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<TITLE>NISSIN CO., LTD.</TITLE>
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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>
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<DIV align="center" style="font-size: 14pt; margin-top: 6pt"><B>UNITED STATES SECURITIES AND EXCHANGE COMMISSION</B>
</DIV>

<DIV align="center" style="font-size: 12pt"><B>WASHINGTON, D.C. 20549</B>
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<DIV align="center" style="font-size: 18pt; margin-top: 10pt"><B>FORM 20-F</B>
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<DIV align="left" style="font-size: 10pt; margin-top: 5pt"><B>(Mark One)</B>

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    <TD align="center"><FONT face="Wingdings">&#111;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD><B>REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR 12(g) OF THE SECURITIES EXCHANGE ACT OF 1934</B></TD>
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<DIV align="center" style="font-size: 10pt; margin-top: 5pt"><B>OR</B>
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    <TD align="center"><FONT face="Wingdings">&#254;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD><B>ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934</B></TD>
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</TABLE>
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<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 12%"><B><B>For the fiscal year ended March&nbsp;31, 2006</B>
</B>
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<DIV align="center" style="font-size: 10pt; margin-top: 5pt"><B>OR</B>
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    <TD align="center"><FONT face="Wingdings">&#111;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD><B>TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934</B></TD>
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<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 12%"><B><B>For the transition period from </B>&nbsp;<U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U>&nbsp;<B>to</B>&nbsp;<U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U>
</B>
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<DIV align="center" style="font-size: 10pt; margin-top: 5pt"><B>OR</B>
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<TR valign="top">
    <TD align="center"><FONT face="Wingdings">&#111;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD><B>SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934</B></TD>
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</TABLE>
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<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 12%"><B><B>Date of event requiring this shell company report</B>&nbsp;<U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U><U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U>
</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>Commission file number: 1-31416</B>
</DIV>


<DIV align="center" style="font-size: 24pt; margin-top: 5pt"><B>Kabushiki Kaisha Nissin</B>
</DIV>

<DIV align="center" style="font-size: 10pt">(Exact name of Registrant as specified in its charter)</DIV>


<DIV align="center" style="font-size: 24pt; margin-top: 10pt"><B>NISSIN CO., LTD.</B>
</DIV>

<DIV align="center" style="font-size: 10pt">(Translation of Registrant&#146;s name into English)</DIV>


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    <TD align="center" valign="bottom"><B>Japan</B>
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><B>Shinjuku L-Tower 15F<BR>
6-1, Nishi Shinjuku 1-chome<BR>
Shinjuku-ku, Tokyo 163-1525<BR>
Japan</B></TD>
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<TR valign="bottom">
    <TD align="center" valign="top">(Jurisdiction of incorporation or organization)
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    <TD>&nbsp;</TD>
    <TD align="center" valign="top">(Address of principal executive offices)</TD>
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<DIV align="center" style="font-size: 10pt; margin-top: 5pt">Securities registered or to be registered pursuant to Section&nbsp;12(b) of the Act:
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    <TD align="center" valign="top">Title of each class
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">Name of each exchange on which registered</TD>
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    <TD align="center" valign="top" style="border-top: 1px solid #000000">&nbsp;
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
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    <TD align="center" valign="top"><B>Common Stock*</B>
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    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><B>New York Stock Exchange</B></TD>
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<DIV align="center" style="font-size: 10pt; margin-top: 5pt">Securities registered or to be registered pursuant to Section&nbsp;12(g) of the Act: <B>None</B><BR>
Securities for which there is a reporting obligation pursuant to Section&nbsp;15(d) of the Act: <B>None</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 5pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Indicate the number of outstanding shares of each of the issuer&#146;s classes of capital or
common stock as of the close of the period covered by the annual report: <B>2,732,839,214 shares of
our common stock outstanding at March&nbsp;31, 2006, including 4,799,200 shares represented by 479,920
American Depositary Shares, as adjusted for our 2-for-1 stock split in April&nbsp;2006.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 5pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule
405 of the Securities Act. Yes&nbsp;<FONT face="Wingdings">&#254;</FONT>&nbsp;&nbsp;No&nbsp;<FONT face="Wingdings">&#111;</FONT>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 5pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If this report is an annual or transition report, indicate by check mark if the registrant is
not required to file reports pursuant to Section&nbsp;13 or 15(d) of the Securities Exchange Act of
1934. Yes&nbsp;<FONT face="Wingdings">&#111;</FONT>&nbsp;&nbsp;No&nbsp;<FONT face="Wingdings">&#254;</FONT>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 6%">Note &#151; Checking the box above will not relieve any registrant required to file
reports pursuant to Section&nbsp;13 or 15(d) of the Securities Exchange Act of 1934 from
their obligations under those Sections.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 5pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Indicate by check mark whether the registrant: (1)&nbsp;has filed all reports required to be filed
by Section&nbsp;13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12&nbsp;months (or
for such shorter period that the registrant was required to file such reports), and (2)&nbsp;has been
subject to such filing requirements for the past 90&nbsp;days.&nbsp;Yes&nbsp;<FONT face="Wingdings">&#254;</FONT>&nbsp;&nbsp;No&nbsp;<FONT face="Wingdings">&#111;</FONT>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 5pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Indicate by check mark whether the registrant is a large accelerated filer, an accelerated
filer, or a non-accelerated filer. See definition of &#147;accelerated filer&#148; in Rule&nbsp;12b-2 of the
Exchange Act. (Check one):
</DIV>
<DIV align="center" style="font-size: 10pt">Large accelerated filer&nbsp;<FONT face="Wingdings">&#254;</FONT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accelerated filer&nbsp;<FONT face="Wingdings">&#111;</FONT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Non-accelerated filer&nbsp;<FONT face="Wingdings">&#111;</FONT></DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 5pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Indicate by check mark which financial statement item the registrant has elected to follow.&nbsp;Item&nbsp;17&nbsp;<FONT face="Wingdings">&#111;</FONT>&nbsp;&nbsp;Item&nbsp;18&nbsp;<FONT face="Wingdings">&#254;</FONT>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 5pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If this is an annual report, indicate by check mark whether the registrant is a shell company
(as defined in Rule&nbsp;12b-2 of the Exchange Act).&nbsp;Yes&nbsp;<FONT face="Wingdings">&#111;</FONT>&nbsp;No&nbsp;<FONT face="Wingdings">&#254;</FONT>
</DIV>

<DIV style="width: 100%; border-bottom: 1pt solid black; margin-top: 10pt; font-size: 1pt">&nbsp;</DIV>
<DIV style="width: 100%; border-bottom: 2pt solid black; font-size: 1pt">&nbsp;</DIV>



<DIV align="left">
<DIV style="font-size: 1pt; margin-top: 1pt; width: 18%; border-top: 0px solid #000000">&nbsp;</DIV>
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    <TD width="96"></TD>
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    <TD nowrap align="left">*</TD>
    <TD>&nbsp;</TD>
    <TD>Not for trading, but only in connection with the listing of American Depositary Shares, each
representing ten shares of our common stock.</TD>
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<DIV style="margin-right=11%">
<DIV align="center" style="font-size: 10pt; margin-top: 18pt">TABLE OF CONTENTS
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<A name="tocpage"></A>
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<DIV align="center">
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    <TD align="center"><DIV style="margin-left:30px; text-indent:-15px"><A href="#101"><B>PART I</B></A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#102">Item&nbsp;1. Identity of Directors, Senior Management and Advisers</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#103">Item&nbsp;2. Offer Statistics and Expected Timetable</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#104">Item&nbsp;3. Key Information</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#105">Item&nbsp;4. Information on the Company</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#106">Item&nbsp;4A. Unresolved Staff Comments</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">43</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#107">Item&nbsp;5. Operating and Financial Review and Prospects</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">43</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#108">Item&nbsp;6. Directors, Senior Management and Employees</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">76</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#109">Item&nbsp;7. Major Shareholders and Related Party Transactions</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">89</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#110">Item&nbsp;8. Financial Information</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">92</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#111">Item&nbsp;9. The Offer and Listing</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">94</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#112">Item&nbsp;10. Additional Information</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">97</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#113">Item&nbsp;11. Quantitative and Qualitative Disclosures About Market Risk</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">115</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#114">Item&nbsp;12. Description of Securities Other than Equity Securities</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">117</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="center"><DIV style="margin-left:45px; text-indent:-15px"><A href="#115"><B>PART II</B></A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#116">Item&nbsp;13. Defaults, Dividend Arrearages and Delinquencies</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">118</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#117">Item&nbsp;14. Material Modifications to the Rights of Security Holders and Use of Proceeds</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">118</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#118">Item&nbsp;15. Controls and Procedures</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">118</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#119">Item&nbsp;16A. Audit Committee Financial Expert</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">119</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#120">Item&nbsp;16B. Code of Ethics</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">119</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#121">Item&nbsp;16C. Principal Accountant Fees and Services</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">120</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#122">Item&nbsp;16D. Exemptions from the Listing Standards for Audit Committees</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">120</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#123">Item&nbsp;16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">121</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="center"><DIV style="margin-left:45px; text-indent:-15px"><A href="#124"><B>PART III</B></A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#125">Item&nbsp;17.Financial Statements</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">122</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#126">Item&nbsp;18.Financial Statements</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">122</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#127">Item&nbsp;19.Exhibits</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">122</TD>
    <TD>&nbsp;</TD>
</TR>
<TR><TD style="font-size: 12pt">&nbsp;</TD></TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Index to Consolidated Financial Statements</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">F-1</TD>
    <TD>&nbsp;</TD>
</TR>
<TR><TD style="font-size: 12pt">&nbsp;</TD></TR>
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<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="k01180exv1w1.htm">EX-1.1 Articles of Incorporation</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="k01180exv1w2.htm">EX-1.2 Share Handling Regulations</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="k01180exv1w3.htm">EX-1.3 Regulations of the Board of Directors</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="k01180exv1w4.htm">EX-1.4 Regulations of Board of Statutory Auditors</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="k01180exv8w1.htm">EX-8.1 List of Subsidiaries</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="k01180exv12w1.htm">EX-12.1 Certification of the principal executive officer required by 17 C.F.R. 240. 13a-14(a)</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="k01180exv12w2.htm">EX-12.2 Certification of the principal executive officer required by 17 C.F.R. 240. 13a-14(a)</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="k01180exv12w3.htm">EX-12.3 Certification of the principal financial officer required by 17 C.F.R. 240. 13a-14(a)</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="k01180exv13w1.htm">EX-13.1 Certification of the chief executive officer required by 18 U.S.C. Section 1350</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="k01180exv13w2.htm">EX-13.2 Certification of the chief executive officer required by 18 U.S.C. Section 1350</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="k01180exv13w3.htm">EX-13.3 Certification of the chief financial officer required by 18 U.S.C. Section 1350</A></FONT></TD></TR>
</TABLE>
</DIV>

