| 1. | Significant Accounting Policies |
| �@ | (1) | Principles of Consolidation
The accompanying consolidated financial statements include the accounts of the Bank and its subsidiaries which are as follows:
(Subsidiaries)
The Saikyo Business Service Co., Ltd.
The Saikyo Lease Co., Ltd.
The Saikyo Million Card Co., Ltd.
The S.K. Ventures Co., Ltd. |
| �@ | (2) | The settlement day of the consolidated subsidiaries is March 31. |
| �@ | (3) | Items about the Accounting Standards |
| �@ | �@ | 1) | Evaluation Standards of Trading Account Securities
Trading account securities are stated at market value at the fiscal year end. Sales value is calculated by the moving-average method. |
| �@ | �@ | 2) | Evaluation Standards of Securities
| a) | Debt securities being held to maturity are stated at amortized cost computed by the moving-average method. Other securities are stated at cost or amortized cost computed by the moving-average method. | | b) | Securities included in Money held in trust are stated at the same method as described above. | |
| �@ | �@ | 3) | Derivatives
Derivatives are stated at market value. |
| �@ | �@ | 4) | Premises and Equipment
| a) | The Bank's Premises and Equipment are stated at cost accumulated depreciation.
Depreciation of Premises and Equipment is computed by the declining-balance method as stipulated by the Japanese corporation tax regulations.
The buildings acquired after April 1.1998 are depreciated by the straight-line method.
The estimated useful lives for buildings and equipments are as follows:
buildings: 5 to 60 years
equipment: 3 to 20 years
The Premises and Equipment of consolidated subsidiaries are depreciated primarily by the declining balance method, on the basis of the estimated useful lives of the assets. | | b) | Cost of computer software developed or obtained for internal use are deferred and amortized using the straight-line method over the estimated useful lives of 5 years. | |
| �@ | �@ | 5) | Reserve for Possible Loan Losses
According to the Uniform Rules, the Bank implemented an internal self-assessment rule for the credit quality of assets. Based on the rule, the Bank classifies a debtor into the following four risk categories based on their credit risk:
Legally Bankrupt.
Substantially Bankrupt.
Potential Bankrupt and Requiring Caution.
For claims to debtors who are legally bankrupt or substantially bankrupt, a specific reserve is provided based on the amount excluding amounts expected to be collected through the disposal of collateral or throught the execution of guarantees.
The Bank also provides specific reserves for assets to potential bankrupt debtors. Reserves should be provided in a required (appropriate) ratio of assets amounts not covered by collateral or guarantee.
The Bank also provides general reserve for substandard and normal debtors assets collectively. The ratio of the general reserve is determined based on the Bank's loan loss experience and current economic condition.
Based on these standards, all claims are subject to asset assessment conducted by the relevant business sections, and after this, a final assessment by an asset assessment department. Based on the results of these assessments, appropriate action is taken either to write off the claim or cover it with reserves.
The amounts deemed necessary for the reserve for possible loan losses of consolidated subsidiaries is provided based on historical loan losses experience and estimated collectibility of specific claims. |
| �@ | �@ | 6) | Reserve for Employees' Retirement Benefits
Reserve for employees' retirement benefits is provided for the payments of employees' retirement benefits based on estimated amounts of the actuarial retirement benefit obligation and the pension assets.Prior service cost is amortized using the straight-line method over 10 years. Net actuarial gain (loss) is amortized using the straight-line method over 10 years commencing from the next fiscal year of incurrence.
The unrecognized net retirement benefit obligation at the adoption of new accounting standard was ��1,290 million and was amortized at the fiscal year end. |
| �@ | �@ | 7) | Reserve for Losses on Real Estate-Collateralized Loans Sold
Reserve for losses on real estate-collateralized loans sold is provided based on the estimated losses with respect to real estate-collateralized loans sold to the Cooperative Credit Purchasing Company, Limited, considering the fair value of the collateral of such loans. |
| �@ | �@ | 8) | Foreign Currency Translation
Assets and liabilities which are payable and receivable in foreign currencies are translated into Japanese yen at the rate prevailing at each balance sheet date. |
| �@ | �@ | 9) | Finance Leases
Finance leases of the Bank and its subsidiaries which may be considered not transferable to the owners are accounted in the same way as the operating leases under the accounting principles generally accepted in Japan. |
| �@ | �@ | 10) | Method of Hedge Accounting
The method of hedge accounting is a "Macro Hedge" in which the Bank manages interest rate risks arising from various assets and liabilities with derivatives transactions as a whole. The Bank applies a risk adjustment approach based on the report issued by Japanese Institute of Certified Public Accountants "Tentative Treatments in Accounting and Audit for Banks on Application of Accounting Standard for Financial Instruments".
