ANNUAL REPORT 2011 for the year ended March 31, 2011

Notes To Consolidated Financial Statements

Credit Saison Co., Ltd. and Consolidated Subsidiaries
For the Years Ended March 31, 2011 and 2010

20. Equity

(A) Equity

Japanese companies are subject to the Companies Act of Japan (the "Companies Act").

The significant provisions in the Companies Act that affect financial and accounting matters are summarized below:

i. Dividends

Under the Companies Act, companies can pay dividends at any time during the fiscal year in addition to the year-end dividend upon resolution at the shareholders' meeting. For companies that meet certain criteria, the Board of Directors may declare dividends (except for dividends in kind) at any time during the fiscal year if the company has prescribed so in its articles of incorporation. However, the Company cannot do so because it does not meet all the above criteria.

Semiannual interim dividends may also be paid once a year upon resolution by the Board of Directors if the articles of incorporation of the company so stipulate.

The Companies Act provides certain limitations on the amounts available for dividends or the purchase of treasury stock.

The limitation is defined as the amount available for distribution to the shareholders, but the amount of net assets after dividends must be maintained at no less than ¥3 million.

ii. Increases/decreases and transfer of common stock, reserve and surplus

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

iii. Treasury stock and treasury stock acquisition rights

The Companies Act also provides for companies to purchase treasury stock and dispose of such treasury stock by resolution of the Board of Directors.

The amount of treasury stock purchased cannot exceed the amount available for distribution to the shareholders which is determined by specific formula.

Under the Companies Act, stock acquisition rights are presented as a separate component of equity. The Companies Act also provides that companies can purchase both treasury stock acquisition rights and treasury stock. Such treasury stock acquisition rights are presented as a separate component of equity or deducted directly from stock acquisition rights.

(B) Common Stock

The Company has 300,000,000 authorized shares of which 185,444,772 shares as of March 31, 2011 and 185,444,772 shares as of March 31, 2010 were issued.

Type and number of shares issued and treasury stock

  Thousands of shares
Issued shares
(Common stock)
Treasury stock
(Common stock)
Balance at April 1, 2009 181,885 1,743
Number of shares increase 3,560*1 177*2
Number of shares decrease - 118*3
Balance at March 31, 2010 185,445 1,802
Number of shares increase - 8*4
Number of shares decrease - 0*5
Balance at March 31, 2011 185,445 1,810
Note:
  1. Increase in number of issued shares
    Issuance of new shares by share exchanges: 3,560 thousand shares
  2. Increase in treasury stock
    Acquisition of fractional shares by share exchanges: Less than a thousand shares
    Acquisition of treasury stock by consolidated subsidiaries because of share exchanges: 167 thousand shares
    Acquisition of any number of shares less than a full trading unit: 9 thousand shares
  3. Detail of decrease
    Sales of treasury stock acquired by consolidated subsidiaries because of share exchanges: 117 thousand shares
    Sales of any number of shares less than a full trading unit:1 thousand shares
  4. Increase in treasury stock
    Acquisition from consolidated subsidiary: 6 thousand shares
    Acquisition of any number of shares less than a full trading unit: 2 thousand shares
  5. Detail of decrease
    Sales of any number of shares less than a full trading unit: Less than a thousand shares

(C) Stock Option Plans

The Company has the following option plans for directors, corporate auditors, officers, employers and corporate counselors of the Companies as of March 31, 2011, which were approved at the General Shareholders' Meetings:


Date of approval Number of stock
acquisition rights
unexercised
Type and number of
targeted shares
Exercise price Effective period Issue price Per share addition to
common stock
June 25, 2005 14,903 Common stock
1,490,300 shares
¥3,740 per share June 30, 2007 to
June 29, 2010
¥3,740 ¥1,870
Note:
  1. Conditions of execution
    In the event a granted person retires or resigns under the regulations, stock acquisition rights may be exercised within two years after that.In
    the event a granted person retires voluntarily or dies, stock acquisition right will be canceled.
  2. Transfer of stock option
    Transfer of stock option to a third party needs the approval of the Board of Directors' Meeting.

