obligations
Purchase of treasury stock of consolidated subsidiary
Interest expenses paid
Cash dividends paid
Other
Net cash (used in) provided by financing activities
EFFECT OF EXCHANGE RATE CHANGE ON CASH AND
CASH EQUIVALENTS
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS
CASH AND CASH EQUIVALENTS AT BEGINNING OF THE YEAR
INCREASE IN CASH AND CASH EQUIVALENTS FROM NEWLYCONSOLIDATED SUBSIDIARY
DECREASE IN CASH AND CASH EQUIVALENTS RESULTING FROMEXCLUSION OF SUBSIDIARIES FROM CONSOLIDATIONCASH AND CASH EQUIVALENTS AT END OF THE YEAR (Note 1)

See notes to consolidated financial statements.

7

Thousands of
U.S. Dollars(Note 1)2009

¥ (55,219 ) ¥ (13,467 )$ (599,553)(10,982 )8,386(526,820 )
723,626
40,000(1,670 )(9,296 )
3,873
—
—
—
(404 )(119,240 )
91,051(5,720,085 )
7,856,963
434,311(18,134 )(3,293 )(2,886 )201(10,030 )(1,165 )1,406(1,006 )694
700
217,160(537 )(3,699 )1,663(12,848 )(257 )
1,350(24,125 )
2,183
1,120
(40,977 )(35,751 )(31,332 )2,177(108,900 )(12,653 )
15,262(10,923 )
7,536
7,596
2,357,877(77,600 )
4,600
49,650(135,204 )1,234(6,010 )(3,532 )(4,116 )(2,246 )(1,309 )376(174,157 )

6,905
7,700
146,547(101,509 )
9,863(4,990 )(810 )
0(2,310 )(1,299 )1,271
62,397(842,567 )
49,946
539,088(1,468,018 )
13,398(65,255 )(38,347 )(44,690 )(24,384 )(14,216 )
4,086(1,890,959 )(37 )(12,253 )¥81,284(866 )
7,088¥73,861(402)(133,036)$882,562

34,751

342

377,320(164 )¥103,618(7 )¥81,284(1,781)$1,125,064

Rakuten, Inc. and Consolidated Subsidiaries
Notes to Consolidated Financial Statements
Years Ended December 31, 2009 and 2008

1. BASIS OF PRESENTING CONSOLIDATED FINANCIAL STATEMENTS
The accompanying consolidated financial statements have been prepared in accordance with accounting
principles generally accepted in Japan, which are different in certain respects as to application anddisclosure requirements of International Financial Reporting Standards, and have been compiled from theconsolidated financial statements prepared by Rakuten, Inc. (the “Company”) and consolidated subsidiaries
as required by the Financial Instruments and Exchange Law of Japan.
The consolidated financial statements are stated in Japanese yen, the currency of the country in which theCompany is incorporated and operates. The translations of Japanese yen amounts into U.S. dollar amounts
are included solely for the convenience of readers outside Japan and have been made at the rate of ¥92.10
to $1, the approximate rate of exchange at December 31, 2009. Such translations should not be construed
as representations that the Japanese yen amounts could be converted into U.S. dollars at that or any otherrate.
Certain amounts in the prior years’ financial statements have been reclassified to conform to the current
year’s presentation.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESa.

Consolidation—The consolidated financial statements as of December 31, 2009 include theaccounts of the Company and its 43 (46 in 2008) significant subsidiaries (together, the “Group”).
Under the control or influence concept, those companies in which the Company, directly or indirectly,
is able to exercise control over operations are fully consolidated.
Investments in 7 (10 in 2008) affiliates are accounted for by the equity method. Those companies
over which the Group has the ability to exercise a significant influence in terms of their operating andfinancial policies are accounted for by the equity method.
Investments in the remaining 20 (17 in 2008) non-consolidated subsidiaries and affiliates are statedat cost. If the equity method of accounting had been applied to the investments in these companies,
the effect on the accompanying consolidated financial statements would not be material.
All significant intercompany balances and transactions have been eliminated in consolidation. All
material unrealized profit included in assets resulting from transactions within the Group iseliminated.

b.

Cash and Cash Equivalents—Cash and cash equivalents as stated in the consolidated statementsof cash flows consist of cash on hand, securities and deposits that can be converted to cash at any
time, and short-term liquid investments with a maturity not exceeding three months at the time ofpurchase and whose value is not subject to significant fluctuation risk. In addition, the scope of cash
and cash equivalents for certain consolidated subsidiaries involved in the banking business consist of
cash and due from banks recorded under cash and deposits on the consolidated balance sheets.

c.

Securities—Marketable and investment securities are classified and accounted for, depending on
management’s intent, as follows: (1) trading securities, which are held for the purpose of earning
capital gains in the near term are reported at fair value, and the related unrealized gains and losses
are included in earnings, (2) held-to-maturity debt securities, which are expected to be held tomaturity with the positive intent and ability to hold to maturity are reported at amortized cost,(3) available-for-sale securities, which are not classified as either of the aforementioned securities,
are reported at fair value with unrealized gains and losses, net of applicable taxes, reported in a
separate component of equity. The cost of available-for-sale securities sold is computed by themoving-average method and (4) non-marketable available-for-sale securities are stated at cost
determined by the moving-average method. (5) held-to-maturity debt securities for the banking
business are amortized on a cost basis using the moving average method (straight-line amortization).
Available-for-sale securities are stated at fair value, using the mark-to-market method based on the8market prices at the closing date (valuation differences are reported as a component of net assets,
and are primarily calculated as cost of sales using the moving average method). Non-marketableavailable-for-sale securities are stated at cost or the amortized cost method using the moving
average method.
d.

Property, Plant and Equipment—Property, plant and equipment are stated at cost. Depreciation ofproperty, plant and equipment is computed mainly by the declining-balance method at rates based on
the estimated useful lives of the assets subject to corporate tax law, while the straight-line method isapplied to buildings.

e.

Intangible Assets—Amortization on intangible assets is computed by the straight-line method.
Software for internal use is amortized by the straight-line method over its estimated useful life
(generally five years).

f.

Leases—For leased assets acquired before the Japanese accounting standards for leases changed,
finance leases that deem to transfer ownership of the leased assets to the lessee are to becapitalized, while other finance leases are permitted to be accounted for as operating leasetransactions if certain “as if capitalized” information is disclosed in the notes to the lessee’s financial
statements.
Leased assets under finance leases that transfer ownership of the leased assets are depreciatedusing the same method that is applied to fixed assets. Assets leased in finance leases that do nottransfer ownership of the leased assets are depreciated by the straight-line depreciation method overthe estimated useful lives of the each asset, which is deemed to be the lease period, with zero
residual value.

g.

Allowance for Doubtful Accounts—An allowance equal to estimated losses is established toprepare for losses from credit guarantees. The method of estimating the allowance is based on credit
loss ratio for general credit, and on likelihood of collection for doubtful accounts. Allowance for
doubtful accounts of a certain consolidated subsidiary in the banking business is provided for inaccordance with internally developed standards for write-offs and provisions to allowance for loan
losses, as follows. Claims considered normal claims or claims requiring caution (provided as
stipulated in the “Practical Guidelines for Evaluation of Internal Control over Valuation of Assets andAudits for Write-offs and Reserves for Possible Loan Losses of Banks and Similar Institutions”(Report No. 4 of Ad Hoc Committee for Audits of Banks of the Japanese Institute of Certified Public
Accountants) are classified into specific classes and then an allowance is provided based onreasonable calculations of estimated loss ratios. Provisions for claims considered potentially bankrupt
are made in the amount deemed necessary after subtracting the expected collectable amounts ofcollateral and guarantees. For claims considered bankrupt or substantially bankrupt, the amountremaining after subtracting the expected collectable amounts of collateral and guarantees istransferred to the reserve. Following the Company’s asset self-assessment standards, operating
departments conduct an asset assessment, and the Asset Audit Department, which is independent ofoperations, then audits the assessment results. The provisions mentioned above are then made forall claims based on these assessments.

h.