The effectiveness of the macro hedge is reviewed for a reduction in interest rate risk exposure and for the actual risk amount of derivatives within the permitted risk amount under the Bank's risk control policies.
The subsidiaries do not apply the method of hedge accounting. |
| �@ | �@ | 11) | Consumption Taxes
Consumption taxes are excluded from the financial statements for the Bank and its subsidiaries. |
| �@ | (4) | Assets and Liabilities of Subsidiaries
Assets and Liabilities of subsidiaries are evaluated by the wholly market value method. |
| �@ | (5) | Retained Earnings
Statements of retained earnings is stated as amount under the appropriation of profit, which is settled during the consolidated accounting year. |
| �@ | (6) | Statement of Cash Flows
Cash and cash equivalents in the statements of cash flows represent cash on hand and deposits with The Bank of Japan among "cash and due from banks" in the consolidated balance sheets. |
| �@ | (7) | Translation to U.S. Dollars
For convenience only, the amounts of U.S. dollar presented in the following financial statements are translated from those of Japanese yen at the rate of \123.90 to US$1, the exchange rate prevailing on March 30,2001.
All yen figures are rounded down to the nearest one million yen and U.S. dollar figures are rounded down to the nearest one thousand U.S. dollar. Therefore, the total amounts in each columns may not add up to the totals.
(Additional Information) |
| �@ | �@ | 1) | Effect of Adoption of New Accounting Standard for Employees' Retirement Benefits
The new accounting standard for employees' retirement benefits was adopted for the current fiscal year. As a result, Ordinary loss decreased by \119 million and Loss before income taxes decreased by \1,409 million, respectively. |
| �@ | �@ | 2) | Effect of Adoption of New Accounting Standard for Financial Instruments
The new accounting standard for financial instruments was adopted for the current fiscal year.
As a result, Ordinary loss and Loss before income taxes decreased by \7 million, respectively. |
| �@ | �@ | 3) | New Foreign Exchange Accounting Standards
The Bank continued to adopt the "New Foreign Exchange Accounting Standards".
The subsidiaries have no foreign exchange transactions in this fiscal year. �@ |
| 2. | Note to Consolidated Balance Sheets |
| �@ | (1) | Loans to customer in bankruptcy proceedings at the end of term amounted to \10,133million, and non-accrual delinquent loans amounted to \16,154million.
Loans to customer in bankruptcy proceedings are loans for which circumstances apply as stated in the Implementation Ordinances for the corporation Tax Law (Government Ordinance No.97, 1965) among non-accrual loans (excluding loans written off) for which there are no prospects for recovery or repayment of principal or interest for which payment of principal or interest has not been received for a substantial period or for other reasons.
Non-accrual delinquent loans are those loans other than loans to customer in bankruptcy proceedings and other than loans for which interest payments have been rescheduled with the objective of assisting these borrowers in business restructuring. |
| �@ | (2) | Loans past due for three months or more at the end of term amounted to ��125million.
Loans past due for three months or more are those loans for which payments of principal or interest have not been received for a period of three months or more beginning with the next business day following the last due date for such payments, and are not included in loans to customer in bankruptcy proceedings or non-accrual delinquent loans. |
| �@ | (3) | Restructured loans under the revised uniform rules at the end of term amounted to \20,017million.
Restructured loans under the revised uniform rules are those loans for which the bank has provided more favorable terms and conditions - including reducing interest rates, rescheduling interest and principal payment, or the waiving of claim on the borrower - to the borrower than those in the original loan agreement, with the aim of providing restructuring assistance and support. Such loans exclude loans to customer in bankruptcy proceedings, non-accrual delinquent loans and loans past due for three months or more. |
| �@ | (4) | Total of Risk Management Credits at the end of term amounted to \46,430million.
