ANNUAL REPORT 2012 for the year ended March 31, 2012

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

23. EQUITY

(A) EQUITY

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

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

i. Dividends

Under the Companies Act, companies can pay dividends at any time during the fiscal year in addition to the year-end dividend upon resolution at the shareholders' meeting. For companies that meet certain criteria, the Board of Directors may declare dividends (except for dividends-in-kind) at any time during the fiscal year if the company has prescribed so in its articles of incorporation.

However, the Company cannot do so because it does not meet all the above criteria.

Semiannual interim dividends may also be paid once a year upon resolution by the Board of Directors if the articles 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 the legal reserve and additional paid-in capital equals 25% of common stock. Under the Companies Act, the total amount of additional paid-in capital and legal reserve may be reversed without limitation. The Companies Act also provides that common stock, legal reserve, additional paid-in capital, other capital surplus and retained earnings can be transferred among the accounts 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, 2012 and 185,444,772 shares as of March 31, 2011 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, 2010 185,445 1,802
Number of shares increase 8*1
Number of shares decrease 0*2
Balance at March 31, 2011 185,445 1,810
Number of shares increase 2*3
Number of shares decrease 0*4
Balance at March 31, 2012 185,445 1,812
Notes:
  1. Increase in treasury stock
    Acquisition from consolidated subsidiary: 6 thousand shares
    Acquisition of any number of shares less than a full trading unit: 2 thousand shares
  2. Detail of decrease
    Sales of any number of shares less than a full trading unit: Less than a thousand shares
  3. Increase in treasury stock
    Acquisition of any number of shares less than a full trading unit: 2 thousand shares
  4. Detail of decrease
    Sales of any number of shares less than a full trading unit: Less than a thousand shares

(C) DIVIDEND

i. Dividend payment

Resolution Type of share Total amount Dividend per share Record date Effective date
Millions of
yen
Thousands of
U.S. dollars
Yen U.S. dollars
General Meeting of
  Shareholders
  on June 21, 2011
Common
stock
¥5,511 $67,098 ¥30.00 $0.365 March 31,
2011
June 22,
2011

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

Expected Resolution Type of share Source of
payment
Total amount Dividend per share Record date Effective date
Millions of
yen
Thousands of
U.S. dollars
Yen U.S. dollars
General Meeting of Shareholders
on June 27, 2012, approved
Common
stock
Retained
earnings
¥5,511 $67,098 ¥30.00 $0.365 March 31,
2012
June 28,
2012

24. CASH FLOWS INFORMATION

(A) The balance of cash and cash equivalents as of March 31, 2012 and 2011 is reconciled with the respective consolidated balance sheet items as follows:


  Millions of yen   Thousands of
U.S. dollars
2012 2011   2012
Consolidated balance sheet:        
Cash and deposits ¥60,085 ¥64,112   $731,499
Securities 5,000  
Short-term loans 3,999  
Time deposits with a maturity of over 3 months as of the date of acquisition (500)  
Segregated trustee deposits (84) (84)   (1,032)
Cash and cash equivalents at the end of year ¥60,001 ¥72,527   $730,467

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


  Millions of yen   Thousands of
U.S. dollars
2012 2011   2012
Assets and liabilities from finance leases recorded in the current fiscal year ¥1,008 ¥3,243   $12,266

(C) DESCRIPTION OF PROCEEDS FROM SALES OR REDEMPTIONS OF INVESTMENT SECURITIES


  Millions of yen   Thousands of
U.S. dollars
2012 2011   2012
Proceeds from sales of investment securities ¥ 971 ¥ 104   $ 11,824
Proceeds from redemptions of investment securities 1,028 1,042   12,512
Proceeds from distribution of limited liability partnerships and
  other similar partnerships or return of capital
50 30   609
Total proceeds from sales or redemptions of investment securities ¥2,049 ¥1,176   $24,945

(D) BREAKDOWN OF MAJOR ASSETS AND LIABILITIES THAT DECREASED OWING TO AN ABSORPTION-TYPE
      COMPANY SPLIT

The following is a breakdown of the assets and liabilities the Company succeeded to Seven CS Card Service Co., Ltd, by an absorption-type company split and proceeds.

Please refer to Note 4 for additional information on the absorption-type company split.

  Millions of yen   Thousands of
U.S. dollars
2012   2012
Current assets ¥ 158,288   $ 1,927,050
Non-current assets 49 596
Current liabilities (742) (9,037)
Difference 157,595   1,918,609
Value of the shares transferred (21,801)   (265,403)
Proceeds from an absorption-type company split ¥135,794   $1,653,206

25. NET INCOME PER SHARE

Reconciliation of the differences between basic and diluted net income per share ("EPS") for the year ended March 31, 2012 and 2011 is as follows:


For the year ended March 31, 2012: Millions of yen Thousands of
shares
Yen   U.S. dollars
Net income Weighted
average shares
EPS
Basic EPS          
Net income available to common shareholders ¥9,454 183,634 ¥51.48   $0.627
Effect of dilutive securities          
Securities issued by a consolidated subsidiary (114)        
Diluted EPS          
Net income for computation 9,340 183,634 50.86   0.619

For the year ended March 31, 2011: Millions of yen Thousands of
shares
Yen   U.S. dollars
Net income Weighted
average shares
EPS
Basic EPS          
Net income available to common shareholders ¥12,830 183,636 ¥69.86   $0.850
Effect of dilutive securities          
Securities issued by a consolidated subsidiary (84)        
Diluted EPS          
Net income for computation 12,746 183,636 69.41   0.845
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