Allowance for bonus—An allowance for bonus is provided for the estimated amounts to be paid in
the subsequent period based on the service provided during the current year.

i.

Reserve for Points—An amount equivalent to points that are earned by customers and are
expected to be used in the future is recorded for the fiscal year. A provision of allowance for points is
included in selling, general and administrative expenses.

j.

Allowance for Retirement Benefits—At certain consolidated subsidiaries, an allowance is made for
employees’ retirement benefits based on the estimated benefit obligation at the fiscal year-end.
Actuarial differences are recorded from the following fiscal year by the straight-line method using afixed number of years (10 years) within the average remaining service period of employees.

k.

Allowance for Loss on Interest Repayments—A certain consolidated subsidiary has calculated
and recorded an allowance for expected losses on interest repayments based on factors such as theactual ratio of repayments made and average amount of repayments over the reasonable estimate
period. The expected loss of ¥10,277million (¥14,068 million in 2008) for write-offs of principals byinterest repayment claims was included in the allowance for doubtful accounts.

l.

Reserve for Financial Instrument Transaction Liabilities—At a certain consolidated subsidiary,9

provision is made for possible loss resulting from securities transaction accidents. The amount of thereserve is provided based on Article 175 of the Cabinet Order Concerning Transactions in Financial
Instruments, which is based on the provisions of Article 46-5 of the Financial Instruments andExchange Law.
m. Reserve for Liabilities on Transaction in Commodities—A certain consolidated subsidiary
allocate the amounts stipulated in the Commodity Exchange Law to provide for losses resulting fromcontingencies relating to commodity transactions, in accordance with the provisions of Article 221 of
the Commodity Exchange Law.
n.

Derivatives and Hedging Accounting
Hedging policies:
The Group uses derivative financial instruments to manage its exposures to fluctuations in foreignexchange and interest rates. Foreign exchange forward contracts, interest rate swaps and interest
rate caps are utilized by the Group to reduce foreign currency exchange and interest rate risks. The
Group does not enter into derivatives for trading or speculative purposes.
Interest rate swaps and interest rate caps are used to establish hedges for exposure to interest rate
volatility risk associated with borrowings. Hedged items are identified by each individual contract.
Interest caps are applied to all short-term borrowings by a certain consolidated subsidiary.
Foreign exchange volatility risks associated with foreign currency-denominated receivables andpayables relating to business transactions are, in accordance with certain company rules, managedby using currency forward agreements to reduce foreign currency exchange risks in actual demandof securities transactions. Holdings of foreign currency deposits and foreign currency-denominatedsecurities carry the risk of exchange rate and market price fluctuations. Exchange contracts areused, subject to specific rules, to avoid this risk.
Hedge accounting:Deferred hedge accounting has been adopted. However, a special method is used for transactions
which meet certain conditions. The appropriation method has been adopted for foreign currencydenominated receivables and payables with currency forward agreements.
Hedging instruments and hedged items:
Hedging instruments comprise currency forward agreements, interest rate swaps and interest rate
caps. Hedged items comprise foreign currency-denominated receivables and payables relating tobusiness transactions, foreign currency deposits, foreign currency-denominated securities andloans.
Method for evaluating effectiveness of hedging activities:
For interest rate swaps and interest rate caps, the company compares the cumulative changes incash flows of the hedged items and hedging instruments every three months. The effectiveness ofthe hedge is determined based on the cumulative changes of the hedged items and instruments,
along with other items. However, this evaluation is not performed for interest rate swaps that is
applied special methods.
For currency forward agreements, the effectiveness is determined by the currency, amount andsettlement date of the hedged item based on the company management data.

o.

Consumption Taxes—The tax-excluded method is used in consumption tax accounting for national
and local consumption taxes.

p.

Goodwill—The excess of the cost of an acquisition over the fair value of the net assets of theacquired subsidiary at the date of acquisition is called goodwill. The goodwill is amortized over theperiod in which such action is deemed effective. However, if the amount is immaterial, the entire
amount is amortized at the date of acquisition.

q.

Foreign Currency Financial Statements—The balance sheet accounts of the consolidated foreignsubsidiaries are translated into Japanese yen at the exchange rate as of the balance sheet date
except for net assets, which is translated at the historical rate. Revenue and expense accounts ofconsolidated foreign subsidiaries are translated into Japanese yen at average rate of exchange forthe fiscal periods.
Differences arising from such translation are shown as “Foreign currency translation adjustments” ina separate component of net assets.
10

r.

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 byapplying currently enacted tax laws to the temporary differences.

s.

Retained earnings—The Corporation Law of Japan provides that an amount equal to 10% of theamount to be distributed as distributions of capital surplus (other than the capital reserve) andretained earnings (other than the legal reserve) be transferred to the capital reserve and the legal
reserve, respectively, until the sum of the capital reserve and the legal reserve equals 25% of thecapital stock amount.

3. SHORT-TERM AND LONG-TERM DEBT
Short-term debt at December 31, 2009 and 2008 consisted of notes to banks, bank overdrafts,
commercial paper and lease obligations. Short-term and long-term debt at December 31, 2009 and 2008
consisted of the following:
Corporate bonds
Millions of Yen
2009
2008
Rakuten, Inc. (due 2010 with interest rate of 1.09%)
Rakuten Credit, Inc. (due 2010 with interest rate of 1.75%)
Rakuten, Inc. (due 2012 with interest rate of 1.68%)
eBANK Corporation (due 2015 with interest rate of 5.43%)
FUSION COMMUNICATIONS CORPORATION(due 2012 with interest rate of 0.78%)¥2,000—10,00010,000¥6,0002,010
10,000
—

1,234

—

Total

¥23,234¥18,010

The amounts of corporate bonds due for redemption in each of the five years after the consolidatedbalance sheet date are as follows:Year Ending December 31

Millions of Yen
2009

2010
2011
2012
2013
2014

¥4,246
4,494
4,494
—
—

Total

¥13,234

11

Borrowing and others
Millions of Yen
2009
2008
Short-term bank loans
Long-term bank loans, due within one year
Long-term bank loans, due after one year
Other debt with interest
Commercial paper
Margin transaction liabilities
Lease obligation, due within one year
Lease obligation, due after one year¥

64,49085,247
138,333¥

142,150
128,185
181,065

18,60024,903316
748

14,00025,251
981
2,996

Total

¥ 332,635¥ 494,628

Weighted average interest rates of loans as of December 31, 2008 and 2009 were as follows:

Short-term bank loans
Long-term bank loans, due within one year
Long-term bank loans, due after one year
Commercial paper
Margin transaction liabilities
Lease obligation, due within one year
Lease obligation, due after one year

2009

2008

1.58%
2.03%
1.72%
1.18%
1.11%
—
—

1.76%
2.15%
1.94%
2.39%
1.11%
—
—

Annual maturities of long-term bank loans and lease obligations at December 31, 2009 were as follows:
2009
Millions of Yen

Year Ending December 31
2010
2011
2012
2013
2014

¥85,563
66,30740,00323,928
6,342

Unused commitment lines for financing at December 31, 2009 and 2008 amounted to ¥80,400 millionand ¥23,680 million, respectively.

4.