<DIV align="left">
<!-- /TOC -->
</DIV>

<P align="center" style="font-size: 10pt">-2-
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Certain Defined Terms, Conventions and Presentation of Financial Information</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As
used in this annual report on Form 20-F, unless the context otherwise
requires, the &#147;Company&#148;
refer to Nissin Co., Ltd. and the &#147;Group&#148; &#147;we,&#148; &#147;us,&#148; &#147;our&#148; and similar terms refer to Nissin
Co., Ltd. and its consolidated subsidiaries.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In this annual report on Form 20-F, &#147;subsidiary&#148; and &#147;subsidiaries&#148; refer to consolidated
subsidiaries of the Company, companies in which the Company owns more than 50%, and &#147;affiliate&#148; and
&#147;affiliates&#148; refer to all of our affiliates accounted for by the equity method, companies in which
the Company owns 20-50% and has the ability to exercise significant influence over their operations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The consolidated financial statements of the Company have been prepared in accordance with
accounting principles generally accepted in the United States of America, or US GAAP. Unless
otherwise stated or the context otherwise requires, all amounts in such financial statements are
expressed in yen.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In this annual report on Form 20-F, &#147;yen&#148; or &#147;&#165;&#148; means the lawful currency of Japan, and
&#147;dollar&#148; or &#147;$&#148; means the lawful currency of the United States of America.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Certain monetary amounts and percentage data included in this annual report have been subject
to rounding adjustments for the convenience of the reader. Accordingly, figures shown as totals in
certain tables may not be equal to the arithmetic sum of the figures which precede them.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Group&#146;s fiscal year ends on March&nbsp;31. The fiscal year ended March&nbsp;31, 2006 is referred
to throughout this annual report on Form 20-F as &#147;this fiscal year&#148;, and other fiscal years are
referred to in a corresponding manner. References to years not specified as being fiscal years are
to calendar years.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Special Note Regarding Forward-looking Statements</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This annual report on Form 20-F contains forward-looking statements about our industry, our
business, our plans and objectives, our financial condition and our results of operations that are
based on our current expectations, assumptions, estimates and projections. These forward-looking
statements are subject to various risks and uncertainties. These statements discuss future
expectations, identify strategies, discuss market trends, contain projections of results of
operations or of financial condition, or state other forward-looking information. Known and
unknown risks, uncertainties and other factors could cause our actual results to differ materially
from and be worse than those contained in or suggested by any forward-looking statement. We cannot
promise that our expectations, projections, anticipated results, estimates or other information
expressed in or underlying these forward-looking statements will turn out to be correct.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Important risks and factors that could cause our actual results to differ materially from the
forward-looking statements are in Item&nbsp;3.D and elsewhere in this annual report on Form 20-F and
include, without limitation:
</DIV>

<DIV style="margin-top: 12pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the effect of weak domestic economic conditions, including changes in corporate and
personal bankruptcy and unemployment rates in Japan;</TD>
</TR>


</TABLE>
</DIV>
<P align="center" style="font-size: 10pt">-3-
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>competition by entry of major financial institutions and IT companies in the
business owners and consumer loan industries;</TD>
</TR>

<TR>
    <TD style="font-size: 12pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>misconduct by an employee or director and our exposure to negative publicity of the
consumer or business finance industries generally or us specifically;</TD>
</TR>

<TR>
    <TD style="font-size: 12pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the effect of potential changes to legislation and accompanying enforcement, and
restrictions and regulations associated with Japan or U.S. law, including restrictions
on interest rates, to regulations for the moneylending business;</TD>
</TR>

<TR>
    <TD style="font-size: 12pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the growing variety of legal means with which debtors can seek protection from
creditors;</TD>
</TR>

<TR>
    <TD style="font-size: 12pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>uncertain liquidity of Japan&#146;s capital markets and availability of funding from
lenders on favorable terms and potential changes to government policy, including
Japan&#146;s monetary policy;</TD>
</TR>

<TR>
    <TD style="font-size: 12pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the reliability of our information or technological systems and networks.</TD>
</TR>

<TR>
    <TD style="font-size: 12pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the influence of our chairman and his family over important decisions;</TD>
</TR>

<TR>
    <TD style="font-size: 12pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the failure to generate the results we desire by changes in the mix of our assets portfolio;</TD>
</TR>

<TR>
    <TD style="font-size: 12pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>fluctuation in market environments regarding our investments;</TD>
</TR>

<TR>
    <TD style="font-size: 12pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>our ability to pursue and maintain profitable joint ventures and strategic alliances;</TD>
</TR>

<TR>
    <TD style="font-size: 12pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the effect of fluctuations in the value of real estate held and potential changes to
tax legislation and amendments to regulations concerning real estate-related
businesses; and</TD>
</TR>

<TR>
    <TD style="font-size: 12pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>increasing competition in the loan servicing market in which Nissin Servicer Co.,
Ltd., a consolidated subsidiary, operates.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>
<P align="center" style="font-size: 10pt">-4-
</DIV>

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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>
<DIV align="left">
<A name="101"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>PART I</B>
</DIV>

<DIV align="left">
<A name="102"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Item&nbsp;1. Identity of Directors, Senior Management and Advisers.</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Not required.
</DIV>
<DIV align="left">
<A name="103"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Item&nbsp;2. Offer Statistics and Expected Timetable.</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Not applicable.
</DIV>
<DIV align="left">
<A name="104"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Item&nbsp;3. Key Information.</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>A. Selected Financial Data.</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;You should read the following selected consolidated financial information together with Item&nbsp;5
of this annual report on Form 20-F and our consolidated financial statements and the notes to the
consolidated financial statements beginning on page F-1.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The consolidated income statement data for the years ended March&nbsp;31, 2002, 2003, 2004, 2005
and 2006 and the consolidated balance sheet data as of March&nbsp;31, 2002, 2003, 2004, 2005 and 2006
that are identified as being in accordance with accounting principles generally accepted in the
United States of America, or U.S. GAAP, are derived from our consolidated financial statements
prepared in accordance with U.S. GAAP, which have been audited by BDO Sanyu &#038; Co., an independent
registered public accounting firm. We have included in this annual report on Form 20-F our
consolidated financial statements for the years ended March&nbsp;31, 2004, 2005 and 2006.
</DIV>

<P align="center" style="font-size: 10pt">-5-
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Selected Financial Information</B>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="28%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="23" style="border-bottom: 1px solid #000000"><B>Year ended/As of March 31,</B></TD>

</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2002</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2003</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2005<SUP style="font-size: 85%; vertical-align: text-top"> (2)</SUP></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2006</B></TD>
    <TD>&nbsp;</TD>

    <TD nowrap align="center" colspan="4" style="border-bottom: 1px solid #000000"><B>2006</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="22"><B>(in millions of yen and thousands of U.S. dollars except number of shares and per share data)</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Consolidated Income Statement Data:</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total interest income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">33,976</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">39,234</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">40,107</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">32,555</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">33,901</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">288,593</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total interest expense</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,884</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,984</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,724</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,159</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,105</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">26,432</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Net interest income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">30,092</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">35,250</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">36,383</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">29,396</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">30,796</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">262,161</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Provision for loan losses, net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,433</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12,688</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13,461</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,576</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,463</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">80,557</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Net interest income after provision for
loan losses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">22,659</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">22,562</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">22,922</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20,820</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">21,333</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">181,604</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total non-interest (loss)&nbsp;income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(428</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">837</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">730</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,984</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,934</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">84,567</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total non-interest expense</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13,629</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14,299</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12,993</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14,896</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16,598</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">141,296</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Income before income taxes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,602</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,100</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,659</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11,908</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14,669</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">124,875</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Income taxes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,801</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,924</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,582</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,646</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,214</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">52,899</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Net income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">4,801</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">5,176</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">6,077</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">7,262</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">8,455</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">71,976</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Consolidated Balance Sheet Data:</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cash and cash equivalents</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">17,116</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">23,612</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">20,243</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">25,709</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">22,860</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">194,603</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Loans receivable, net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">148,235</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">166,977</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">166,890</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">146,119</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">225,947</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,923,444</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Purchased loans receivable, net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">380</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,946</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,342</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13,581</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">24,155</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">205,627</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14,566</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13,039</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">18,793</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">42,992</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">86,981</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">740,453</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Total assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">180,297</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">206,574</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">210,268</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">228,401</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">359,943</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">3,064,127</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Short-term borrowings</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">1,400</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">5,600</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">5,563</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">12,600</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">60,411</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">514,267</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Long-term borrowings</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">128,659</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">148,595</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">142,577</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">136,844</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">198,924</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,693,403</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,315</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,782</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,670</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,840</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17,671</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">150,430</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Total liabilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">136,374</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">160,977</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">155,810</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">160,284</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">277,006</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,358,100</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Minority interests</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">148</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">161</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,146</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,433</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20,712</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Common stock</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,611</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,611</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,218</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,779</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11,849</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">100,868</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Additional paid-in capital</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,467</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,462</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,092</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,836</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14,808</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">126,058</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">28,697</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">30,524</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">37,987</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">49,356</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">53,847</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">458,389</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Total shareholders&#146; equity</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">43,775</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">45,597</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">54,297</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">66,971</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">80,504</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">685,315</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Total liabilities and shareholders&#146; equity</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">180,297</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">206,574</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">210,268</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">228,401</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">359,943</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">3,064,127</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Number of Shares<SUP style="font-size: 85%; vertical-align: text-top"> (1)</SUP></B><B>:</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Issued at the end of fiscal year (in thousands)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,546,380</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,546,380</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,586,744</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,614,408</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,812,941</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,812,941</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Per Share Data<SUP style="font-size: 85%; vertical-align: text-top"> (1)</SUP></B><B>:</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Basic</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">1.90</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">2.09</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">2.54</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">2.98</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">3.27</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.028</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Diluted</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.82</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.94</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.34</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.70</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3.08</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.026</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cash dividends</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Declared</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.33</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.39</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.45</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.81</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.05</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.009</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Paid during the fiscal year</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.32</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.33</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.42</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.53</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.02</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.009</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">(1)</TD>
    <TD>&nbsp;</TD>
    <TD>The Company completed a 2-for-1 stock split on each of May&nbsp;21, 2002, May&nbsp;20, 2003, May&nbsp;20, 2004,
November&nbsp;19, 2004, November&nbsp;18, 2005, and April&nbsp;1, 2006, respectively, and a 1.2-for-1 stock
split on May&nbsp;20, 2005. All share information presented above has been retroactively adjusted
to reflect such stock splits.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(2)</TD>
    <TD>&nbsp;</TD>
    <TD>The Company sold &#165;32,697&nbsp;million in consumer loans on June&nbsp;1, 2004 to Orient Credit Co., Ltd.
resulting in a gain of &#165;3,327&nbsp;million.</TD>
</TR>