(D) Dividend

i. Dividend payment

Resolution Type of share Total amount Dividend per share Record date Effective date
Million of
yen
Thousands of
U.S. dollars
Yen U.S. dollars
General Meeting of
  Shareholders
  on June 21, 2010
Common
stock
¥5,511 $66,283 ¥30.00 $0.361 March 31,
2010
June 28,
2010

ii. For dividend payments with aneffective date in the year ended March31,2011, the record date occurred in the year ended March 31,2010

Expected Resolution Type of share Source of
payment
Total amount Dividend per share Record date Effective date
Million of
yen
Thousands of
U.S. dollars
Yen U.S. dollars
General Meeting of
  Shareholders
  on June 21, 2011
Common
stock
Retained
earnings
¥5,511 $66,283 ¥30.00 $0.361 March 31,
2011
June 22,
2011

21. Cash Flow Information

(A) The balances of cash and cash equivalents as of March 31,2011 and 2010 are reconciled with the respective consolidated balance sheet items as follows:


  Millions of yen   Thousands of
U.S. dollars
2011 2010   2011
Consolidated balance sheet:        
Cash and deposits ¥64,112 ¥64,232   $771,035
Securities 5,000 -   60,132
Short-term loans 3,999 8,999   48,099
Time deposits with a maturity of over 3 months of the data of acquisition (500) 0   (6,013)
Segregated trustee deposits (84) (100)   (1,012)
Cash and cash equivalents at end of year ¥72,527 ¥73,131   $872,241

(B) Non-cash investing and financing activities as of March 31, 2011 and 2010 are as follows:


  Millions of yen   Thousands of
U.S. dollars
2011 2010   2011
Assets and liabilities to finance leases recorded at the current fiscal year ¥3,243 ¥3,307   $39,003
Increase in capital surplus by share exchanges - 3,164   -

(C) Description of Proceeds From Sales Or Redemption of Investment Securities


  Millions of yen   Thousands of
U.S. dollars
2011 2010   2011
Proceeds from sales of investment securities ¥ 104 ¥11,712   $ 1,249
Proceeds from redemption of investment securities 1,042 11   12,533
Proceeds from distribution of limited liability partnerships and
  other similar partnerships or return of capital
30 21   362
Total proceeds from sales or redemption of investment securities ¥1,176 ¥11,744   $14,144

(D) Breakdown of Major Assets And Liabilities of Subsidiaries Newly Added To The Consolidation Through Share Acquisition

The following is a breakdown of assets and liabilities of newly consolidated subsidiaries at the time of the first consolidation, acquisition costs of these subsidiaries, and net revenues from or net payments for acquisitions.

Value Balance Silent Partnership operated by Value Balance Inc. Millions of yen
2010
Current assets ¥ 17,680
Noncurrent assets 136
Current liabilities (899)
Long-term liabilities (14,273)
Negative goodwill (69)
Equity in purchase (800)
Total 1,775
Cash and cash equivalents (2,319)
Net increase in purchase ¥ 544

22. Net Income Per Share

Reconciliation of the differences between basic and diluted net income per share ("EPS") for the years ended March 31, 2011 and 2010 is as follows:


For the year ended March 31, 2011: Millions of yen Thousands of
shares
Yen   U.S. dollarsn
Net income Weighted
average shares
EPS
Basic EPS          
Net income available to common shareholders ¥12,830 183,636 ¥69.86   $0.840
Effect of dilutive securities          
Securities issued by a consolidated subsidiary (84)        
Diluted EPS          
Net income for computation 12,746 183,636 69.41   0.835

For the year ended March 31, 2010 Millions of yen Thousands of
shares
Yen   U.S. dollarsn
Net income Weighted
average shares
EPS
Basic EPS          
Net income available to common shareholders ¥18,680 182,271 ¥102.48   $1.101
Effect of dilutive securities          
Securities issued by a consolidated subsidiary (33)        
Diluted EPS          
Net income for computation 18,647 182,271 102.30   1.100
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