PLEDGED ASSETS(1) Assets pledged as collateral:
The carrying amounts of assets pledged as collateral at December 31, 2009 and 2008 were as
follows:
Millions of Yen
2009
2008
Deposits
Accounts receivable — installment and operating loans
Receivable from lease contracts
Investment securities¥ 100
52,963
50
1,260

¥ 100
127,970
169
43,771

Total¥54,373¥172,010

Securities in custody from customers in the amount of ¥6,699 million and ¥7,967 million were pledged
as collateral for short-term bank loans at December 31, 2009 and 2008, respectively. Securities in theamount of ¥24,612 million and ¥25,665 million were pledged as collateral for short term loans and12borrowings related to margin transactions at December 31, 2009 and 2008, respectively. Securities
loaned were pledged as collateral for borrowings in the amount of ¥10,112 million and ¥4,607 million
at December 31, 2009 and 2008, respectively.
Securities for banking business, which were pledged as collateral for foreign exchange settlements,
derivative and other transactions, and for issuing letters of credit, were ¥79,022 million at December
31, 2009. Other collateral included in current assets includes ¥5,945 million for initial margins related
to futures trading and ¥698 million for guarantees pledged by consolidated subsidiaries in the banking
business, and ¥8,567 million of short-term guarantee deposits pledged by a consolidated subsidiary inthe securities business.
(2) Liabilities for which assets were pledged as collateral:
Millions of Yen
2009
2008
Short-term bank loans
Long-term bank loans, due within one year
Borrowings related to margin transactions
Long-term bank loans, due after one year
Accrued liabilities
Accounts payable¥ 20,190
46,90524,90332,418141
1,757¥ 41,395
92,74084,409115,739
71
1,780

Total

¥126,314¥224,105(3) Fair value of marketable securities pledged as collateral:
Millions of Yen
2009
2008
Securities loaned on margin transactions
Securities pledged for loans payable for margin transactions
Securities loaned by promissory note collateralized¥ 36,107
24,826
9,664¥ 30,588
26,0354,483(4) Fair value of marketable securities received as collateral:
Millions of Yen
2009
2008
Securities pledged for loans receivable for margin transactions
Securities borrowed on margin transactions
Substitute securities for guarantee deposits received on futures5.

¥ 99,774
10,812
174,900¥ 60,732
8,340
119,187

LINE-OF-CREDIT AGREEMENTS
Certain subsidiaries make loans to customers who have credit cards or loan cards issued by thesubsidiaries. Unused lines of credit granted to customers amounted to ¥1,229,554 million and ¥977,673
million at December 31, 2009 and 2008, respectively.

6.

COMMITMENTS AND CONTINGENCIES
Installment accounts receivable, guarantee contracts and accounts receivable, guarantee contracts
which a consolidated subsidiary does not provide certain services for collection are not recorded in the
consolidated balance sheet. Such balance as of December 31 2009 and 2008 were as follows:
Millions of Yen
2009
2008
Credit guarantee
Provision for loss on guarantees¥29,542(102)
13¥33,699(90)

Total¥29,440¥33,609

The Group had guarantees for customers in the amount of ¥181 million and ¥201 million at December
31, 2009 and 2008, respectively.

7.

GOODWILL
The change in the carrying amount of goodwill for the years ended December 31, 2009 and 2008 was
as follows:
Millions of Yen
Balance at December 31, 2007
Goodwill acquired during the year
Amortization
Impairment
Balance at December 31, 2008
Goodwill acquired during the year
Amortization
Impairment¥ 64,466
5,680(3,931)(1,132)¥ 65,083
27,886(5,524)(398)

Balance at December 31, 2009

¥87,047

Goodwill acquired during fiscal 2009 mainly consisted of goodwill related to the acquisition of eBANK
Corporation. Goodwill of Cause Loyalty, LLC was impaired in fiscal 2009 due to the difficulty in recoveryof the company’s net assets based on estimated future financial performance under the current businessenvironment. Goodwill acquired during fiscal 2008 mainly consisted of goodwill related to the acquisitionof additional share of O-net, Inc. Goodwill of Rakuten Research, Inc. was impaired in fiscal 2008 due tothe difficulty in recovery of the company’s net assets based on estimated future financial performance
under the current business environment.

8.

SALES, GENERAL AND ADMINISTRATIVE EXPENSES
Selling, general and administrative expenses comprises as follows:
Millions of Yen
2009
2008
Point costs
Advertising and promotion expenses
Personnel expenses
Provision for bonuses
Depreciation
Communication and maintenance expenses
Outsourcing expenses
Provision of allowance for doubtful accounts
Other
Total selling, general and administrative expenses¥ 6,809
16,772
41,181
1,897
12,85013,235
21,181
16,212
41,427¥3,48011,64533,1501,208
11,145
13,52021,604
14,89736,736¥ 171,564¥ 147,385

Research and development cost in general administration expenses for the year ended December 31,
2009 and 2008 were ¥214 million and ¥188 million yen respectively.

9. GAIN/LOSS ON SALES OF NONCURRENT ASSETS AND
LOSS ON RITIREMENT OF NONCURRENT ASSETS
The gains on sales of noncurrent assets for the year ended December 31, 2009 and 2008 were as
follows:
14

Millions of Yen
2009
2008
Land
Other

—
—

¥ 121
0

Total gain on sales of noncurrent assets

—

¥121

The losses on sales of noncurrent assets for the year ended December 31, 2009 and 2008 were as
follows:
Millions of Yen
2009
2008
Building and structures
Tools, equipment and fixtures
Software
Other

—
—
—
—

¥65
44
20
16

Total loss on sales of noncurrent assets

—

¥145

The losses on retirement of noncurrent assets for the year ended December 31, 2009 and 2008 were as
follows:
Millions of Yen
2009
2008
Building and structures
Tools, equipment and fixtures
Machinery and equipment
Software
Other
Total loss on retirement of noncurrent assets

—
¥103
—
866
118

¥331
228
510
659
127

¥1,087¥1,855

10. IMPAIRMENT LOSSESThe Rakuten Group recorded the following impairment losses in the year ended December 31, 2009:
Main assets for which impairment losses were recognized:

15

Unit
Rakuten Financial
Solutions, Inc.
eBANK Corporation

Cause Loyalty, LLC
Rakuten KC Co. Ltd.
Fusion Communications
Corporation—
Total

Business use
Banking BusinessType of asset
SoftwareAlliance credit card services
Personal loans
Yokohama call center—
Advertising BusinessImpairment loss
(Millions of yen)
¥730

Software
Software in progress
Other
Goodwill
Other
Land
Real estate for rent Idle assets
Buildings

198
249
5
338
16
155
142

Telecommunications

190—

Leased assets
Other

102
¥2,125(A) Asset Grouping Method
The Rakuten Group generally groups its assets by business unit except for idle assets and real estate forrent, which are assessed by individual properties.
(B) Information on Recognition of Impairment Losses
a. Rakuten Financial Solutions, Inc.
Impairment loss was recorded for an accounting system and related facilities judged to have noprospect for future use.
b. eBANK Corporation
In conjunction with eBANK’s withdrawal from credit card services with a business partner, an
impairment loss was recorded for associated systems with no plans for future use. An impairment
loss was also recorded for software development related to personal loan services that was
postponed following a reevaluation of development plans due to the merger with Rakuten Credit, Inc.
c. Cause Loyalty, LLC
In consideration of the future profit outlook for the company’s business environment, recovery of
net asset value was judged to be unlikely and an impairment loss was taken on goodwill.
d. Rakuten KC Co., Ltd.
The likelihood of recovering investment in real estate for rent was significantly reduced, due
primarily to tenant vacancy, and an impairment loss was recorded against the real estate.
e. FUSION COMMUNICATIONS CORPORATION
An impairment loss was recorded on the assets for businesses with terminated services,
deteriorating profitability, and assets scheduled for disposal as part of a facilities’ relocation.
(C) Method Used for Estimated Recoverable Amounts
Recoverable amounts are calculated by using agreed sale prices in the case of business assets on saleagreements, and the appraised values of leased real estate. The recoverable amounts of other businessassets, idle assets and goodwill are deemed to be zero.