</TABLE>


<P align="center" style="font-size: 10pt">-6-
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">






<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Exchange Rate Information</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For convenience, we have translated certain yen amounts in this annual report on Form 20-F
into dollars at the rate of &#165;117.47 = $1.00, the mean of the exchange rate quotations by The Bank
of Tokyo-Mitsubishi UFJ, Ltd. for buying and selling spot dollars by telegraphic transfer against
yen as of March&nbsp;31, 2006, the date of our most recent balance sheet included in this annual report
on Form 20-F. However, you should not construe such translations as representations that the yen
amounts have been, could have been or could be converted into dollars at that or any other rate.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table presents the noon buying rates for Japanese yen per $1.00 in New York City
for cable transfers in foreign currencies as certified for customs purposes by the Federal Reserve
Bank of New York:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="40%">&nbsp;</TD>

    <TD width="5%">&nbsp;</TD>

    <TD width="2%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>

    <TD width="5%">&nbsp;</TD>

    <TD width="2%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>

    <TD width="5%">&nbsp;</TD>

    <TD width="2%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>

    <TD width="5%">&nbsp;</TD>

    <TD width="2%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000"><B>Year ended March 31,</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>High</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Low</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Average (1)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Period-end</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2002</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">134.77</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">115.89</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">125.64</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">132.70</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2003</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">133.40</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">115.71</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">121.10</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">118.07</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2004</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">120.55</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">104.18</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">112.75</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">104.18</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">114.30</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">102.26</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">107.28</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">107.22</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2006</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">120.93</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">104.41</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">113.67</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">117.48</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Calendar month</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">January&nbsp;2006</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">117.55</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">113.96</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">115.48</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">116.88</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">February&nbsp;2006</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">118.95</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">115.82</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">117.86</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">115.82</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">March&nbsp;2006</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">119.07</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">115.89</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">117.28</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">117.48</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">April&nbsp;2006</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">118.66</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">113.79</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">117.07</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">113.79</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">May&nbsp;2006</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">113.46</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">110.07</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">111.73</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">112.26</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">June&nbsp;2006</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">116.42</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">111.66</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">114.63</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">114.51</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">July&nbsp;2006</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">117.44</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">113.97</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">115.77</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">114.44</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">August&nbsp;2006</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">117.35</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">114.21</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">115.92</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">117.35</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">(1)</TD>
    <TD>&nbsp;</TD>
    <TD>The average yen exchange rates for the fiscal year represent the average noon buying rates on
the last business day of each month during the respective period.</TD>
</TR>

</TABLE>



<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
noon buying rate for yen on September&nbsp;22, 2006 was &#165;116.45 per $1.00.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>B. Capitalization and Indebtedness.</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Not applicable.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>C. Reasons for the Offer and Use of Proceeds.</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Not applicable.
</DIV>


<P align="center" style="font-size: 10pt">-7-
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>D. Risk Factors.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>We may suffer larger loan losses if defaults on loans by our customers increase as a result of weak
economic conditions in Japan</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Weak economic conditions in Japan may lead to increased defaults on loans, including loans
that we guarantee, which in turn would cause us to increase our charge-offs of loans and our
provisions for loan losses, thereby adversely affecting our results of operations and financial
condition. The current economic environment in Japan is showing improvements in corporate
profitability and business confidence, especially with respect to major companies, and rises in the
stock and real estate markets. These trends also led to continued improvements in employment and
personal consumption. However, the Japanese economy still faces uncertainties such as inflation in prices for raw materials
caused by the expansion of production activities, fiscal reconstruction, and potential changes to
the social security system. If the economic situation
in Japan worsens, we may be forced to charge off loans in excess of our existing provisions for
loan losses, to increase our provisions for loan losses, to pay out on loans that we guarantee
beyond our reserves for guarantee losses, or to tighten our credit screening policies, which would
limit our acquisition of new customers. Any such event could adversely affect our financial
condition or results of operations.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Increasing competition among Japan&#146;s finance companies and other financial institutions may
adversely affect our ability to increase or maintain the size of our loan portfolio, the average
credit quality of our customers or the interest rates we charge on our loans</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The consumer and business owner finance industries in Japan&#146;s financial sector are becoming
increasingly competitive. Competition for customer acquisition may continue to intensify due to
movements toward entry into this industry, which has included capital investments by major
financial institutions, establishment of joint venture corporations, and acquisition of companies
by corporations including information technology companies and foreign-affiliated financial
institutions.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Many of these competitors have substantially greater financial, technical and marketing
resources, larger customer bases, longer histories, greater name recognition, more extensive
physical infrastructure and networks of loan offices and more established relationships in the
finance industry than we do. Our competitors seek to compete aggressively on the basis of interest
rates, lending terms and the coverage and scale of their network of distribution and marketing
channels. Under these competitive pressures, we have focused our efforts on acquisition of prime
customers with low credit risk, especially among small and medium-sized businesses, including
through alliances with various companies, in an effort to differentiate ourselves from competitors.
In June&nbsp;2004, we sold most of the outstanding balance of our consumer loans to a third party, and
strategically shifted our loan portfolio toward provision of loans to small and medium-sized
business owners, which usually bear lower interest rates. This has resulted in a decrease in the
weighted period-end average contractual interest rate on our outstanding loans, from 24.0% at March
31, 2004, to 22.1% at March&nbsp;31, 2005 and 16.1% at March&nbsp;31, 2006. If we are unwilling or unable to
match our competitors&#146; terms, we may fail to increase or maintain the number and average balance of
our customer accounts, and our results of operations or financial condition could be adversely
affected. To the extent that we reduce interest rates on our products in response to competitive
pressures, our interest margins will decline. Furthermore, the average credit quality of our
customers may decrease if we cannot sufficiently acquire prime customers, or if we lose these prime
customers to our competitors, and our financial condition or results of operations could be
adversely affected.
</DIV>

<P align="center" style="font-size: 10pt">-8-
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Misconduct by an employee or director could harm us and is difficult to detect and deter</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our employees and directors could engage in misconduct, which includes, among other things:
</DIV>



<DIV style="margin-top: 12pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>conduct that exceeds the authority given to the employee or director, such as
approval of a transaction for which he or she does not have proper authorization;</TD>
</TR>

<TR>
    <TD style="font-size: 12pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>concealment of such unauthorized conduct or authorized but unsuccessful activities
that cause material harm to us; and</TD>
</TR>

<TR>
    <TD style="font-size: 12pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>improper use or disclosure of confidential information or leakage of personal
information.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Any such misconduct by an employee or director could result in regulatory sanctions, legal
liability and serious reputational or financial harm to us. We have not in the past suffered
materially from misconduct by an employee or director. However, the precautions we take to prevent
and detect such misconduct may not always deter or prevent it, even though we recognize compliance
as the most significant challenge for management. Moreover, even if we succeed in managing the
conduct of our own employees and directors, we may suffer reputationally or financially from
misconduct by other lenders in the finance industry. This could lead to introduction of additional
regulations or laws favoring borrowers that might erode our profitability, and therefore could
affect our financial position and results of operations.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Legislative or regulatory changes to the Interest Rate Restriction Law or other laws, as a result
of court decisions or other factors, could adversely affect our business</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Interest Rate Restriction Law provides that a loan with an interest rate exceeding a
prescribed rate is invalid with respect to the portion exceeding the maximum rate. Prescribed
rates are 20% per annum for loans of less than &#165;100,000; 18% per annum for loans of &#165;100,000 or
more but less than &#165;1&nbsp;million; and 15% per annum for loans
of &#165;1&nbsp;million or more. However, the [Contributions Law]
permits a maximum interest rate of 29.2%. Interest rates
for all of our products are set below the maximum lending rate under the Contributions Law;
however, we may charge interest rates in excess of the prescribed rate under the Interest Rate
Restriction Law (the &#147;gray-zone interest rate&#148;). The Moneylending Business Restriction Law
provides that a payment by a borrower or guarantor of interest in excess of the rate prescribed by
the Interest Rate Restriction Law to a registered moneylender is valid and non-refundable so long
as the excess interest is paid without coercion, mistake or threat and documentation requirements
are satisfied.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;However, as a result of a Supreme Court Decision, a portion of the Enforcement Regulation of
the Moneylending Business Restriction Law was amended effective on July&nbsp;1, 2006. These
amendments primarily stipulate that loan documentation should specifically provide that the
acceleration clause for non-payment of interest is valid only if the borrower fails to repay the
interest portion within the maximum rate set forth in the Interest Rate Restriction
Law. These amendments apply to all moneylenders. A strict interpretation of the Supreme Court
decision could lead to further amendments to the terms of our loan agreements, which could reduce
our effective interest rates or make it more difficult to collect on loans.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Prior amendments to relevant laws require the Japanese government, which last reduced the
statutory maximum interest rate (29.2% under the Contributions Law) in June&nbsp;2000, to review the
statutory maximum interest rate again in January&nbsp;2007, and the issue is currently being discussed
and considered by various advisory panels. Any such reduction or other legislative or regulatory
changes could adversely affect our business and results of operations.
</DIV>

