Contents of supporting data

 

1. Qualitative Information and Financial Statements …………………………………………………………………………	4
(1) Qualitative Information on Consolidated Business Performance …………………………………………………………	4
(2) Qualitative Information on Consolidated Financial Condition ……………………………………………………………	4
(3) Qualitative Information on Forecasts of Consolidated Operating Results ………………………………………………...	5
2. Other Information …………………………………………………………………………………………………………...	5
(1) Changes of Significant Subsidiaries………………………………………………………………………………………..	5
(2) Adoption of Simple Method in Accounting and Adoption of Particular Accounting Method  ……………………………	5
(3) Changes in Accounting Method  ………………………………………………………………………………………….	5
(4) Changes in Indication Method ……………………………………………………………………………………………..	5
(5) Important Events Affecting Going-concern Assumption…………………………………………………………………..	6
3. First Quarter Consolidated Financial Statements …………………………………………………………………………...	7
(1) First Quarter Consolidated Balance Sheets ………………………………………………………………………………..	7
(2) First Quarter Consolidated Statements of Income …………………………………………………………………………	9
(3) First Quarter Consolidated Statements of Cash Flows …………………………………………………………………….	11
(4) Notes on the Going-concern Assumption ………………………………………………………………………………….	13
(5) Notes in Case of Significant Changes in the Amount of Shareholders' Equity …………………………………………...	13
4. Complementary information ………………………………………………………………………………………………..	14
(1) (Reference) First Quarter Non-consolidated Financial Statements ………………………………………………………..	14
(2) Actual Operating Results (Consolidated) ………………………………………………………………………………….	18
(3) Actual Operating Results (Non-consolidated) ……………………………………………………………………………..	20

1. Qualitative Information and Financial Statements

(1) Qualitative Information on Consolidated Business Performance

Japan's economy during the consolidated first quarter under review continues to be severe with the unemployment rate remaining high, although business climate is surely picking up, as observed in continued increase in export, production and consumer spending.  Regarding the future prospect, while business climate is expected to move toward self-sustaining recovery, risks of downward pressure, such as concerns for worse-than-expected results in international economy and influence of deflation, still remain.

In consumer finance industry, business environment continues to be unpredictable with the full enforcement of the Money Lending Business Law, which introduced aggregate debt control and reduced cap interest rate, as well as sustained surge in interest refund claims.

Under such circumstances, TAKEFUJI CORPORATION and its subsidiaries' (the "Group") operating revenues for the consolidated first quarter under review amounted to 21,148 million yen (year-on-year down 39.9%) due to a decrease in interest income on direct cash loans, ordinary income amounted to 8,095 million yen (year-on-year down 15.5%) and net income amounted to 6,348 million yen (year-on-year down 31.5%).

 

(2) Qualitative Information on Consolidated Financial Condition

Total assets at the end of the first quarter under review on a consolidated basis was 559,217 million yen, down 127,713 million yen compared to that of the end of the previous consolidated fiscal year. This was mainly due to a decrease in direct cash loans to customers by 79,365 million yen, a decrease in cash and deposits by 20,304 million yen, a decrease in short-term loans receivable related to asset management in repurchase transaction by 19,989 million yen and a decrease in land due to transfer of real estate properties by 7,180 million yen.

As for liabilities, the amount decreased to 404,594 million yen, by 131,717 million yen compared to that of the end of the previous consolidated fiscal year. This was mainly due to a decrease in allowance for losses for refund of interest received from customers by 61,342 million yen due to responding to refund claims of interest, a decrease in current portion of long-term borrowings by 32,335 million yen and redemption of convertible bond-type bonds and consequent decrease by 42,400 million yen.

Regarding net assets, the amount increased to 154,624 million yen, by 4,004 million yen compared to that of the end of the previous consolidated fiscal year mainly due to an increase in retained earnings by 4,324 million yen. Consequently, shareholders' equity ratio was 27.6%, up 5.7 points compared to that of the end of the previous consolidated fiscal year.

 

(The situation of consolidated cash flows)

Cash and cash equivalent at the end of the first quarter under review on a consolidated basis (hereinafter called the "Funds") was 20,069 million yen, down 40,292 million yen compared to that of the end of the previous consolidated fiscal year.