16

11. CASH AND CASH EQUIVALENTS
The reconciliation between the year-end balance of cash and deposits stated in the consolidatedbalance sheet and cash and cash equivalents stated in the consolidated statement of cash flow was
as follows:
Millions of Yen
Year Ending December 31

2009

2008

Cash and deposits
Securities
Time deposit over three months’ maturity
Due from foreign banks
Deposits separately kept
Deposits with restrictions¥ 96,233
17,944(9,040)
(825)
—
(694)

¥ 88,588
2,629(4,396)—(4,700)(837)

Cash and cash equivalents¥ 103,618¥ 81,284

12. LEASES
A. The Group leases buildings, machinery, furniture and fixtures, software and vehicles.
Lessee’s accountinga.

Pro forma information regarding of leased assets acquired before change of accounting
standard for lease such as acquisition cost, accumulated depreciation, obligations underfinance lease, depreciation expense, impairment losses interest expense and other information
regarding of finance leases that do not transfer ownership of the leased assets to the lessee on
an “as if capitalized” basis for the years ended December 31, 2009 and 2008 were as follows:
Millions of Yen
2009

VehiclesFurnitureandfixtures

Machinery

SoftwareTotal

Acquisition costLess: Accumulated depreciation
Impairment loss

¥21
18
—

¥6,226
4,247
214¥7,917
5,143
—

¥837
541
7

¥15,001
9,949
221

Net amount¥3¥1,765¥2,774¥289¥4,831Millions of Yen
2008
Furniture
andBuildings Vehicles fixtures
Machinery

SoftwareTotal

Acquisition costLess: Accumulated depreciation
Impairment loss

¥12
8
—

¥21
14
—

¥8,277
4,181—¥8,264
4,688
155¥ 1,121—¥17,695
9,698
155

Net amount¥4¥7¥4,096¥ 3,421¥ 314¥7,842b.

Obligations under finance leases:
Millions of Yen
17

2009

2008

Due within one year
Due after one year

¥2,691
2,427¥ 3,289
4,839

Total

¥5,118¥8,128c.

Lease payment depreciation expense, deemed interest expenses and other information underfinance leases:
Millions of Yen
2009
2008

Lease payments
Reversal of impairment of leased assets
Depreciation expense
Deemed interest expense
Impairment lossd.

¥3,684
72
3,397
185
95

¥4,440
100
4,021
273
1,268

Depreciation expense and interest expense, which are not reflected in the accompanying
consolidated statements of income, are computed by the straight-line method and the interest
method, respectively.

B. Finance Lease
Finance leases that do not transfer ownershipa.

Description of leased assets
i. Tangible fixed asset
These consist primarily of telephone exchange equipment (tools, equipment, fixtures) used for theCredit Card Business, as well as a charging system and telecommunications equipment used for
the Telecommunications Business.
ii. Intangible fixed assets
This consists of software.

b.

Depreciation method for leased assets
The method is as described in “Basis of Presenting Consolidated Financial Statements” under“f. Leases” of “2.Summary of Significant Accounting Policies.”

Obligations under operating leases:
Millions of Yen
2009
2008

13.

Due within one year
Due after one year

¥478
2,139

¥415
2,366

Total

¥2,617¥2,781LEASED ASSETS
Pro forma information regarding of leased assets acquired before change of accounting standard forlease such as acquisition cost, accumulated depreciation, obligations under finance lease, depreciation
expense, impairment loss, interest expense and other information regarding of finance leases that do nottransfer ownership of the leased assets to the lessee on an “as if capitalized” basis for the years ended
December 31, 2009 and 2008 were as follows:
Lessor’s accounting
Millions of Yen
2009
2008
18

Furniture and fixtures
Other
Total
Accumulated depreciation
Net leased assets¥ 6,985
21
7,006(6,862)¥ 8,733
86
8,819(8,491)

¥144

¥328

The aggregate receivables from the lessees including equipment costs, unearned income and executory
costs, which were not recorded on the books of account, as of December 31, 2009 and 2008, were as
follows:
Millions of Yen
2009
2008
Due within one year
Due after one year

¥103
40

¥191
154

Total

¥143

¥345

Receivables from unexpired leases related to subleased items other than which listed above amount to¥2,701 million and ¥6,725 at December 31, 2009 and 2008.
Receivables lease fees, depreciation and deemed interest income as of December 31, 2009 and 2008
were as follows:
Millions of Yen
2009
2008
Receivable lease fees
Depreciation
Deemed interest income

¥202
139
16

¥228
207
22

The booked amount of interest income is based on the interest method.

14.

SECURITIESA.

The costs, unrealized gains and losses and aggregate fair values of marketable securities at
December 31, 2009 and 2008 were as follows:

December 31, 2009Marketable securities classified as
Trading
Available-for-sale
Equity securities
Corporate bonds

Millions of Yen
Unrealized
Unrealized
gains
losses

Cost

Fair
value

—

—

—

¥57

¥54,65370¥2,131—¥2,844—¥53,94070

Note: The carryings values shown above are the amounts after adjustment for impairment losses.
A valuation loss on investment securities of ¥848 million was recognized in fiscal 2009.

19

December 31, 2008
Marketable securities classified as
Trading
Available-for-sale
Equity securities
Other

Millions of Yen
Unrealized Unrealized
Gains
Losses

Cost

Fair
Value

—

—

—

¥118

¥54,94650¥2,586
13¥609—

56,92363

Note: The carryings values shown above are the amounts after adjustment for impairment losses.
A valuation loss on investment securities of ¥66,952 million was recognized in fiscal 2008.

Available-for-sale securities for which fair value is not readily determinable as of December 31, 2009 and2008 were as follows:
Millions of Yen
2009
2008
Unlisted equity securities
Negotiable deposits
Open-end bond investment trust
Other¥ 3,559
16,0001,944
512¥ 24,249
—
2,629
641

Redemption schedule of debt securities with contractual maturities classified as available-for-salesecurities at December 31, 2009 and 2008, were as follows:
Millions of Yen
2009
2008
Due within one year
Negotiable deposits
Corporate bonds¥16,000
70——

B. Securities for banking bushinessTrading securities: None
Held-to-maturity debt securities with fair value at December 31, 2009 were as follows:
Millions of Yen

Local government bonds
Other securities¥7,1094,000¥7,2184,294

Unrealized
gains
¥109
294

Total

¥11,109¥11,512¥403

Carrying value

Fair value“Fair value” is based on the market prices, etc. as of December 31, 200920

The costs, unrealized gains and losses and aggregate fair values of marketable securities for banking
business at December 31, 2009 were as follows:

December 31, 2009

Cost

Millions of Yen
Unrealized
Unrealized
Gains
LossesFair
Value

Available-for-sale
StocksBonds
JGB
Short-term corporate bonds
Corporate bonds
Others

¥28

¥0

—

¥28

207,895
22,492
27,536125,152

5,502
0
232
2,938

¥255
0
83
1,947

213,142
22,491
27,654
126,143

Total¥383,103¥8,672¥2,285¥389,489

Notes:
1. The carrying value on the consolidated balance sheets is stated at fair value based on market
prices or similar data as of December 31, 2009.
2. If the fair value of an available-for-sale security for which fair value accounting applies has
declined by 50% or more from the purchase cost, then, in the absence of any reasonable
evidence to the contrary, such decline in value will be regarded as material to the extent thatrecovery cannot be expected. The security will be reported on the consolidated balance sheets atthe corresponding fair value, and the valuation difference will be treated as an impairment loss inthe same fiscal year. Furthermore, if the fair value has declined by less than 50%, but has
depreciated by at least 30%, an assessment is made of the likelihood that the asset will recoverits fair value and any required losses for impaired assets will be recorded. Impairment losses forfiscal 2009 were ¥1,868 million.
3. An amount of ¥897 million was reflected in the income statement due to the treatment ofembedded derivatives as part of a hybrid security.
4. Among securities in the banking business that should be stated at fair value, the market price offloating rate Japanese government bonds in a market with a large gap between buyers’ andsellers’ desired prices is not regarded as the fair value. Instead, an amount calculated on areasonable basis is assigned as the fair value. Therefore, compared with a case in which fairvalue is estimated by market prices, the value of securities in the banking business increased by¥9,179 million, the valuation difference on available-for-sale securities increased by ¥6,002
million, and deferred tax liabilities increased by ¥3,177 million.
The value calculated on a reasonable basis for floating rate government bonds was set to the netpresent value (after adjustment for convexity) of all future interest payments as calculated fromthe government bond forward curve and the cash flow at redemption. The main variables applied
for price determination were the yield on Japanese government bonds and the volatility of interest
rate swap options on 10-year underlying assets.
Other securities sold during fiscal 2009 were as follows:
Millions of Yen
2009
Proceeds from sales
Total gains
Total losses¥333,359
323
167