<P align="center" style="font-size: 10pt">-9-
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Any failure to maintain the confidentiality of personal information of our customers could
adversely affect our results of operations</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We keep and manage sensitive personal information obtained from our customers. If we fail to
maintain the confidentiality of personal information for any reason, our results of operations
could be adversely affected in a number of ways. We could be subject to lawsuits for damages from
our customers if they are injured as a result of the release of their
personal information. Failure to maintain the confidentiality of personal information could subject us to penalty under
the Law on Protection of Personal Information. We could incur
additional expenses associated with changing our security systems, either voluntarily or in
response to administrative guidance or other regulatory initiatives from the government, or in
connection with public relations campaigns designed to prevent or mitigate damage to our corporate
image or reputation. Any damage to our reputation could also adversely affect our ability to
retain or acquire customers or to maintain or establish strategic alliances with third parties, or
otherwise adversely affect our financial condition or results of operations.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>We may have to constrain our business activities to avoid being deemed an investment company under
the U.S. Investment Company Act of 1940</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In general, a company which is or holds itself out as being engaged primarily in the business
of investing, reinvesting or trading in securities, may be deemed to be an investment company under
the U.S. Investment Company Act of 1940. We do not believe that we are an investment company as
defined under the U.S. Investment Company Act of 1940. However, if we were to be deemed an
investment company, we would be prohibited from issuing our securities in the United States and may
have to terminate our U.S. listing or other sponsorship promoting a U.S. trading market for our
issued securities. In order to avoid these prohibitions, we may be forced to forego otherwise
attractive business opportunities, potentially limiting our growth and our profitability.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Compliance with Section&nbsp;404 of the Sarbanes-Oxley Act could adversely affect our results of
operations</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We are subject to Section&nbsp;404 of the Sarbanes-Oxley Act starting from the fiscal year ending
March&nbsp;31, 2007, and our chief executive officer and chief financial officer must include the
following statements in each annual report under Section&nbsp;404 of the Sarbanes-Oxley Act:
</DIV>

<DIV style="margin-top: 12pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>a statement of management&#146;s responsibility for establishing and maintaining adequate
internal control over financial reporting for the Group;</TD>
</TR>

<TR>
    <TD style="font-size: 12pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>a statement identifying the framework used by management to conduct the required
evaluation of the effectiveness of the Group&#146;s internal control over financial
reporting;</TD>
</TR>

<TR>
    <TD style="font-size: 12pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>management&#146;s assessment of the effectiveness of the Group&#146;s internal control over
financial reporting as of the end of the Group&#146;s most recent fiscal year, including a
statement as to whether or not the Group&#146;s internal control over financial reporting
is effective; and</TD>
</TR>
<TR>
    <TD style="font-size: 12pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>a statement that the registered public accounting firm that audit the financial
statements included in the annual report has issued an attestation report on
management&#146;s assessment of the registrant&#146;s internal control over financial
reporting.</TD>
</TR>
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">-10-
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">






<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We are in the midst of strengthening our corporate governance structure in order to comply
with the Sarbanes-Oxley Act while obtaining a wide range of advisory opinions from inside and
outside experts regarding the approaches to corporate governance and risk management, and examined
them from different perspectives. This has, however, required payment by us of fees to various
parties as well as internal costs. These compliance costs are significant and may be in excess of
amounts we anticipate, and as result could adversely affect our financial condition or results of
operations.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>An increasing number of our customers seeking protection from creditors under the Bankruptcy Law or
related laws could require us to increase our provisions for loan losses and charge-offs</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In recent years, the number of legal means with which retail borrowers can seek protection
from creditors has increased. For instance, amendments to the
Bankruptcy Law that became effective in
January&nbsp;2005 are aimed to achieve prompt, efficient, effective and fair procedures for, and to
simplify the procedure for, and improve debtors&#146; protection under, personal bankruptcy. Under
these amendments, an individual debtor can take advantage of a unified discharge procedure and a
larger scope of assets may be retained by insolvent debtors. The new law also improved the
effectiveness of the automatic stay, preference, offset and other practical provisions for fair
treatment among creditors. We generally recover almost nothing under personal bankruptcy
proceedings.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This and other laws, including the Special Conciliation Law and the Civil Rehabilitation Law,
may discourage borrowers who would otherwise make an effort to repay the entirety of their loans
from doing so, if they perceive a relative ease of availing themselves of these legal means for
discharge of their debts. As a result, the number of our customers
who seek legal
protection from enforcement of terms of payment or adjournment of payment may increase. If, as a
result, the number of delinquent loans increases, we may be required
to increase our provisions for loan losses and
our results of operations could be adversely affected. Any further amendment to the Bankruptcy Law
or related laws that increases protection of the assets of individual debtors and reduces the
burden of declaring personal bankruptcy would also have a materially adverse impact on our results
of operations.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Any future inability to obtain funds from lenders or access the debt capital markets on favorable
terms could impair our ability to extend loans to borrowers, reduce our competitiveness and the
profitability of our lending and adversely affect our financial condition</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Ready access to funds on favorable terms is essential to our business. The difference between
the interest rates we charge our customers and the interest rates we pay to our financing sources
is the key factor impacting our profitability. As of March&nbsp;31, 2006, our weighted period-end
average contractual interest rate on outstanding loans in our loan portfolio was 16.1%, while our
weighted period-end average contractual interest rate was 1.0% for our short-term borrowings and
1.4% for our long-term borrowings. We raise funds through loans from financial institutions and
the capital markets by issuing debt securities. As of March&nbsp;31, 2006, the aggregate amount of our
borrowings was &#165;259,335&nbsp;million, which represented approximately 98.6% of our total loans
outstanding and purchased loans as of the same date.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of March&nbsp;31, 2006, 76.7% of our borrowings, or &#165;198,924&nbsp;million, are long-term borrowings,
68.9% of our borrowings, or &#165;178,565&nbsp;million, came from loans from banks, non-banks, insurance
companies and other financial institutions, 22.7% of our borrowings, or &#165;58,972&nbsp;million, came from
issuances of corporate bonds, including convertible bonds, and
commercial paper, and 8.4% of our borrowings, or
&#165;21,798&nbsp;million, came from other sources, including
securitization of certain of our loan receivables. Based on
their evaluations of our long-term or short-term financial prospects, any of these lenders could
cease to finance our business or to offer funds on favorable terms. A downgrade in our credit
ratings or those of similar companies or Japanese companies generally, for instance, could result
in an increase in the interest rates that lenders charge us. For example, the downgrade of our
debt rating by the Japan Credit Rating Agency in April&nbsp;2003, has led us to curtail our debt issuances and
increase our reliance on bank loans which typically bear higher interest rates. Negative publicity
about small business or consumer finance lenders such as that seen in 1999 about the practices of
small business lenders could also make lenders reluctant to extend credit to companies in our
industry, including us.
</DIV>


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<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Moreover, although contractual borrowing interest rates are subject to fluctuation due to
the market environment and other factors, the contractual lending interest rate in our loan
business is restricted to 29.2% as stipulated by the Contributions Law. Therefore, in order to
minimize our interest fluctuation risk, we are pursuing financing with fixed interest rates for
borrowings from financial institutions and issuances of corporate bonds. As of March&nbsp;31, 2006, our
fixed rate borrowings, including those fixed through hedging from derivative transactions,
comprised 61.4%, and our variable rate borrowings comprised 38.6%, of our total borrowings.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
do not have any difficulty in accessing funds required at present.
However, as a result of the ongoing restructuring of the Japanese financial sector, and of regional
banks in particular, our lenders may fail or adopt lending policies unfavorable to us. A number of
other factors largely beyond our control could impair our ability to borrow, including severe
disruptions of the financial markets, negative views about the prospects for the finance industry
generally or further downgrades of Japan&#146;s sovereign debt ratings. Any impact from these factors
that worsen our capital procurement environment significantly beyond our expectations could
increase our interest expenses. An inability to obtain sufficient funds from lenders or capital
markets on favorable terms or at all could impair our ability to extend loans to borrowers, reduce
our competitiveness and the profitability of our lending. Any or all of these factors could
adversely affect our financial condition and results of operations.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>An increase in prevailing market interest rates would increase our interest expense and thus could
reduce the margins we receive on our loans to our borrowers</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Interest rates in Japan have been extremely low for several years, reflecting government
monetary policy including the &#147;zero interest rate&#148; policy of the Bank of Japan, which had been in
place for most of the period since February&nbsp;1999 until it was ended in July&nbsp;2006. Also, the
official discount rate offered by the Bank of Japan has remained at 0.1% since September&nbsp;2001 until
it was increased to 0.4% in July&nbsp;2006. Partly as a result of this policy, our weighted period-end
average contractual interest rates on our own borrowings have been extremely low in recent years:
1.3% as of March&nbsp;31, 2004, 1.2% as of March&nbsp;31, 2005 and 1.0% as of March&nbsp;31, 2006 for our
short-term borrowings and 2.3% as of March&nbsp;31, 2004, 1.9% as of March&nbsp;31, 2005 and 1.4% as of March
31, 2006 for our long-term borrowings.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As
a result of a recent change in policy by the Bank of Japan, short term
interest rates have recently risen in Japan and may continue to do
so. Consequently, our lenders
may increase interest rates on their loans to us and we may not be able to pass our increased
interest expenses to our customers in the form of higher rates on our loans due to competitive
considerations and to the legal limit on interest rates that we may
charge. In addition, the maximum interest rates that we may charge to
our customers may decline when the Japanese government reviews the legal limit in January&nbsp;2007. See &#147;Regulation &#151; The Money Lending Business Restriction Law, Contributions Law and
Interest Rate Restriction Law &#151; Restrictions on Usury&#148; in Item&nbsp;4.B of this annual report on Form
20-F for a further discussion of the legal limit. Any increase in the interest rates our lenders
charge us could thus have an adverse effect on our operating margins and profitability.
</DIV>
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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Any disruption, outages, delays or other difficulties experienced by our information or
technological systems and networks could adversely affect our business</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We increasingly rely on internal and external information and technological systems and
networks to generate new business, provide services to customers and manage our operations. In
particular, our business depends on:
</DIV>