The amounts mentioned above item no.1 to 4 are those which is before deducting reserve for possible loan losses. |
| �@ | (5) | Commercial bills taken by discounting at the end of term amounted to \20,822million. |
| �@ | (6) | Assets Pledged as collateral and liabilities related to the pledges assets as of March 31, 2001
are as follows:
| �@ | Millions of yen
| | Assets pledged as collateral | �@ | | �@�@�@Securities | \9,894 | | �@�@�@Due from Banks | 18 | | �@�@�@Movables | 932
| | Liabilities related to the above pledged assets | �@ | | �@�@�@Deposits | \712 | | �@�@�@Borrowed money | 3,841
|
In addition, \12,320million of securities and \150million of due from banks are pledged as collateral for settlement of exchange and margin money for futures.
Guaranty money deposited amounts to \326 million and margin money for futures amounts to 6 million, included in premises and equipment. |
| �@ | (7) | Contracts of overdraft facilities and loan commitment limits are the contracts that the Bank lends to customers up to the prescribed limits in response to customers' application of loan as long as there is no violation of any condition in the contracts. The unused amount within the limits total \52,156million relating to these contracts.
Since many of these commitments expire without being drawn dawn, the unused amount does not necessarily represent a future cash requirement. Most of these contracts have conditions that the Bank and its subsidiaries can refuse customers' application of loan or decrease the contract limits with proper reasons (e.g., changes in financial situation, deterioration in customers' creditworthiness). At the inception of contracts, the Bank and its subsidiaries obtain real estate, securities, etc. as collateral if considered to be necessary. Subsequently, the Bank and its subsidiaries perform periodic review of the customers' business results based on internal rules, and take necessary measures to reconsider conditions in contracts and/or require additional collateral and guarantees. |
| �@ | (8) | The land used in the ordinary course of business is revaluated as of March 31, 1998 in accordance with The Revaluation Act of Land Properties (Law No.34, 1998). The difference between current and previous evaluations are stated that due to tax of them is accounted as "Deferred Income Tax Liabilities for Revaluation Excess" and grouped into the liabilities, and the balance deducted by that amount is stated as "Revaluation Excess" and grouped into the capital.
Revaluation method in accordance with Art.3-3, of Law 34:
Revaluation are made based on the method that forms the basis for calculating land value taxes as set out in Art.2-4 of Ordinance Implementing the Law Concerning Land Revaluation (Government Ordinance No.119, 1998) with appropriate adjustments.
The difference between the total running prices of lands by revaluation at the end of term and the total book values after revaluation of relevant lands for business is \1,301million. |
| �@ | (9) | Accumulated depreciation as of March 31, 2001 is \12,266million. �@ |
| 3. | Note to Consolidated Statements of Income and Retained Earnings |
| �@ | (1) | Other expenses for the year ended March 31, 2001 include \756million losses on sale of loans to The Resolution and Collection Co., Ltd. |
| �@ | (2) | Other income for the year ended March 31, 2001 include \55million Profits on sale of land. |
| �@ | (3) | Other expenses for the year ended March 31, 2001 include following items:
\28 million losses as retirement benefits to directors.
\1,290 million losses as unrecognized net retirement benefit obligation as the adoption of new accounting standard.
\2,621 million losses of stocks by involuntary depreciation.
\2,427 million losses as securities investment trust sold.
\126 million losses as foreign securities sold. �@ |
| 4. | Note to Consolidated Statements of Cash Flows |
| �@ | (1) | As of March 31, 2001, the linkage between "cash and cash equivalents" and "cash and due from banks"stated in the consolidated balance sheets is as follows: |
| �@ | �@ | | �@ | Millions of yen
| | Cash and due from banks | \30,056 | | Time deposits | -498 | | Ordinary deposits | -4,824 | | Foreign deposits | -9,107 | | Certificate of deposits | -1,000 | | Others | -52
| | Cash and cash equivalents | \14,574
|
|
| �@ | (2) | Assets and Liabilities of Newly Consolidated Subsidiaries
Two subsidiaries have been newly consolidated due to additional purchases of equity of companies including The Saikyo Lease Co.,Ltd. and The Saikyo Million Card Co.,Ltd.