21

Available-for-sale securities in the banking business for which fair value is not readily determinable
as of December 31, 2009 were as follows:
Millions of Yen
2009
Other securities
Unlisted equity securities¥1
Unlisted foreign securities
50
Industrial bonds
10,886Deemed securities
387
Monetary claims bought
112,457
Total¥123,781

The redemption schedule by term for held-to-maturity bonds and other securities with maturities at
December 31, 2009 were as follows:
Millions of Yen
Over 1 year
Over 5 years
1 year or lessOver 10 years
to 5 years
to 10 years
Bonds
JGB
¥45,053—¥95,019¥73,071
Local government bonds—¥7,109——
Short-term corporate bonds
22,492———
Corporate bonds
7,674
7,502
3,687
19,707
Other
11,898150,51753,56822,560Total

15.

¥87,117¥165,128¥152,274¥115,338

DERIVATIVES(1) Transaction types
The Rakuten Group enters into the following derivative transactions: foreign exchange forward
contracts, interest rate swaptions, interest rate swaps, interest rate cap transactions foreign exchange
margin transactions and contract for difference. Credit derivatives embedded in hybrid financial
instruments are also traded.
(2) Trading policy
Rakuten undertakes derivative transactions with the objective of hedging risks against fluctuation in
future foreign exchange and interest rates and does not enter into derivative transactions for trading or
speculative purposes. Foreign exchange margin trading and contract for difference are generally
negotiated transactions with customers in which Rakuten performs a covered trade with a counterparty.
(3) Trading purpose
Derivative transactions related to currencies are conducted as a risk hedge against exchange rate
fluctuation for foreign currency-denominated receivables and payables for the purpose of ensuring
stable profits. For interest rates, derivatives are used as a hedge against future volatility in interest rate
markets related to interest on borrowings. Also, certain subsidiaries, as a part of their business, carry out
covered trades with a counterparty to hedge risks generated by transactions with customers, in addition
to conducting foreign exchange margin trading and contract for difference by negotiated trades withcustomers.
(4) Trading-related risks
Foreign exchange forward contracts entail exchange rate fluctuation risks, and interest rate swaps andinterest cap trading entail interest rate fluctuation risks. Furthermore, foreign exchange margin trading
and contract for difference pose foreign exchange market fluctuation risks, interest rate fluctuation risks
and risks of suffering losses from price changes in stock, stock indexes, commodities and other
instruments. Credit derivatives involve risks related to the bond market.
Although credit risks are generally recognized as low because the counterparties are financial
institutions that mainly have high credit ratings, derivative transactions undertaken by certain
22

subsidiaries may suffer from economic loss due to the default of a certain counterparty.
The fair value of foreign currency transactions as of December 31, 2009 was as follow:
Million of Yen
Type of party
Customers

Counterparties

OTC

ContractvalueType of trade
Foreign exchange margin trading
Short positions
Long positions
Foreign exchange margin trading
Short positions
Long positions
Foreign exchange forward contracts
Short positions
Long positions

Total

Unrealized
gain (loss)

Fair value¥44,500
34,195¥(116)
864¥(116)
864

35,06044,616————32,58069,599(198 )
1,389(198 )
1,389¥260,550¥1,939¥1,939Notes:
1. This note does not cover transactions that are applied hedge accounting.
2. Method for calculating fair value: Foreign exchange margin transactions are adapted foreign
currency spot markets method. Foreign exchange forward contracts are adapted foreign exchange
futures markets and trading prices indicated by financial trading institutions.
Interest rate derivatives transactions as of December 31, 2009 were as follows:
Million of Yen
Type of party
OTC

ContractvalueType of trade
Interest rate swap options
Short positions
Long positions

Total

Fair value

Unrealized
gain (loss)¥67,505
68,061¥2,603(2,594)¥2,603(2,594)¥135,566¥9¥9

Notes:
1. This note does not cover transactions that are applied hedge accounting.
2. Interest rate swap transactions presented in this table were classified in groups including thosewith complex provisions.
3. Fair value was calculated by present value discounted future cash flows, option pricing models andother means.

Credit derivatives as of December 31, 2009 were as follows:
Million of Yen
Type of party
OTC

Type of trade
Other
Short positions

Contract
value

Fair value

Unrealized
gain (loss)¥2,500¥918¥918

Notes:
1. This note does not cover transactions that are applied hedge accounting.
2. The credit derivatives reported in this table include embedded derivatives in hybrid financial
instruments.
3. “Short positions” are transactions that underwrite credit risks.
4. Estimated fair values were based on data indicated by financial trading institutions.
Other derivatives as of December 31, 2009 were as follows:
Million of Yen
Unrealized
Contract
Fair value
Type of party
Type of tradegain (loss)
value
Customers
Contract for difference
23Counterparties

Short positions
Long positions
Contract for difference
Short positions
Long positions

Total

¥337
526

¥ (0)
2

¥ (0)
2

526
337

(2)
0

(2)
0

¥1,726——

Notes:
1. This note does not cover transactions that are applied hedge accounting.
2. Fair value was based on the closing market price on markets or exchanges that handle the given
financial instruments.
The fair value of foreign currency transactions as of December 31, 2008 was as follows:
Million of Yen

Transactions other than market transactions
Foreign exchange forward contracts
Sold; U.S. Dollars

Contract
value

Fair value

Unrealized
gain (loss)¥ 3,760¥ 3,749¥ 11

Foreign exchange forward contracts subject to hedge accounting are not included. The fair value isindicated by the financial institutions that are counterparties of the transactions. The fair value of interest
rate caps as of December 31, 2008 was as follows:
Million of Yen

Transactions other than market transactions
Interest rate caps; BoughtContract
value

Fair value

Unrealized
gain (loss)

¥24

¥1

¥(23)

Derivative transactions such as interest rate swaps subject to hedge accounting are not included. The
listed transactions are under non-hedge accounting that require disclosure though the intra-groupelimination of hedged transactions. The fair value is indicated by the financial institutions that arecounterparties of the transactions.

16.

RETIREMENT AND PENSION PLANS
Employees in certain consolidated subsidiaries are granted a tax-qualified pension plan and a lump-sum
retirement and pension plan.
Information concerning retirement benefit obligation:
Millions of Yen
2009
2008
Projected benefit obligation¥ 3,660¥ 3,704
Fair value of plan assets(2,756)(2,617)
Unfunded retirement benefit obligation
904
1,087
Unrecognized actuarial loss
(547)
(750 )Net retirement benefit obligation as shown on balance sheet
357
337
Allowance for retirement benefits
¥ 357
¥ 337
Certain consolidated subsidiaries that have a retirement benefit plan use the simplified method for
calculating retirement benefit obligations.
Retirement benefit expenses:
Millions of Yen
2009
2008

24

Service cost
Interest cost
Expected return on plan assets
Amortization of actuarial loss
Other

¥ 157
71
(52)
133
15

¥ 194
83
(75)
78
—

Total retirement benefit expenses

¥ 324

¥ 280

Retirement benefit expenses at consolidated subsidiaries using the simplified method are included in“Service cost.”
Basis for calculating retirement benefit obligations and other:
The retirement benefit obligation is attributed to each period by the straight-line method over theestimated years of service of employees.

Discount rate
Expected rate of return on plan assets
Amortization period of actuarial gain (loss)

17.