Each cash flow situation and factors were as follows:

 

(Net cash provided by operating activities)

The Funds provided by operating activities were 25,567 million yen (28,856 million yen was provided in the previous year's same period). The principal sources of these cash flows were as follows; 61,342 million yen of decrease in allowance for losses for refund of interest received from customers (previously 25,317 million yen), 490 million yen for direct cash loans made to customers in our core business of consumer finance (previously 20,729 million yen), which was restrained since prioritizing cash and cash equivalents at hand, 36,498 million yen (previously 56,404 million yen) for direct cash loans collected from customers based on our core business of consumer finance and a decrease in direct cash loans to customers by 21,916 million yen due to transfer of loans receivable (previously 0 yen).

 

(Net cash provided by investing activities)

The Funds provided by investing activities were 8,827 million yen (76 million yen was used in the previous year's same period). The principal sources of these cash flows were as follows; 1,019 million yen for purchase of tangible and intangible fixed assets (previously 441 million yen) and 10,086 million yen (previously 0 yen) for proceeds from sales of tangible and intangible fixed assets for fund procurement.

 

(Net cash used in financing activities)

The Funds used in financing activities were 74,685 million yen (39,455 million yen was used in the previous year's same period). The principal sources of theses cash flows were as follows; 31,878 million yen of repayment for long-term borrowings (previously 34,576 million yen), 42,280 million yen of redemption for bonds (previously 2,177 million yen) including convertible bond-type bonds with subscription rights to shares and 2,027 million yen of dividends payment (previously 2,702 million yen).

 

(3) Qualitative Information on Forecasts of Consolidated Operating Results

There is no change to Forecasts of Consolidated Operating Results for the Fiscal Year Ending March 31, 2011 and Non-Consolidated Forecast for the Fiscal Year Ending March 31, 2011, both announced on May 13, 2010.

 

2. Other Information

(1) Changes of Significant Subsidiaries

None

 

(2) Adoption of Simple Method in Accounting and Adoption of Particular Accounting Method

A. Calculation Method of Write-off Estimate for Normal Loans

As there is no significant change between the credit loss ratio etc. at the end of the consolidated quarter under review and the credit loss ratio etc. at the end of the previous consolidated fiscal year, the write-off estimate is calculated based upon the credit loss ratio at the end of the previous consolidated fiscal year.

 

B. Calculation Method of Fixed Assets Depreciation and Amortization

As for assets adopting declining-balance method, the amount of depreciation and amortization is allocated based on related duration.

 

(3) Changes in Accounting Method

(Adoption of accounting standard for asset retirement obligations)

Effective as of the consolidated first quarter under review, the Group adopts Accounting Standard for Asset Retirement Obligations (ASBJ Statement No. 18 March 31, 2008) and Guidance on Accounting Standards for Asset Retirement Obligations (ASBJ Guidance No. 21 March 31, 2008).  Due to this change, income before income taxes for the quarter under review decreased by 1,015 million yen.

 

(Allowance for retirement benefits of directors and corporate auditors)

The Company had recorded necessary amount at the end of a fiscal year in accordance with internal rules to prepare for the retirement benefits of directors and corporate auditors. However, at the Annual General Shareholders' Meeting held on June 29, 2010, the Company abolished such scheme. It was resolved that retirement benefits for the directors' and corporate auditors' service period until the closing of the Annual General Shareholders' Meeting will be paid at the end of their term. Accordingly, approved amount of 188 million yen for allowance for retirement benefits of directors and corporate auditors was cancelled and was recorded in "Other fixed liabilities."

 

(4) Changes in Indication Method

(Regarding consolidated statements of income for the quarter)

"Salaries and bonuses" was included in "Other" in the Operating expenses at the first quarter of the previous consolidated fiscal year. However, because it exceeded 20/100 of the total other operating expenses, it is indicated separately in the consolidated quarter under review. For your reference, 2,974 million yen of Salaries and bonuses was included in "Other" in the Operating expenses for the first quarter of the previous fiscal year.