<DIV style="margin-top: 12pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the ability of our automated fund transfer system to handle high volumes of phone
calls and to provide customers with a convenient system which offers reliable privacy
protection;</TD>
</TR>

<TR>
    <TD style="font-size: 12pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the reliability and security of third-party databases from which we obtain credit
information about our customers;</TD>
</TR>

<TR>
    <TD style="font-size: 12pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the reliability of Sanyo Electric Credit&#146;s wire transfer service which we use to
disburse loans to accounts designated by our customers; and</TD>
</TR>

<TR>
    <TD style="font-size: 12pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the reliability of the financial institutions that hold our customers&#146; accounts from
which we automatically transfer their payments to us.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition, we outsource the following hardware and software responsibilities, in order to
manage our operating transaction and accounting data, confidential customer information and other
back-office data operations:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>our main computer housed in an NEC affiliate&#146;s data center, to which all data are
backed up each business day;</TD>
</TR>

<TR>
    <TD style="font-size: 12pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>dedicated lines that connect our main computer and outsourcing center to our
application servers and e-mail servers; and</TD>
</TR>

<TR>
    <TD style="font-size: 12pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>maintenance and support work for our main computer.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our systems are vulnerable to damage or interruption from human error, natural disasters,
power loss, computer hackers, computer viruses and similar events or the loss of support services
from third parties such as our systems solution providers including NEC and its affiliates,
telephone carriers and Internet backbone providers. Any disruption, outages, or delays or other
difficulties experienced by any of these technological and information systems and networks could
affect our financial position and results of operations.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Our chairman and his family may exercise influence over important business decisions in a way that
conflicts with your interest</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As a result of the direct and indirect ownership or control of our outstanding shares by
Sakioka family members, who collectively beneficially owned 37.4% of our outstanding shares as of
March&nbsp;31, 2006, our chairman and his family members can exercise a
controlling influence over important decisions affecting our business and affairs. These decisions
may involve significant corporate transactions such as the sale of our company, corporate restructuring, investment in
other businesses or assets, or the terms of future financings. The interests of these shareholders
in these and other matters may differ from those of our public shareholders.
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>A sale of our shares held by our major shareholders, including our chairman or members of their
family, may adversely affect our share price</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of March&nbsp;31, 2006, our chairman, members of their immediate family and corporations
controlled by them together owned 37.4% of our outstanding shares. A disposal of any portion of
their holdings on the Tokyo Stock Exchange or otherwise will increase the supply of our shares in
the marketplace and may adversely affect the market price of our shares and American Depositary
Shares.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>We may change our portfolio of products and services from time to time but fail to achieve the
intended results</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;While we traditionally were a finance company that specialized in unsecured lending to
individuals in Japan, we intend to review our portfolio of products and services on an ongoing
basis and change them as appropriate to remain competitive in the markets that we serve. For
example, in response to the diversified needs of small and medium-sized businesses and consumers, as
well as to maximize our corporate value, in June&nbsp;2004, we sold most of the outstanding balance of
our unguaranteed consumer loans to Orient Credit, a consumer finance company, in order to
concentrate our resources on providing loans with guarantors, such as small business owner loans,
and otherwise serving small and medium-sized business owners.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;With respect to financial services for small and medium-sized business owners, in addition to
extending small business owner loans and Business Timely loans, which are unguaranteed, unsecured
loans made under pre-approved revolving credit lines to small business owners, we also concentrate
on the provision of leases and installment loans, and real estate finance. With respect to the
quality of operating assets, we seek to accumulate prime assets with lower credit risks through
acquisition of prime customers through the promotion of our alliance
strategy. We have also begun investment banking, securities and
venture capital operations, which expose us to various risks.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Changes in our portfolio of products or services, including those described above, may fail to
generate the results we desire and adversely affect our results of operations or financial
condition. For example, deterioration of the quality of our operating assets due to deterioration
in the financial condition of small and medium-sized businesses caused by rapid changes in the
economic environment and other factors could adversely affect our financial position and results of
operations.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>The fair value of our strategic investments could decline due to a deterioration of the economic
environment and adversely affect our financial position</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
invest in various companies which we believe will improve our
ability to provide integrated financial services and expand our business network. As of March&nbsp;31,
2006, the cost of our investment securities was &#165;33,099&nbsp;million and the fair value of these investments was &#165;42,071&nbsp;million, or
11.7% of our consolidated total assets. However, in the future, if the stock prices of these
companies decline significantly, or the financial condition of our investments worsen due to
deterioration of the economic environment, we could suffer impairment losses on these securities or
our shareholders&#146; equity ratio could decline due to fluctuation in unrealized profits in investment
securities, which could adversely affect our financial position and results of operations.
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>The strategic alliances, joint ventures and strategic investments which we&#146;ve entered into in order
to acquire new customers may not yield attractive returns and could produce losses</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have been pursuing various strategic alliances and joint ventures with consumer finance and
other financial companies, which include arrangements to receive customer referrals and to provide
guarantees to the borrowings of the customers of third parties. We have also in recent years
increased our investments in companies that have the potential to complement our business
strategically. The book carrying value of these strategic investments was &#165;1,876&nbsp;million as of
March&nbsp;31, 2004, &#165;20,890&nbsp;million as of March&nbsp;31, 2005 and &#165;28,674&nbsp;million as of March&nbsp;31, 2006.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We expect to continue seeking strategic alliances, joint ventures and strategic investments to
build our customer base and establish a solid profit base for our group, but may not be able to
successfully grow or maintain profits. These strategic alliances, joint ventures and strategic
investments may not achieve profitability and we may incur impairment losses as a result of failing
to recover any investments or expenditures. Moreover, strategic alliances, joint ventures and
strategic investments that aim at specific markets may attract our existing customers, rather than
expand our customer base, and reduce the profitability of our core business.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>The success of our real estate-related businesses are highly dependant on the health of the
Japanese economy and are susceptible to regulatory and legal changes.</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Recently, our secured loans portfolio has grown significantly, reflecting our strategic shift
toward promotion of financial services to small and medium-sized business owners centering on real
estate financing, through active sales and marketing efforts by our Real Estate Finance Department,
which was established in February&nbsp;2004. Proceeds from these loans are primarily used by our
customers as working capital for property development. The health of the real estate market in
Japan is closely tied to larger economic trends. Thus, the value of real estate pledged to us by
our customers could decline in connection with deteriorating Japanese
economic conditions, exposing us to significant unsecured risks.
Because our secured bans to property developers are generally used as
working capital for property development, we are also exposed to the
risk that our customers may not complete development projects in a
timely manner or at all, or that the completed property will not have
the value we anticipated, resulting in less collatral than we
expected.</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our
property development loans are generally for long terms and very
large principal amounts. This has increased our long-term funding
requirements, which we may not be successful in meeting or accurately
evaluating. This could constrain our ability to make new
loans.</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Environmental
liabilities unknown at the time we made loans could also impair the
value of properties securing our loans.</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition, in the event taxation regimes concerning our real estate-related businesses,
including land taxation, are amended, our costs at acquisition and sale of real estate may
increase, and could adversely affect our real estate businesses.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Moreover, tightening of regulations, such as the Building Standard Law, the City Planning Law,
and other real estate-related regulations, as a result of recent construction scandals in Japan,
including the falsification of earthquake-resistance data for building designs, is expected. Any
amendments to these regulation, could impose new obligations on our businesses, increase our costs,
and adversely affect our businesses.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Any or
all of the above factors could result in material diverse affects to
our business, financial condition or results of operations.</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Increasing competition in the loan servicing market in which Nissin Servicer operates could reduce
our profitability.</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our subsidiary, Nissin Servicer Co., Ltd., mainly purchases specific money claims from
financial institutions by invited tender. The increase in the number of companies entering this
market, together with the contraction in liquidity in the market for bad debts due to the trend
towards economic recovery, has lead to increasingly severe competition. In response to these
factors, we have revised pricing standards through classification of specific money claims into
categories, and by improving due diligence, we seek to maintain our competitiveness in the purchase
of specific money claims. This, together with the development of new areas of business such as
liquidation of assets, securitization, and corporate revitalization, we believe has allowed us to
maintain competitiveness in the current business environment. However, if we are unable to maintain competitiveness in the purchase of specific money
claims, or if there are rapid increases in purchase prices or falls in commission fees, we may be
unable to purchase these loans at favorable prices or at all, and our loan servicing business may
have decreased profitability or losses, which could significantly affect our business strategies
and results of operations.
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Our business in China is subject to extensive Chinese government regulation that changes
frequently, and these regulations could adversely affect our business and operating results.</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our subsidiary, Nissin Leasing, operates leasing and other businesses in China. The Chinese
government has broad discretion and authority to regulate the leasing, non-bank finance and other
industries in China. The Chinese government exercises significant control over financial and other
markets, as well as China&#146;s economic growth, through the allocation of resources, controlling
payment of foreign currency-denominated obligations, setting of monetary policy and provision of
preferential treatment to particular industries or companies. Existing regulations or government
action in China may constrain our operations, and new regulations, the readjustment of previously
implemented regulations or other government action could require us to change our business
operations in China, increase our costs, prevent us from repatriating profits to Japan, or limit
our ability to finance or conduct activities in China.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition, China&#146;s commercial legal system is still under development, and even where
adequate law exists in China, enforcement of laws or contracts may be uncertain and sporadic. The
relative inexperience of China&#146;s judiciary creates additional uncertainty as to the outcome of any
litigation, and interpretation of statutes and regulations may be subject to government policies
reflecting domestic political changes. Our activities in China are subject to administrative
review and approval by various national and local agencies of China&#146;s government. Because of the
changes occurring in China&#146;s legal and regulatory structure, we may not be able to secure requisite
governmental approval for our activities, or approvals we have received, such as the leasing
license obtained by Nissin Leasing, may be suspended or revoked. Any of these factors could
adversely affect our business, financial condition and operating results.
</DIV>