The outline of assets and liabilities of these subsidiaries is as follows: |
| �@ | �@ | | �@ | Millions of yen
| | Assets | \15,182 | | Liabilities | -14,766 | | Minority interest | -121 | | Other | -48 | | Adjustment account of consolidation | 54
| | Acquisition cost of the equity of the two subsidiaries mentioned above | 300 | | Cash and cash equivalents of the two subsidiaries mentioned above | 0
| Net cash provided by additional purchases of equity
�@�@�@�@�@�@�@�@of the two subsidiaries mentioned above | 299
| �@ |
| 5. | Note to Finance Leases
Information of leased property such as acquisition cost, accumulated depreciation, obligation under finance leases, depreciation expense, interest income of finance leases for the year ended March 31, 2001 is as follows: |
| �@ | �@ | | �@ | Millions of yen
| | �@ | Equipment | �@ | Total | | �@ |
| Acquisition costs
�@ | \2,715 | �@ | \2,715 | | Accumulated depreciation | 1,459 | �@ | 1,459 | | �@ |
| | Net leased property | \1,256 | �@ | �@�@\1,256 | | �@ |
|
| �@ | Millions of yen
| Obligations under finance leases:�@
| �@ | | �@Due within one year | \435 | | �@Due after one year | 885
| | Total | \1,321
|
| �@ | Millions of yen
| | Income of finance leases | \623 | | Depreciation expenses | 508 | | Imputed interest expense portion | 99 |
The amount corresponding to interest income is the difference between total lease fees to be paid and the amount corresponding to acquisition costs of the properties. The interest method is used to allocate the amounts to applicable fiscal years.
�@ |
| 6. | Market Value Information for Securities |
| �@ | (1) | Trading securities
| �@ | Millions of yen
| | Amount in the balance sheet | - | | Valuation gain(loss)include in income(loss)before income taxes and others | - |
|
| �@ | (2) | Marketable debt securities being held to maturity
| �@ | Millions of yen
| | �@ | Amount in the
balance sheet | Market value | Differences | Gain | Loss | | Government bonds | \23,440 | \23,705 | \265 | \265 | \0 | | Municipal bonds | 311 | 321 | 9 | 9 | - | | Corporate bonds | 4,702 | 4,762 | 59 | 59 | 0 | | Others | 4,771
| 4,818
| 46
| 53
| 7
| | Total | \33,226
| \33,607
| \381
| \388
| \7
|
|
| �@ | (3) | Marketable securities available for sale
| �@ | Millions of yen
| | �@ | Amount in the
balance sheet | Market value | Differences | Gain | Loss | | Stocks | \7,245 | \6,829 | \-415 | \87 | \502 | | Bonds | 22,612 | 23,241 | 629 | 639 | 9 | | �@Government bonds | 4,356 | 4,420 | 63 | 70 | 6 | | �@Municipal bonds | 1,882 | 1,943 | 61 | 61 | - | | �@Corporate bonds | 16,373 | 16,877 | 503 | 507 | 3 | | Others | 3,134
| 3,172
| 38
| 40
| 1
| | Total | \32,992
| \33,244
| \252
| \766
| \514
|
|
| �@ | (4) | Marketable Dept Securities being Held to Maturity Sold
There are no marketable dept securities being held to maturity sold in this fiscal year. |
| �@ | (5) | Securities Available for Sale Sold
Securities available for sale sold in this fiscal year are as follows:
| Millions of yen
| Proceeds from sale
| Gain
| Loss
| | 17,888 | 37 | 549 |
|
| �@ | (6) | Securities for Which Fair Value is not Readily Determinable
Principal items in securities for which fair value is not readily determinable are as follows:
| �@ | Millions of yen
| | Contents | Amount in the balance sheet | | Debt Securities being held to maturity | �@ | | �@Domestic privately-placed bonds | 50 | | �@Domestic negotiable deposits | 1,000 | | Other securities | �@ | | �@Non-listed stocks | 2,265 | | �@Domestic privately-placed bonds | 2,225 |