(5) Important Events Affecting Going-concern Assumption

The Group had been conducting funding through various, expeditious and flexible measures, such as borrowing from financial institutions, issuance of corporate bonds and securitization of direct cash loans to customers. However, while financial situation was becoming more and more severe due to sub-prime loan issue in the U.S. and Lehman Brothers' shock etc., funding environment surrounding the Group became more severe with financial needs for high-level interest refund claims and with concerns about impact of loan volume control that was introduced at the full enforcement of Money Lending Business Law on June 18, 2010. In addition, the Company was downgraded against this background to give rise to conflict against covenant for early redemption and other events for a part of borrowings.

In above mentioned situation, the Group considered various funding methods to improve cash position. As a result, during the first quarter under review on a consolidated basis, the Group conducted sale of real estate properties and sale of a part of loans receivable. Despite these conducts, new funding continues to be extremely difficult due to extending economic slowdown, unpredictable future of the industry and high-level interest refund claims.

As explained above, a material question about the Group's going-concern assumption exists under current circumstances.

The Group responds to said circumstances with approaches below:

1. Procurement of necessary funds and stabilizing cash position

As severe funding environment is expected to continue for the time being, the Group endeavors to procure necessary funds for near-term operation by conducting measures such as transfer of real estate properties held by the Group and loans receivable, as well as strives to stabilize total cash position through efforts including reducing burden of existing bonds and considering strategic operational tie-up to secure new financing method.

2. Improvement of business streamlining

The Group further advances existing business streamlining measures such as scrap-and-build reduction of branch offices as we have been conducting continuously and systematically, as well as making other efforts in business streamlining such as cost cut by reviewing contracts related to payments.

As a part of our measures to procure necessary funds and to stabilize cash position as mentioned above, during the quarter under review, we transferred real estate properties of the Company and a part of loans receivable, while aiming to maximize transfer price. As a result, we serviced early redemption of Euro-yen Convertible Bond-Type Bonds with Subscription Rights to Shares Due 2018 requested by bond holders, which was a recent peak for financial needs. We have been continuing funding by utilizing assets and some of the contracts have been concluded. We will further continue negotiation with counterparties, aiming for conclusion of contracts for real estate properties selected in the previous fiscal year and aiming for conclusion of transfer contracts for loans receivable including receivables, which were subject to Allowance for loss on transfer of receivables that was posted in the previous fiscal year.

We consider that the question about the Group's going concern assumption can be eliminated by surely conducting further business streamlining measures in addition to continuously advancing measures for stabilizing total cash position.

However, with economic conditions remaining severe and with influence of the revised Money Lending Business Law, it is not clear that funding environment surrounding the Group will change for better.  Thus a material uncertainty about the Group's going-concern assumption is currently recognized.

3. First Quarter Consolidated Financial Statements

(1) First Quarter Consolidated Balance Sheets

      (millions of yen)

	Current First Quarter as of June 30, 2010		Summary of previous Fiscal Year as of March 31, 2010
Assets:
Current assets
Cash and deposits	20,069	40,372
Direct cash loans to customers	510,112	589,477
Short-term loans receivable	-	19,989
Other current assets	39,112	43,819
Allowance for credit losses	-54,481	-60,658
Total current assets	514,812	633,000
Fixed assets
Tangible fixed assets	24,827	33,214
Intangible fixed assets	4,439	4,837
Investments and other assets	15,139	15,880
Total fixed assets	44,406	53,931
Total assets	559,217	686,931

 

                (millions of yen)