<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Because we expect our shares and ADSs will be treated as stock of a passive foreign investment
company, or PFIC, for U.S. federal income tax purposes, you may be subject to materially adverse
tax consequences</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As we expect that 50% or more of our gross asset value constitutes &#147;passive assets,&#148; generally
meaning assets not constituting part of an active trade or business under U.S. federal tax rules,
we expect that our shares and ADSs will be treated as stock of a passive foreign investment
company, or PFIC, for U.S. federal income tax purposes. U.S. persons who hold our shares or ADSs,
either directly or indirectly, may be subject to materially adverse U.S. federal income tax
consequences upon the sale or disposition of the shares or ADSs and upon distributions with respect
to the shares or ADSs to the extent the distributions are &#147;excess distributions,&#148; distributions in
excess of a normal rate of distribution as calculated for passive foreign investment companies.
Gain realized on the sale or other disposition of shares or ADSs would in general be taxed as
ordinary income. If you are a U.S. holder, you would be treated as if you had realized such gain
and certain &#147;excess distributions&#148; ratably over your holding period for the shares or ADSs and the
income allocated to such prior tax years would be taxed at the highest tax rate in effect for each
such year to which the gain was allocated, together with an interest charge in respect of the tax
attributable to each such year. In addition, dividends that you receive from us will not be
eligible for the 15% tax rate applicable to qualified dividend income if we are a PFIC either in
the taxable year of the distribution or the preceding taxable year. See &#147;United States Tax
Considerations &#151; Passive Foreign Investment Company Rules&#148; in Item&nbsp;10.E of this annual report on
Form 20-F.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Holders of ADSs have fewer rights than shareholders and have to act through the depositary to
exercise those rights</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The rights of shareholders under Japanese law to take actions including voting their shares,
receiving dividends and distributions, bringing derivative actions, examining our accounting books
and records and exercising appraisal rights are available only to holders of record on our register
of shareholders or our register of beneficial shareholders. Because the depositary, through its
custodian agents, is the registered holder of the shares underlying the ADSs, an ADS holder cannot
take these actions except through and to the extent permitted by the depositary. If we instruct
the depository to provide ADS holders with the opportunity to vote in a timely manner, the
depositary will make efforts to vote the shares underlying your ADSs as instructed by you. ADS
holders, however, may not be provided with such rights on a timely basis or at all.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>If you hold fewer than 100 shares, you do not have the right to vote the shares or transfer them
and if you have ADSs representing fewer than 100 shares, you cannot withdraw the shares underlying
the ADSs and cannot require us to purchase the underlying shares</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;One hundred of our shares constitute one &#147;unit.&#148; A holder who owns fewer than 100 shares owns
less than a whole unit. The Japanese Corporate Law restricts the rights of a shareholder who holds
shares of less than a whole unit. In general, holders of shares constituting less than a unit do
not have the right to vote under the unit share system. Our articles of incorporation also provide
that no share certificates will be issued with respect to any number of shares constituting less
than one unit. As the transfer of shares normally requires delivery of share certificates, any
fraction of a unit for which no share certificates are issued is non-transferable. Furthermore,
under the unit share system, holders of shares constituting less than a unit have the right to require us to purchase their shares. However,
holders of ADSs that represent other than multiples of whole units cannot withdraw the underlying
shares representing less than one unit and, therefore, they will be unable to exercise the right to
require us to purchase the underlying shares. As a result, holders of ADSs representing shares in
lots of less than one unit will not have access to the Japanese markets to sell their shares
through the withdrawal mechanism. See &#147;Limitations Affecting Security Holders &#151; Japanese Unit
Share System&#148; in Item&nbsp;10.B of this annual report on Form 20-F.
</DIV>
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<DIV align="left">
<A name="105"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Item&nbsp;4. Information on the Company.</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>A. History and Development of the Company.</B>

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company was established as a joint stock corporation under the laws of Japan in 1960 in
Matsuyama, the capital of Ehime Prefecture in the northern part of the island of Shikoku, which is
one of Japan&#146;s four major islands. Our first business was dealing in discounting commercial bills.
In 1967, we started providing real estate-secured loans. In 1972, we began offering consumer
loans and opened offices throughout Shikoku and became a registered moneylender under the
Moneylending Business Restriction Law in 1984. We started offering small business owner loans in
1981, Wide loans in 1990 and Business Timely loans in 2000. We steadily expanded beyond our
original base in Shikoku by opening offices in Hiroshima in 1988, Osaka in 1990, Kyushu in 1992,
Tokyo in 1994, Nagoya in 1995 and Sendai, Hokkaido and Shizuoka in 1996. As of March&nbsp;31, 2006, we
had 50 loan offices throughout Japan. In recent years, we have also expanded our customer base
through strategic alliances with banks, consumer finance, leasing and other financial services
companies.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In 1990, we changed our name from Nissin Shoji Co., Ltd. to Nissin Co., Ltd. In 1998, we
adopted a dual head-office system, with one head office in Tokyo through which our operations are
primarily managed and the other in Matsuyama, Ehime Prefecture.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In July&nbsp;2001, we established Nissin Servicer Co., Ltd., or Nissin Servicer, to acquire and
service non-performing assets of banks and other financial institutions. In September&nbsp;2004, Nissin
Servicer listed its stock on the Mothers market of the Tokyo Stock Exchange and became Japan&#146;s
first loan servicing company to go public.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In November&nbsp;2003, we established NIS Lease Co., Ltd., or NIS Lease, to commence capital and
operating lease operations in Japan.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In June&nbsp;2004, NIS Property Co., Ltd., or NIS Property, was renamed from a subsidiary
previously established by us, to commence real estate-related business operations in Japan.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In June&nbsp;2004, we sold most of the outstanding balance of our unguaranteed consumer loans to
Orient Credit for &#165;32,697&nbsp;million. See &#147;Our Products &#151; Integrated Financial Services &#151; Consumer
Loans&#148; in Item&nbsp;4.B of this annual report on Form 20-F.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In July&nbsp;2004, we established Matsuyama Nissin Investment &#038; Consulting (Shanghai) Co., Ltd.,
currently Nissin Leasing (China) Co., Ltd, or Nissin Leasing, in Shanghai to commence arrangement
of investments and various business projects, as well as to operate a real estate agency and a
subleasing business in China. In September&nbsp;2005, Nissin Leasing obtained a leasing license from
the Chinese government and began operating full-scale leasing business in China.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In December&nbsp;2004, we acquired 100% of the outstanding shares of Yamagen Securities Co., Ltd.,
currently NIS Securities Co., Ltd., or NIS Securities, to commence securities and investment
banking business operations in Japan.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In December&nbsp;2005, we acquired 69.3% of the outstanding shares of Aprek Co., Ltd., or Aprek, a
company listed on the JASDAQ Securities Exchange, to enhance financial services to owners of small
and medium-sized enterprises in Japan&#146;s Kyushu region.
</DIV>


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<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In June&nbsp;2006, our general shareholders&#146; meeting resolved to change our company name from
&#147;Nissin Co., Ltd.&#148; to &#147;NIS Group Co., Ltd.&#148; effective as of October&nbsp;1, 2006.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our principal executive office is located at Shinjuku L-Tower 25F, 6-1, Nishi Shinjuku
1-chome, Shinjuku-ku, Tokyo 163-1525, Japan, and its phone number is 81-3-3348-2424. Our principal
Internet website is http://www.nisgroup.jp. Information on this website does not form part of this
annual report on Form 20-F.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Information about our principal capital expenditures and divestitures is provided in Item&nbsp;5.B
of this annual report on Form 20-F.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>B. Business Overview.</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Overview</B>

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We provide integrated financial services to small and medium-sized enterprises and their
owners in Japan, tailored to their stage of development and particular needs. We provide our
services directly and through alliances with other financial institutions. We also engage in real
estate-related businesses, including providing secured loans to property developers and principal
investment in real estate. We service distressed loans purchased from third parties and engage in
leasing and related businesses in Japan, as well as investment banking, securities and principal
investment businesses in Japan. In recent years, we have begun leasing and other operations in
China. For the year ended March&nbsp;31, 2006, our net interest income after provision for loan losses
was &#165;21,333&nbsp;million and our net income was &#165;8,455&nbsp;million.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Our Strategies</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Provide Integrated Financial Services to Small and Medium-Sized Enterprises in Japan</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We seek to provide a broad range of non-bank financial services to small and medium-sized
enterprises in Japan and their owners. These services include the following:
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Broad Range of Services to Small and Medium-Sized Enterprises. </I>We provide a
variety of financial services to small and medium-sized enterprises, depending on
their growth stage, in an effort to be our customer&#146;s primary source for financial
services. In addition to business loans, we provide leasing and other services,
including secured loans and investment banking services.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Services to Business Owners. </I>For small businesses owners, we provide small
business loans and Business Timely loans, described below, as well as installment
credit. We seek to customize our products to the needs of small business owners.
For example, we may loan to the owner&#146;s business directly, with a guarantee from
the owner or a third party, or secure such loans if appropriate collateral is
available.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition to our direct channels, we also seek to provide our services through alliances
with other financial service companies. We apply our credit expertise as a lender to small and
medium-sized enterprises and their owners to take advantage of allied customer databases and
established brand value to more effectively offer our products and services, as well as to develop
new products for these customers. Depending on the alliance, we market these products under our
own or our allied brands. We refer to this as our &#147;financial OEM&#148; strategy.
</DIV>