2009

2008

2.00%
2.00%
10 years

2.00%
2.00%
10 years

STOCK-BASED COMPENSATION PLANS
The Company has stock-based compensation plans as an incentive program for directors, auditors andemployees of the Company, subsidiaries and affiliates.
From 2001, in accordance with approval at shareholders’ meetings, the Company has granted stockacquisition rights and stock options to directors, auditors and certain employees of the Company,
subsidiaries and affiliates. These options vest about over two years to four years and expire within ten
years from the date of grant. Some subsidiaries have the same type plans.
The following is a summary of the Company’s stock-based compensation:

Grant Date

April 26, 2001
April 30, 2002
July 14, 2003
August 29, 2003
September 7, 2004
December 15, 2005
February 13, 2006

Exercisable Period

From March 30, 2003
to March 28, 2011
From March 29, 2006
to March 27, 2012
From March 28, 2007
to March 26, 2013
From March 28, 2007
to March 26, 2013
From March 31, 2008
to March 29, 2014
From March 31, 2009
to March 29, 2015
From March 31, 2009
to March 29, 2015

25

Exercise
Price

Number of outstanding
stock options
as of December 31, 2009

¥ 11,210*

14,862

11,000*7,587

19,300*30,86027,500*2,090

75,500*35,73091,30054,410103,8482,000

April 20, 2006
December 14, 2006
January 19, 2009

From March 31, 2010
101,000
30,000to March 29, 2016
From March 31, 2010
55,90014,340to March 29, 2016
From March 28, 2012
56,30033,050to March 26, 2018
* Exercise price has been adjusted to reflect the stock splits.

The following is a summary of Rakuten Securities Holdings, Inc.’s stock-based compensation:

Grant Date

April 19, 2004
September 15, 2005

Exercisable Period

From April 20, 2006
to April 19, 2011
From September 19, 2007
to September 18, 2012

Exercise
Price

Number of outstanding
stock options
as of December 31, 2009

¥497,648

96

1,380,000

188

The following is a summary of Rakuten KC Co., Ltd.’s stock-based compensation plans:
Number of outstanding
Exercisestock options
Grant Date
Exercisable Period
Price
as of December 31, 2009
June 17, 2005

From June 18, 2006
to June 17, 2015

¥ 256,000

880

The following is a summary of FUSION COMMUNICATIONS’s stock-based compensation:

Grant Date

November 20, 2000
July 12, 2001
July 12, 2001
July 12, 2001
June 29, 2002
June 30, 2003

Exercisable Period

From November 20,
2002 to November 20,
2010
From July 12, 2001
to July 10, 2010
From July 12, 2001
to July 10, 2011
From July 12, 2001
to July 10, 2012
From June 29, 2004
to June 28, 2012
From July 1, 2005
to June 30, 2013

Exercise
Price

Number of outstanding
stock options
as of December 31, 2009

¥ 50,000

1,435

155,792

530

155,792650

155,792255

219,388525

219,388

120

The following is a summary of Net’s Partners Co., Ltd.’s stock-based compensation:

Grant Date

July 30, 2005
April 28, 2006

Exercisable Period

From July 28, 2007
to July 27, 2015
From April 27, 2008
to April 26, 2016

26

Exercise
Price

Number of outstanding
stock options
as of December 31, 2009

¥38,000

380

38,000120

The following is a summary of Dot Commodity, Inc.’s stock-based compensation:

Grant Date

July 1, 2005
July 1, 2006

Exercisable Period

From July 1, 2007
to May 31, 2015
From July 1, 2008
to May 31, 2016

Exercise
Price

Number of outstanding
stock options
as of December 31, 2009

¥50,000

220

50,000280

The following is a summary of eBANK Corporation’s stock-based compensation:

Grant Date

October 13, 2000
March 13, 2001
August 20, 2001
August 20, 2001
October 31, 2002

September 30, 2002
January 6, 2003
March 31, 2003
June 18, 2003

May 30, 2003
June 18, 2003
March 31, 2004

November 28, 2003
February 29, 2004
June 18, 2004

November 30, 2004
January 31, 2005
February 10, 2005
March 31, 2005

Exercisable Period

From October 13, 2002
to September 26, 2010
From March 13, 2003
to February 22, 2011
From August 20, 2001
to June 18, 2011
From August 20, 2003
to June 18, 2011
From October 31, 2002
to June 20, 2012
From September 30, 2004
to June 20, 2012
From January 6, 2005
to June 20, 2012
From March 31, 2005
to June 20, 2012
From June 18, 2005
to June 20, 2012
From May 30, 2003
to June 20, 2012
From June 18, 2003
to June 20, 2012
From March 31, 2004
to June 19, 2013
From November 28, 2005
to June 19, 2013
From February 29, 2006
to June 19, 2013
From June 18, 2006
to June 19, 2013
From November 30, 2004
to June 24, 2014
From January 31, 2005
to June 24, 2014
From February 10, 2005
to June 24, 2014
From March 31, 2005
to June 24, 2014

27

Exercise
Price

Number of outstanding
stock options
as of December 31, 2009

¥ 60,000

1,710

65,000760

71,500800

65,000830

82,5003,030

75,0001,570

82,5002,600

82,5002,000

75,0007,670

75,0002,920

88,000150

88,000330

100,000

7,420

140,000

100

October 20, 2004
November 30, 2004
January 31, 2005

February 10, 2005
March 31, 2005
August 15, 2005
November 15, 2005

November 15, 2005
March 31, 2006
May 1, 2006
March 31, 2006

March 31, 2006
July 5, 2006
March 5, 2007

March 5, 2007
March 30, 2007
March 30, 2007
April 27, 2007
June 25, 2008
June 25, 2008

From October 20, 2006
to June 24, 2014
From November 30, 2006
to June 24, 2014
From January 31, 2007
to June 24, 2014
From February 10, 2005
to June 24, 2014
From March 31, 2005
to June 24, 2014
From August 15, 2007
to June 29, 2015
From November 15, 2007
to June 29, 2015
November 15, 2005
to June 29, 2015
From March 31, 2008
to June 29, 2015
From May 1, 2008
to June 29, 2015
From March 31, 2006
to March 6, 2016
From March 31, 2008
to March 6, 2016
From July 5, 2008
to March 6, 2016
From March 5, 2009
to March 6, 2016
From March 5, 2009
to June 9, 2016
From March 30, 2009
to June 9, 2016
From March 30, 2007
to June 9, 2016
From April 27, 2009
to June 9, 2016
From June 25, 2008
to June 26, 2017
From June 25, 2010
to June 26, 2016

88,000620

100,000

1,600

140,000

1,050

150,000

7,970

150,000

2,000

200,000

600

200,000

500

200,000

450

200,000

460

200,000

5,430

200,000

2,000

180,000

80

100,000

850

100,000

2,555

A summary of information regarding for the TARFFIC GATE, LTD’s stock-based compensation was asfollows:
Number of outstanding
Exercise
Grant Date
Exercisable Period
stock options
Price
as of December 31, 2009
January 27, 2005
September 27, 200718.

From September 30, 2006
to September 29, 2014
From September 28, 2008
to September 18, 2017

¥333

94,8002,000

21,900

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% for theyears ended December 31, 2009 and 2008.