	Current First Quarter as of June 30, 2010		Summary of previous Fiscal Year as of March 31, 2010
Liabilities:
Current liabilities
Short-term borrowings	1,500	-
Current portion of bonds	67,170	9,068
Current portion of long-term borrowings	48,072	80,406
Income taxes payable	94	317
Allowance for bonuses	89	376
Allowance for loss on transfer of receivables	11,276	11,276
Other current liabilities	26,913	30,702
Total current liabilities	155,115	132,145
Fixed liabilities
Bonds payable	30,000	83,470
Convertible bond-type bonds with subscription rights to shares	-	42,400
Long-term borrowings	-	38
Allowance for losses for refund  of interest received from customers	211,611	272,953
Allowance for retirement benefits of employees	3,824	3,881
Allowance for retirement benefits of directors and corporate auditors	-	178
Other fixed liabilities	4,043	1,246
Total fixed liabilities	249,479	404,166
Total liabilities	404,594	536,311
Net assets:
Shareholders' equity
Capital stock	30,478	30,478
Capital surplus	52,263	52,263
Retained earnings	109,941	105,616
Treasury stock	-36,469	-36,469
Total shareholders' equity	156,213	151,889
Valuation and foreign currency translation adjustments
Valuation difference on available-for-sale securities	-1,080	-945
Foreign currency translation adjustments	-713	-526
Total valuation and foreign currency translation adjustments	-1,793	-1,471
Subscription rights to shares	203	202
Total net assets	154,624	150,620
Total liabilities and net assets	559,217	686,931

 

(2) First Quarter Consolidated Statements of Income

(millions of yen)

 

	Previous First Quarter (from April 1, 2009 to June 30, 2009)	Current First Quarter (from April 1, 2010 to June 30, 2010)
Operating revenues
Interest income on direct cash loans	33,741	20,012
Credit card revenues	15	10
Other financial revenues	34	4
Other operating revenues	1,385	1,121
Total operating revenues	35,175	21,148
Operating expenses
Financial expenses	2,931	2,092
Other operating expenses
Provisions for credit losses	12,026	4,722
Salaries and bonuses	-	2,539
Other	10,605	5,329
Total other operating expenses	22,631	12,591
Total operating expenses	25,562	14,683
Operating income	9,613	6,464
Non-operating income
Dividends income	124	18
Equity in gain of affiliates	-	13
Foreign exchange gains	-	1,614
Miscellaneous income	175	34
Total non-operating income	299	1,679
Non-operating expenses
Foreign exchange losses	306	-
Loss on investments in partnerships	-	41
Miscellaneous loss	30	8
Total non-operating expenses	337	48
Ordinary income	9,575	8,095

 

 

(millions of yen)

 

	Previous First Quarter (from April 1, 2009 to June 30, 2009)	Current First Quarter (from April 1, 2010 to June 30, 2010)
Extraordinary income
Gain on sales of investment securities	61	-
Gain on redemption of bonds	754	120
Gain on sales of fixed assets	-	1,352
Gain on derivatives cancellation	-	600
Other	-	495
Total extraordinary income	816	2,567
Extraordinary loss
Loss on devaluation of investment securities	576	-
Loss on sales of fixed assets	-	140
Loss on closing of branch offices	437	3
Loss on transfer of receivables	-	3,097
Loss on adjustment for changes of accounting standard for asset retirement obligations	-	1,015
Other	14	0
Total extraordinary loss	1,027	4,255
Income before income taxes	9,364	6,407
Income taxes-current	85	59
Income taxes-deferred	7	-
Total income taxes	92	59
Income before minority interests	9,272	6,348
Net income	9,272	6,348

(3) First Quarter Consolidated Statements of Cash Flows

(millions of yen)

	Previous First Quarter (from April 1, 2009 to June 30, 2009)	Current First Quarter (from April 1, 2010 to June 30, 2010)
Net cash provided by operating activities
Income before income taxes	9,364	6,407
Increase or decrease in allowance for retirement benefits of employees	95	-57
Increase or decrease in allowance for retirement benefits of directors and corporate auditors	1	-178
Increase or decrease in allowance for credit losses	-4,589	-6,177
Increase or decrease in allowance for losses for refund of interest received from customers	-25,317	-61,342
Write-offs	16,615	8,142
Interest repaid (portion of principal impaired)	10,798	13,321
Interest and dividends income	-124	-18
Gain or loss on sales of short-term and long-term investment securities	-61	-
Direct cash loans made to customers	-20,729	-490
Direct cash loans collected from customers	56,404	36,498
Decrease in direct cash loans due to transfer of receivables	-	21,916
Other	-13,420	7,773
Subtotal	29,038	25,795
Interest and dividends income received	124	18
Income taxes paid	-305	-246
Net cash provided by operating activities	28,856	25,567