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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Expand Real Estate-related Businesses</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We seek to expand our real-estate related businesses in order to take advantage of our credit
and secured lending expertise in Japan&#146;s real estate markets. We believe that the recent
stabilization of asset values in major real estate markets in Japan, particularly major urban areas
such as Tokyo, provides an opportunity for secured real estate lending and principal investment
in real estate. We seek to leverage our credit and secured lending expertise in relation to small
and medium-sized enterprises, as well as our experience servicing distressed loans, to grow various
real-estate related businesses, including the following:
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Providing real estate secured loans to property developers for working capital</I>.
This is currently our fastest growing business line, and we focus primarily on
small to medium-sized property developers that develop small commercial and
residential properties.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Investing in real property with a view to resale</I>. We seek to purchase real
estate, particularly commercial and residential rental properties, that we believe
can be resold at a higher price following renovations of the property or
improvements in property management. We conduct this business primarily through
our subsidiary, NIS Property.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Acquisition of distressed real estate</I>. Taking advantage of our network of
financial institutions selling distressed loans collateralized by real estate and
our experience servicing such loans, our subsidiary, Nissin Servicer, seeks to
acquire distressed real estate assets which it restructures and resells.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Develop Overseas Business, Particularly in China</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We seek to expand our full-scale leasing business in China, which we operate through our
subsidiary, Nissin Leasing (China). We believe that economic and commercial growth in China has
created a demand for sophisticated leasing and other financial services, particularly among growing
enterprises. Through Nissin Leasing (China), we seek to become one of China&#146;s premier leasing
companies. We also seek to use our financial expertise and experience operating a large-scale
business in China to provide consulting services for companies looking to do business in China. We
also intend to explore opportunities in other financial markets in Asia, although we currently have
no concrete plans.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Develop Investment Banking, Securities and Venture Capital Businesses</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Through our subsidiary, NIS Securities, we provide investment banking services targeted at
small and medium-sized enterprises in Japan, including arrangement of direct financing, initial
public offerings of securities, securities brokerage and other financial advisory services. We
seek to take advantage of our network of relationships with small and medium-sized enterprises to
provide customized investment banking services tailored to their stage of growth. We also seek to
expand our proprietary trading and brokerage services.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition, because many of our financial services clients are small or medium-sized
enterprises in relatively early stages of their growth, we believe that attractive principal
investment opportunities exist with many of our customers. We seek to take advantage of our
network of relationships with such companies to make proprietary venture capital investments in
growth enterprises with a view to capital gain. We believe such principal investments
may also lead to investment banking opportunities.
</DIV>


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<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In this manner, we seek to integrate investment banking, securities and venture capital
businesses into our overall package of integrated financial services that we offer to small and
medium-sized enterprises and their owners in Japan.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Our Markets</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Japanese Small Business Finance Industry</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We compete in the Japanese small business finance industry, which provides secured and
unsecured loans to small business entities or their owners. Many of our loan products are extended
principally to individuals who own small businesses on the basis of individual creditworthiness,
rather than to entities based upon business creditworthiness, which is the focus of general
business finance companies. However, to the extent that we provide loans to individual small
business owners, we compete with lenders in the business finance industry that loan to small
businesses.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Japanese Real Estate Finance and Other Real Estate Industries</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We compete in the Japanese real estate finance industry, which provides secured loans for the
purpose of financing the purchase or development of real estate. Our secured loans are generally
provided to small and medium-sized property developers as working capital for the purpose of
developing small commercial and residential properties. Secured loans to property developers are
one of our largest growth products and a strategic focus for us. We also provide secured general
purpose loans to individual customers. In addition to real estate finance, we purchase commercial
and residential real estate with a view to resale, typically following renovations and other
improvements intended to increase property value. We target sales of such properties to Japanese
real estate investment funds, or J-REITs, and other real property investment funds and property
companies. We believe that the growing competition among such funds and property companies to
acquire quality properties provides an opportunity to realize value in purchasing, improving and
selling real properties.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Japanese Loan Servicing Industry</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We compete in the Japanese loan servicing industry through our subsidiary, Nissin Servicer.
This industry has grown rapidly in the last few years due to the accelerated disposal of
nonperforming loans by Japanese financial institutions as a result of Japanese government measures
to combat nonperforming loans. Although we compete with a variety of companies for loan servicing
opportunities, we consider affiliated companies of the major consumer finance or small business
owner loan companies to be our primary competitors. According to the Ministry of Justice, as of
March&nbsp;31, 2006, 94 companies were registered as licensed servicing companies, of which we believe
ten were affiliated with major consumer finance or small business owner loan companies.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Japanese Leasing Industry</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Through our subsidiary, NIS Lease, we compete in the Japanese leasing industry, which provides
finance and operating lease products and services to customers in Japan. Our target market is
small and medium-sized enterprises in Japan. We therefore compete with other leasing and non-bank
finance companies that provide services to such companies.
</DIV>


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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We compete in the Japanese investment banking and securities industry. Japan has highly
sophisticated financial markets, and we compete with Japanese and foreign investment banks to
provide investment banking and securities services to small and medium sized enterprises. We also
operate a principal investment business in Japan. We focus on the small and medium-sized
enterprise markets in Japan, in order to take advantage of our experience and relationships with
such companies developed through out other business lines.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Chinese Leasing and other Industries</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We compete in the Chinese leasing market through our subsidiary, Nissin Leasing (China). We
may also compete in other markets in China as we begin to engage in consulting and import/export
businesses. In addition, we intend to consider opportunities to provide non-bank financial or
other services elsewhere in Asia, although we currently have no operations in outside of China and
no concrete plans for any such businesses.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Japanese Consumer Finance Industry</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We compete in the Japanese consumer finance industry, which provides secured and unsecured
loans without restrictions on the purposes of use to Japanese individuals. Although banks and
credit finance companies outside the consumer finance industry also provide unsecured and secured
loans, we compete most directly with other consumer finance companies. We believe our focus on
consumers seeking to consolidate loans from multiple lenders and on small business owners
differentiates us from other consumer finance companies.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Our Products</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have two operating segments for financial reporting purposes: integrated financial
services and loan servicing.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The integrated financial services segment includes loan businesses, small business owner,
Business Timely, secured, Wide, consumer and other loans, as well as credit guarantee, leasing and
securities business. Included in this segment for the fiscal year ended March&nbsp;31, 2006 are
investment in real estate properties, insurance agency and consultancy businesses. However,
because of the increasing significance of these businesses, we anticipate that they will be
included in a separate business segment for the fiscal year ending March&nbsp;31, 2007.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As part of our loan servicing segment, we mainly acquire for our own portfolio and service
non-performing debts from banks and other financial institutions in Japan.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Integrated Financial Services</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our net interest income after provision for loan losses from our integrated financial services
segment was &#165;21,611&nbsp;million, or 94.3% of our consolidated net interest income after provision for
loan losses for the year ended March&nbsp;31, 2004, &#165;18,534&nbsp;million, or 89.0% of our consolidated net
interest income after provision for loan losses for the year ended March&nbsp;31, 2005, and &#165;17,964
million, or 84.2% of our consolidated net interest income after provision for loan losses for the
year ended March&nbsp;31, 2006. Net income from our integrated financial services segment was &#165;5,671
million, or 93.3% of our consolidated net income for the year ended March&nbsp;31, 2004, &#165;6,244&nbsp;million,
or 86.0% of our consolidated net income for the year ended March&nbsp;31, 2005, and &#165;6,117&nbsp;million, or 72.3% of our consolidated
net income for the year ended March&nbsp;31, 2006.</DIV>


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<DIV style="font-family: 'Times New Roman',Times,serif">

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table provides information on the
average balance of loans outstanding for each category of our loan business during each fiscal
year:
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="40%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="18" style="border-bottom: 1px solid #000000"><B>Year ended March 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2002</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2003</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2006</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="18"><B>(in millions)</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Small business owner loans</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">32,195</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">45,311</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">55,647</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">56,964</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">63,320</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Business Timely loans</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12,238</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17,256</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17,909</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">19,687</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">23,656</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Secured loans</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,589</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,252</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,235</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,976</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">39,496</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Wide loans</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">50,940</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">59,743</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">61,592</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">52,722</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">44,240</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Consumer loans<SUP style="font-size: 85%; vertical-align: text-top"> (1)</SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">45,784</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">45,093</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">38,600</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,296</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,010</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other loans</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">24</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">261</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,166</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,243</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Total average balance of loans outstanding</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">142,770</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">168,668</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">176,244</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">148,811</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">183,965</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">(1)</TD>
    <TD>&nbsp;</TD>
    <TD>Pursuant to an agreement between us and Orient Credit, on June&nbsp;1, 2004, we sold most of the
outstanding balance of our consumer loans to Orient Credit for &#165;32,697&nbsp;million.</TD>
</TR>