28

The tax effects of significant temporary differences and tax loss carry forwards which resulted in deferred
tax assets and liabilities at December 31, 2009 and 2008 were as follows:
Millions of Yen
2009
2008
Deferred tax assets:
Tax loss carry forwards
Excess of depreciation
Loss on valuation of investment securities
Excess of allowance for doubtful accounts
Reserve for points
Impairment loss
Allowance for loss on interest repayment
Reserve for financial instrument transaction liabilities
Loss on valuation of securities for banking business
Other
Less valuation allowance¥ 42,997
2,200
19,332
11,009
3,908
1,204
4,161
1,109
4,304
7,555
(48,333 )¥ 29,569
2,395
18,830
7,298
2,896
1,317
6,223
1,305
—
7,039
(47,109)

Total¥49,446¥29,763

Deferred tax liabilities:
Tax-deductible loss due to transfer of shares
Valuation difference on available-for-sale
Other¥ 8,465
3,880
905¥ 8,465
1,074
242

Total

¥ 13,250¥ 9,781¥ 36,196¥ 19,982

Net deferred tax assets

Reconciliation between the normal effective statutory tax rates and the actual effective tax rates reflectedin the accompanying consolidated statements of income for the year ended December 31, 2009 was asfollows. In addition, as the fiscal year ended December 31, 2008 resulted in a loss before income taxes
and minority interests, so tax rates are not shown here:
2009

19.

Effective statutory tax rate
Expenses nondeductible for income tax purposes
Expired tax loss carried forward
Change in valuation allowance
Amortization of goodwill
Gain on change in equity
Other—net

41.00%
0.58
6.33(49.82)
4.11(3.15)(0.21)

Actual effective tax rate

(1.16)%

SEGMENT INFORMATIONThe Company operates in the following industries:
The E-Commerce Business segment consists mainly of Rakuten Ichiba (Including Package Media,
Media Rental), managed by Rakuten, Inc., Rakuten Auction, Inc., and Link Share Corporation. The
business focuses on operating and providing services for websites related to retailing and other formsof e-commerce. Rakuten Ichiba Taiwan as a first step of overseas development and International
shipping service is also included in this segment.

The Banking Business segment consists mainly of eBANK Corporation and its subsidiaries. The
business is primarily concerned with the internet banking businesses.
29

The Credit Card Business segment (previously Credit and Payment Business Segment) consists mainlyof Rakuten KC Co., Ltd. The business is primarily concerned with the consumer credit card businessand consumer loan businesses.
The Portal and Media Business segment consists mainly of Infoseek, a portal site managed by
Rakuten, Inc. Rakuten Research, Inc., Rakuten Shashinkan, Inc. and O-net, Inc. The segment focuseson the operation of Internet portal sites and community networking sites, as well as Internet market
research and distribution of broadband content. Furthermore, SHOWTIME Inc. was consolidated fromthe end of first quarter of this fiscal year.
The Travel Business segment consists of Rakuten Travel, Inc. and its subsidiaries and affiliates.
It focuses on operating travel-related websites and services, such as hotel bookings.
The Securities Business segment mainly consists of Rakuten Securities, Inc. The business provides theonline securities brokerage and commodity trading business.
The Professional Sports Business segment consists of Rakuten Baseball, Inc., and Rakuten Sports
Properties, Inc. It manages the Tohoku Rakuten Golden Eagles professional baseball team, as well asplanning and selling related goods.
The Telecommunication Business segment consists of FUSION COMMUNICATIONS. and its
subsidiaries. The business provides IP network services, IP telephony and other services.

(1)

Industry Segments

a. Sales and Operating Income
Millions of Yen
2009
E-Commerce
Business

Sales to customers
Inter segment sales

CreditBanking
Card
Business
Business

PortalProfessional
TelecomTravel Securities
andSportsmunications
Media Business BusinessBusiness
Business¥115,003 ¥57,699 ¥30,301 ¥17,622 ¥19,321
2,227

1,204

Corporate &Internal
Eliminations

Consolidated¥23,549¥8,361¥26,396¥298,252—¥298,252

6,872

361

24

472

58

12,875¥ (12,875)—

116,660 59,926 31,505 24,494

19,682

23,573

8,833

26,454

311,127(12,875)

298,252

Operating expenses

80,438 56,613 29,087 23,330

10,88019,1099,450

26,091

254,999(13,396)

241,603

Operating income (loss)¥36,222 ¥3,313 ¥2,418 ¥1,164¥8,802¥4,464¥ (617)¥363¥56,128¥521¥56,649

Total sales

1,657

Total

Note: Due to the addition of eBANK Corporation as a consolidated subsidiary, a new business segment was created starting with the firstquarter financial results. The new segment was classified as Banking Business Segment, Rakuten Credit, Inc. and Rakuten Financial
Solutions, Inc., which were part of the Credit and Payment Business in previous fiscal years, were also transferred to the Banking
Business as of the first quarter of this fiscal year, in consideration of these companies’ activities. In addition, the Credit and Payment
Business became the Credit Card Business after a reassessment of the nature of its business. Compared with the previous
segmentation, these changes caused reductions of ¥6,152 million and ¥782 million, respectively, in net sales and operating income of
the Credit Card Business in the current fiscal year. The effect of these changes has been included in the results for the new Banking
Business, which recorded net sales to external customers of ¥30,301 million and operating income of ¥2,418 million in the current fiscal
year. In light of the above, information on individual business segments is presented below for the fiscal year ended December 31, 2009.

30

b. Total Assets, Depreciation and Capital Expenditures
Millions of Yen
2009
CreditCard
Business

Banking
Business¥310,358¥304,938¥789,452

Depreciation
and amortization

5,989

1,244

2,519

129

Impairment loss

434

297

1,181

Capitalexpenditures

5,768

1,086

2,540

E-Commerce
Business

Total assets

Portal andMedia
Business

TravelBusiness¥11,008 ¥24,058

Professional
TelecomSports
munications
Business

Securities
Business

Corporate &Internal
Eliminations

Total¥9,333 ¥1,868,524

Consolidated¥408,305¥11,072¥ (109,287) ¥1,759,237

723

2,128

878

750

14,3601

14,361

15

—

8

—

190

2,125

—

2,125

82

654

2,326

437

957

13,85010

13,860Note: The group total for corporate and internal eliminations included in assets is ¥54,283 million. This consists mainly of investment
securities held by the Rakuten Group. Unallocatable operating expenses amounted to ¥1,262 million. The main items are tax
expenses based on pro forma standard taxation, and head office expenses that cannot be allocated to segments.

a. Sales and Operating Income
Millions of Yen
2008
E-Commerce
Business

Sales to customers¥

PortalandMedia
Business

Credit andPayment
Business

Corporate &Internal
Eliminations

TravelBusiness

Securities
Business

Professional
TelecomSports
munications
Business

Total¥9,681 ¥16,199¥24,807¥7,963 ¥34,249¥249,883—

Consolidated

91,073¥65,911

1,310

844

5,615

351

1

472

4

8,596

¥(8,596)—

92,38366,755

15,296

16,55024,808

8,435

34,253

258,479(8,596)249,883

Operating expenses

66,31656,052

15,501

9,087

20,951

9,247

33,819210,972(8,240)202,732

Operating income (loss) ¥26,067 ¥

10,703¥ (205)¥7,463¥ 3,857¥(812)¥ 434¥47,507¥ (356)¥47,151

Intersegment sales
Total sales¥

249,88b. Total Assets, Depreciation and Capital Expenditures
Millions of Yen
2008
E-Commerce
Business

Total assets

Credit andPayment
Business

Portal andMedia
Business¥285,667 ¥417,969

TravelBusiness

Securities
Business

Professional
TelecomSports
munications
Business

Total

Corporate &Internal
Eliminations

Consolidated¥1,086,938¥8,460¥16,568¥373,235¥11,459¥11,053¥1,124,411¥(37,473)

Depreciation
and amortization

5,842

2,168

51

637

2,090

855

641

12,284－

Impairment loss

91

2,494

1,132

―

1,616

―

85

5,418

－

6,037

2,282

137

662

3,883

498

851

14,350－Capital expenditures

14,350(2) Geographical Segments
Disclosure of geographic segment information is omitted because domestic net sales and assets
exceed 90% of total segment sales and assets.
(3) Sales to Foreign Customers
Disclosure of sales to foreign customers is omitted because such sales represent less than 10% ofconsolidated net sales.