|
| �@ | (7) | Securities Changed Purpose being Held
There are no securities changed the purpose being held in this fiscal year. |
| �@ | (8) | Repayment Schedule of Bonds Held
The repayment schedule of bonds classified as securities available for sale and being held to maturity is as follows:
| �@ | Millions of yen
| | �@ | | Due from 1
year to 5 years | | Due from 5
years to 10 years | | | | Bonds | 22,765 | 18,865 | 8,524 | 1,001 | | �@Government bonds | 16,531 | 9,472 | 1,504 | 288 | | �@Municipal bonds | 586 | 564 | 1,043 | - | | �@Corporate bonds | 5,648 | 8,827 | 5,976 | 713 | | Others | 745
| 1,175
| 3,541
| 2,500
| | Total | 23,511
| 20,040
| 12,066
| 3,501
|
|
| 7. | Market Value Information for Money held in Trust
Classification of Money held in Trust for each purpose is as follows:
| �@ | �@ | �@ | �@ | Millions of yen
| | Money held in Trust for trading purpose | �@ | | �@Amount in the balance sheet | 992 | | �@Valuation gain(loss) included in income(loss) before income taxes�@ | -0 | | �@ | �@ | �@ | �@ | �@ | �@ | | Other Money held in Trust | �@ | (Millions of yen) | �@ | | | Amount in the
balance sheet | | | | | �@ |
| �@ | | 2,978 | 2,978 | - | - | - | �@ |
|
| 8. | Derivatives
Financial derivatives with credit risk of the Bank as of March 31,2000 and 2001 are as follows:
| �@ | Millions of yen
| | �@ | 2000 | 2001 | | �@ |
|
| | �@ | Notional | Credit-risk | Notional | Credit-risk | | �@ | amounts | equivalents | amounts | equivalents | | �@ |
|
| | �@ | �@�@ | �@ | �@ | �@ | | Interest rate and currency swaps | \15,636 | \202 | \20,037 | \172 | | Foreign exchange contracts | 41,305 | 666 | 27,952 | 781 | | �@ |
|
| | Total | \56,941 | \869 | \47,989 | \953 | | �@ |
|
|
|
| �@ | (1) | The credit risk equivalents amount of off-balance-sheet transactions is calculated using the current exposure method regarding interest rate and currency swaps and foreign exchange contracts. |
| �@ | (2) | Foreign exchange contracts and purchased options with original contract terms of 14days or less are excluded from the previous table as of March 31, 2000 and 2001 are as follows:
| �@ | Millions of yen
| | �@ | 2000
| 2001
| | �@ | Notional | Notional | | �@ | amounts
| amounts
| | �@ | �@�@ | �@ | | Foreign exchange contracts�@ | \6,449
| \8,186
| �@ |
| 9. | Employees' Retirement Benefits |
| �@ | (1) | The funded status and amounts recognized in the consolidated balance sheet are as follows:
| �@ | Millions of yen
| | Projected benefit obligation | \-8,407 | | Fair value of plan assets | | | Projected benefit obligation in excess of plan assets | -4,120 | | Unrecognized net obligation at transition | - | | Unrecognized net actuarial loss | 788 | | Unrecognized prior service cost | | | Net liability recognized | -3,332 | | Prepaid pension cost | | | Liability for employees' retirement benefits | \-3,332
|
|
| �@ | (2) | Employees' retirement benefit expenses in the consolidated statement of income are as follows:
| �@ | Millions of yen
| | Service costs-benefits earned during the year | \494 | | Interest cost on projected benefit obligation | | | Expected return on plan assets | -186 | | Amortization of prior service costs | - | | Amortization of actuarial loss | - | | Amortization of net obligation at transition | | | Others | -
| | Employees' retirement benefit expenses | |
|
| �@ | (3) | Standards for calculation of projected benefit obligation etc.
| Discount rate | 3.5% | | Rate of expected return on plan assets | 4.0% | Estimated amount of all retirement benefits to be paid
at the future retirement date | point method | | Number of years prior service cost to be amortized within | 10 years | | Number of years actuarial loss to be amortized wihtin | 10 years |
|
| 10. | Tax-Effect Accounting |
| �@ | (1) | The principal reasons and breakdown for Deferred Income Tax Assets
Deferred income tax assets as of March 31,2001 comprised as follows:
| �@ | Millions of yen
| | Net operating losses carry forward | \903 | | Excess reserve for employees' retirement benefits | | | Excess reserve for possible loan losses | 5,148 | | Excess depreciation of properties | 364 | | Excess redeem of stocks | 798 | | Others | | | Sub total | 8,752
| | Evaluation reserve | | | Total | 8,742
|
|
| �@ | (2) | A material difference may emerge for companies submitting consolidated financial statements between the legal effective tax rate and the tax burden after the application of tax-effect accounting. The cause of difference are as follows:
| Statutory Effective Tax Rate | 41.74%
| | Adjustment Items | �@ | �@Entertainment expenses and other that are not treated
�@�@�@�@�@�@�@�@�@�@�@�@�@�@�@as expenses for tax purposes | -0.24% | | �@Inhabitant tax and other | -0.11% | | �@Others | -0.82%
| Tax burden of corporate and other taxes after the
�@�@�@�@�@�@�@�@�@�@�@application of tax-effect accounting | 40.55%
|
|
| 11. | Segment Information |
| �@ | (1) | Business Segment Information
Subsidiaries are engaged in business of finance leasing and others. As the proportion of those
activities is deemed immaterial, the segment information of those business is not disclosed. |
| �@ | (2) | Geographic Segment Information
As subsidiaries are engaged in business in domestic area only, the geographic segment information of those business is omitted. |
| �@ | (3) | Income from Foreign Operations
| �@ | Millions of yen
| �@ | | �@ | Ordinary Income
(Foreign Operations)(a) | Ordinary Income
(Consolidated)(b) | Ratio
(a)/(b) | | �@ |
| | Year ended March 31,2000 | 2,858 | 23,420 | 12.2% | | �@ |
| | Year ended March 31,2001 | 2,775 | 21,136 | 13.1% | | �@ |
|
Ordinary income (foreign operations) represents the sum of ordinary income from foreign
currency transactions, yen-denominated trade bills and yen-denominated transactions with
non-residents in Japan. The amounts of operating income by country or area are not
available.
|
| 12. | Per Share Data
Net assets per share as of March 31, 2001 and net income per share for the year ended March
31, 2001 are as follows:
| Net assets per share | \362.27 | | Net income per share | -87.38 | | Diluted net income per share�@�@�@ | - |
|
| �@ | (1) | The computation of net income per share is based on the weighted average number of share of common stock outstanding during the year. |
| �@ | (2) | As no potential stock is held, diluted net income per share is not described.
�@ |
| 13. | Capital Adequacy Ratio (Domestic Standard)
| �@ | Millions of yen
| | �@ | 2000 | 2001 | | �@ |
| | Tier 1 | �@ | �@ | | �@Capital stock | \8,099 | \8,099 | | �@Capital surplus | 5,745 | 5,745 | | �@Retained earnings | 15,765 | 9,152 | | �@Minority interest | - | 189 | | �@ |
| | �@Total(a) | \29,611 | \23,187 | | �@ |
| | Tier 2 | �@ | �@ | | �@45% of the balance between revalued amount | �@ | �@ | | �@and book value before revaluation | 2,048 | 2,048 | | �@Reserve for possible loan losses | 2,067 | 2,372 | | �@ |
| | �@Total | 4,115 | 4,420 | | �@ |
| | �@Count in net worth(b) | 4,115 | 4,420 | | �@Deductions(c) | - | 50 | | �@ |
| | Net worth(a)+(b)-(c)=(d) | \33,726 | \27,558 | | �@ |
| | Risk-Weighted Assets | �@ | �@ | | �@On-balance-sheet exposure | 395,366 | 373,517 | | �@Off-balance-sheet exposure | 7,016 | 6,088 | | �@ |
| | �@Total(e) | \402,382 | \379,605 | | �@ |
| | Capital Adequacy Ratio(Domestic Standard)(d)/(e)x100 | 8.38% | 7.25% | | �@ |
| �@ |
| 14. | Risk Management Credits
| �@ | Millions of yen
| | �@ | 2000 | 2001 | | �@ |
| | Loans to customers in bankruptcy proceedings | 12,360 | 10,133 | | Non-accrual delinquent loans | 9,397 | 16,154 | | Loans past due for three months or more | 195 | 125 | | Restructured loans under the revised uniform rules | 7,615 | 20,017 | | �@ |
| | Total | 29,568 | 46,430 | | �@ |
| | Ratio to total balance of loans and bills discounted | 5.96% | 9.27% | | �@ |
| |