3120. AMOUNTS PER SHARE
Yen
2009
Net income (loss)
Basic
DilutedCash dividends applicable to the year2008

¥ 4,092.17
4,077.62
100.00¥ (4,203.55)—
100.00Yen

Net assets

2009

2008

¥ 15,527.21¥ 11,439.86

Basic net income per share is computed by dividing net income available to common shareholders by
the weighted-average number of common shares outstanding for the period, retroactively adjusted forstock splits. Diluted net income per share of common stock assumes full conversion of the dilutive
stock options. Listed cash dividends per share applicable to the respective years include dividends tobe paid after the end of the year.

21.

RELATED PARTY TRANSACTIONSTransactions during the years ended December 31, 2009 and 2008 with a professional football club
operator, in which the Chairman and CEO owned 100% of voting shares indirectly, were as follows:
Millions of Yen
2009
2008
Sponsor fee

¥

199

¥

179

Sponsor fee is determined on arm’s length basis.
The balances payable due from the company at December 31, 2009 and 2008 were as follows:
Millions of Yen
2009
2008
Sponsor fee

22.

¥

15

¥

15

SUBSEQUENT EVENT

A. Dividend
The following distributions of retained earnings at December 31, 2009 were approved at the Board of
Directors’ meeting held on February 13, 2009:
Millions of Yen
Year-end cash dividends, ¥100 per share¥1,30932

B. Significant Subsequent Event Pertaining to Business Combination(1) Name and business description of company acquired, major reasons for business combination, effective
date of business combination, legal form of business combination, name of business after combination,
number of shares acquired, and percentage of voting rights.
Name and business description of company
acquiredName of business:
Business description of acquired company:
Reasons for combination:

Effective date:
Legal form of combination:
Name after combination:
No. of shares acquired:
Percentage of voting rights after acquisition:(2) Breakdown of acquisition costs
Consideration:
Expenditures directly related to acquisition:
Acquisition cost:

bitWallet Inc.
Operation and planning of prepaid e-money
business (Edy)
To leverage the Rakuten Group’s customer baseand marketing know-how with the aims ofacquiring users of Edy e-money services, which
are planned and operated by bitWallet, and ofaugmenting the Edy business by promoting its useon the Internet. In addition, strengthening thealliance between the Rakuten Group’s services
and Edy allows the combined company to provide
high-convenience settlement tools to users. With
these aims, the two companies have agreed to acapital alliance.
bitWallet was made into a Rakuten’s consolidated
subsidiary through subscription to a third-party
allotment of new shares issued by bitWallet.
January 21, 2010
Acquisition of shares
bitWallet Inc.
576,037
52.8%

Cash

¥3,000 million¥66 million¥3,066 million(3) Financing method: Internal funds

C. Agreement to establish a joint venture
Rakuten and Baidu, Inc., have agreed to form a joint venture in China for an Internet shopping mall business.
(1) Reason for establishment:
By combining Rakuten’s e-commerce platform technology and know-how in operating online shopping mallswith Baidu’s marketing power and a strong ability to attract customers in the China market, the joint venture
aims to start a giant Internet shopping mall in China.
(2) Company overview
Name of joint venture:
Head office:Established:
Business description:
Invested capital:
Investment ratios:

RakuBai Limited
People’s Republic of China
February 12, 2010
Internet shopping mall operations in China
US$ 2,634 million (estimated)
Rakuten 51%, Baidu 49%

D. Grant of subscription rights to shares in accordance with Articles 236, 238, and 239 of the33

Corporate Law
At a meeting on February 12, 2010, the Board of Directors approved a resolution to set certain matters forsolicitation, and to solicit subscribers for stock options pertaining to the issuance of subscription rights toshares in the form of stock options, in accordance with Articles 236, 238, and 239 of the Corporate Law, andin accordance with a resolution of the 12th General Meeting of Shareholders held on March 27, 2009.
(1) Kind and number of stock options: Common stock of Rakuten, Inc. 11,989 shares(2) Eligible subscribers: Directors, corporate auditors and employees of Rakuten, Inc.
(3) Issue price: Gratis(4) Amount out of issued price to be included in capital stock:
One-half of the value of the capital increase for those shares issued by exercise of the stock options ascalculated in accordance with Article 17, Paragraph 1 of the Company Accounting Regulations. Any
fractional amount less than one yen shall be rounded up.
(5) Allocation date for stock options: February 12, 2010(6) Period for exercise of option rights: March 28, 2013 to March 26, 2019

E. eBANK tender offer
At a meeting on March 18, 2010, the Board of Directors of Rakuten, Inc. approved a resolution to put forward
a tender offer for all outstanding shares of eBANK Corporation, a consolidated subsidiary.
(1) Name and business description of company acquired, legal form of business combination, name of unit
after combination, outline and purpose of the transaction
Name and business description ofcompany acquired
Name of business:

Business description:
Legal form of business combination:

Name of business after combination:
Outline and purpose of the transaction:eBANK Corporation(Name of business to be changed to Rakuten Bank Co.,
Ltd., on May 4, 2010.)
Banking through electronic media, primarily financial
settlements
Rakuten, Inc., as the parent company for a complete
exchange of shares, will acquire and exchange sharesof eBANK, as the subsidiary target for a complete
exchange of shares
eBANK Corporation(Name of business will not change after combination)
As of March 18, 2010, Rakuten held 1,579,135 sharesof common stock (67.2% of outstanding shares) in
eBANK, a consolidated subsidiary. Now, with theobjective of making eBANK a wholly owned subsidiary,
Rakuten has decided to make a tender offer to acquire
all of eBANK’s outstanding shares.
By making eBANK a wholly owned subsidiary, the entire
Rakuten Group will realize an overall sense of speed inbusiness operations that is appropriate for members ofan Internet services enterprise. Through these efficiency
improvements, Rakuten expects to achieve a superior
allocation of management resources throughout theGroup, which will greatly increase its corporate value.
These efforts, when considered in light of continued
uncertainty in global financial markets despite somesigns of recovery, will help eBANK achieve steadyearnings and a stronger financial structure. We
therefore judge the complete purchase of eBANK to be
the best option for the future.
34

In addition, by making eBANK a wholly owned
subsidiary, Rakuten can establish conditions for more
effective use of human and physical resources andintellectual property in the parent company and all
members of the Rakuten Group. We believe we canstrengthen the bank’s existing competitiveness andharness additional growth in eBANK as an online
banking specialist to large increases in corporate value
through means of quality improvements in various
services furnished to customers and enhanced
profitability.
If Rakuten is unable to acquire all outstanding shares of
eBANK after executing the tender offer (excluding thoseshares already owned by Rakuten and eBANK), thenafter the tender offer is complete, Rakuten plans toacquire the remaining outstanding shares of eBANK
through an exchange of shares to be conducted byAugust 2010 and make eBANK a wholly owned
subsidiary.
Summary of transaction
Tender period:
Tender price:
Preemptive right to shares:
Share subscription rights:
Shares of stock:
Subscription warrants:
Total:March 19, 2010 to April 30, 2010
Common stock: ¥33,000 per share
1 yen each1 yen each
Number of shares expected to be purchased
632,881
58,380 shares
691,261 shares

Notes: Because this tender offer sets no lower and upper limits on the number of shares purchased,
Rakuten plans to purchase all tendered shares.
Amount of tender: ¥22,812 million (estimated)
The tender amount is equal to the maximum number of shares tendered (691,261) times the price pershare (33,000 yen).
(2) Financing method: Internal funds(3) Summary of accounting treatment
The exchange of shares will be treated for accounting purposes as a transaction under common control inaccordance with the Accounting Standards for Business Combinations (Accounting Standards Board of Japan[ASBJ], Statement No. 21, issued October 31, 2003, and revised December 26, 2008) and the Revised
Guidance on Accounting Standard for Business Combinations and Accounting Standard for Business
Divestitures (ASBJ Guidance No. 10, issued December 27, 2005, and revised December 26, 2008).

35