</TABLE>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table provides information on the balance of loans outstanding for each
category of our loan business as of the end of each fiscal year:
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="40%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="18" style="border-bottom: 1px solid #000000"><B>As of March 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2002</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2003</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2006</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="18"><B>(in millions)</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Small business owner loans</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">37,386</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">53,915</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">57,168</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">58,961</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">65,447</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Business Timely loans</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16,035</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17,303</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">18,659</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20,862</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">25,282</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Secured loans</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,427</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,587</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,003</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">18,812</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">91,610</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Wide loans</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">55,033</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">63,993</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">57,460</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">47,604</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">41,163</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Consumer loans<SUP style="font-size: 85%; vertical-align: text-top"> (1)</SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">46,180</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">40,938</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">35,604</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,827</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,995</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other loans</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">36</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">573</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,296</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,681</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Total balance of loans outstanding</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">156,078</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">177,772</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">179,467</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">155,362</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">237,178</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">(1)</TD>
    <TD>&nbsp;</TD>
    <TD>Pursuant to an agreement between us and Orient Credit, on June&nbsp;1, 2004, we sold most of the
outstanding balance of our consumer loans to Orient Credit for &#165;32,697&nbsp;million.</TD>
</TR>

</TABLE>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Small Business Owner Loans</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our small business owner loans comprised 34.4% of our total average loans outstanding for the
year ended March&nbsp;31, 2006 and 27.6% of our total balance of loans outstanding as of March&nbsp;31, 2006.
These small business owner loans are, in general, guaranteed, unsecured loans of up to &#165;10&nbsp;million
that require one or more guarantors from individuals with an income source separate from the
borrowers. We do not restrict the use of proceeds from these loans.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Small business owner loans are generally contracted at a fixed interest rate of up to 24.09%
per year and payable monthly. In addition, we charge an up-front origination fee of no greater
than 5% for each loan at the time of cash disbursement. These loans have initial repayment terms
of up to seven years and two months. The average maturity of small business owner loans at March
31, 2006 was 3.9&nbsp;years. Customers may prepay their small business owner loans at any time without
penalty. Although we do not restrict the use of proceeds from small business owner loans, we
believe that customers generally use the proceeds to repay existing loans or to obtain working
capital for their businesses. Under normal circumstances, we do not extend additional credit to
small business owner loan customers until they pay off their existing small business owner loan.
As a result, any small business owner loan customer seeking a new small business owner loan must pay off his or her existing loan and be subject to the
same loan approval process as any new customer.</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->-22-<!-- /Folio -->


<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In order to meet our customers&#146; needs, the terms of these loans are often tailored to the
particular situation of a borrower. For example, if a small business owner customer cannot provide
a guarantor, a loan might be secured by real estate or securities to enhance the credit. In such
cases, the loan will still be recorded by us as a small business owner loan
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In contrast to other lenders that target corporations and other business entities, we serve
almost entirely self-employed individuals, primarily individual small business owners in a wide
range of industries. As of March&nbsp;31, 2006, approximately 41.2% of the borrowers were self-employed
individuals in wholesale, retail and restaurant businesses, while the remaining borrowers were
primarily self-employed individuals in industries such as manufacturing, construction,
transportation, communication, agriculture, fishery and other services. The loan process often
begins when staffs at our general branches or loan offices call a prospective client to determine
the loan amount to be applied for, followed by a credit check. Our staff then holds a face-to-face
meeting with the client and the guarantor to ensure that all parties understand the content and
implications of the loan agreement.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table shows the total number of small business owner loan accounts and the
average balance of small business owner loans per account:
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="40%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="19" style="border-bottom: 1px solid #000000"><B>As of March 31,</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2002</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2003</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2006</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Number of small business owner loan accounts</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17,472</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">23,439</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">24,739</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">24,414</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">25,797</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Average balance of loans per account (in
thousands)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">2,140</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">2,300</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">2,311</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">2,415</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">2,537</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table shows advances, recognized on the disbursement date, to our customers
of small business owner loans:
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="40%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="19" style="border-bottom: 1px solid #000000"><B>Year ended March 31,</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2002</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2003</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2006</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="19"><B>(in millions)</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Advances</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">22,328</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">36,560</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">35,061</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">45,834</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">53,134</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As we do not make additional advances under existing small business owner loan contracts,
the majority of the advances are to new customers, with the balance being made to existing
customers under new contracts.
</DIV>




<P align="center" style="font-size: 10pt"><!-- Folio -->-23-<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>



<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Business Timely Loans</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We extend Business Timely loans, our unguaranteed, unsecured loans made under pre-approved
revolving credit lines, to more creditworthy small business owners. Holders of our Business Timely
Card may borrow unguaranteed and unsecured Business Timely loans of up to &#165;5&nbsp;million. These loans
accounted for 12.9% of our total average loans outstanding for the year ended March&nbsp;31, 2006 and
10.7% of our total balance of loans outstanding as of March&nbsp;31, 2006.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Business Timely loans are currently contracted at a fixed interest rate of no greater than
27.01% per year, payable monthly. Customers may prepay their loans at any time without penalty. A
Business Timely loan contract is automatically renewed after three years; however the credit line
is forfeited under certain conditions such as a delinquent loan for 16&nbsp;days or more. Furthermore,
we generally conduct a credit assessment of an account holder every three months. We may terminate the account for a
number of reasons. For example, we may terminate the account if the holder is found to have
increased his or her borrowings from other institutions. Although we do not restrict use of
Business Timely loans, we believe customers generally use the proceeds to repay existing loans or
to obtain working capital. As a general rule, a customer seeking a Business Timely Card may have
loans outstanding from only up to two other companies at the time of application. Customers
granted a Business Timely Card can request transfer of funds to their account using our automated
telephone service on the same or following business day after our approval of the credit line.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We market Business Timely loans along with our small business owner loans. The provision of
Business Timely loans, first introduced in March&nbsp;2000, allows us to tap into a segment of the
consumer finance industry that we believe has been underserved. We market this product to more
creditworthy small business owners from whom we do not require a guarantor. As of March&nbsp;31, 2006,
approximately 27.6% of the borrowers earned more than &#165;7&nbsp;million annually, 55.6% have loans
outstanding from not more than two companies, and 67.0% engaged in wholesale, retail or restaurant
businesses. These potential borrowers often do not have an immediate need for a loan, but value
the security of access to a pre-approved revolving credit line. Of Business Timely Cards issued,
49.8% had outstanding balances as of March&nbsp;31, 2006.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table shows the total number of Business Timely loan accounts and the average
loan balance per Business Timely loan account:
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="54%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="19" style="border-bottom: 1px solid #000000"><B>As of and for the year ended March 31,</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2002</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2003</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2006</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total number of Business Timely loan accounts</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">22,559</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">24,594</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">29,950</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">34,059</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">34,617</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Number of Business Timely loan accounts with
outstanding balances</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13,239</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14,511</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16,163</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17,493</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17,228</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Average balance of loans per account (in
thousands)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">1,211</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">1,192</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">1,154</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">1,193</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">1,467</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table provides information on advances, recognized on the disbursement
date, to our customers of Business Timely loans:
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="40%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="18" style="border-bottom: 1px solid #000000"><B>Year ended March 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2002</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2003</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2006</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="18"><B>(in millions)</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD nowrap><DIV style="margin-left:15px; text-indent:-15px">Advances to existing
customers (including repeat customers)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">9,686</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">10,030</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">9,613</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">12,455</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">18,266</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Advances to new customers</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,847</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,300</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,323</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,953</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,983</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">16,533</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">14,330</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">13,936</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">17,408</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">22,249</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<P align="center" style="font-size: 10pt"><!-- Folio -->-24-<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Secured Loans</I></DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Secured loans comprised 21.5% of our total average loans outstanding for the year ended March
31, 2006 and 38.6% of our total balance of loans outstanding as of March&nbsp;31, 2006. They
represented our fastest growing loan product for the fiscal year ended March&nbsp;31, 2006, with growth
of 387% in loans outstanding during this period. These loans are primarily loans to property
developers secured by real property. In addition, we make loans to individuals and small and
medium-sized enterprises in Japan secured by real estate or securities, in many cases as
consolidation loans for customers who do not qualify for our unsecured Wide loans. Loans to
property developers for the purpose of property development represented 57.3% of our secured loans
for the fiscal year ended March 31, 2006 and are the strategic focus
of our secured loan business. Loans to individuals and
small and medium-sized enterprises represented 42.7% of our secured loans for this period.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Secured Loans to Property Developers. </I>We established our Real Estate Finance Department in
February&nbsp;2004 in order to focus on loans designed for property developers secured by real property.
These loans have grown significantly in the last two fiscal years from a balance of &#165;7,433 as of
March&nbsp;31, 2004 to &#165;52,330&nbsp;million as of March&nbsp;31, 2006. These loans are primarily used as working
capital for the development of small commercial or residential buildings by property developers.
Our primary customers are small to medium-sized property development companies in Japan. We
determine the interest rates for these loans on an individual basis, and the weighted period-end
average interest rate on secured loans to property developers at March&nbsp;31, 2006 was 6.1% per year.
We also generally charge an upfront origination fee of typically
around 2% on each of these loans.
These loans have a high degree of liquidity and typically mature in a period ranging from one month to two years.
The average maturity of secured loans to property developers at March&nbsp;31, 2006 was 1.1&nbsp;years.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table shows the total number of accounts, the balance of loans outstanding, and
the average balance of loans per account with respect to secured loans to property developers:
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="40%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="19" style="border-bottom: 1px solid #000000"><B>As of March 31,</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2002</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2003</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2006</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="19"><B>(in millions except number of accounts)</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Number of secured loan accounts</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">99</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">204</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Balance of loans outstanding</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,433</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11,890</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">52,330</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Average balance of loans per account</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">372</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">120</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">257</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table shows advances of secured loans, recognized on the disbursement date,
to property developers:
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="40%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="19" style="border-bottom: 1px solid #000000"><B>Year ended March 31,</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2002</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2003</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2006</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="19"><B>(in millions)</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Advances</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,397</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">18,716</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">72,587</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Unlike many of our other loans, the principal amounts of secured loans to property
developers are generally relatively large. This is because these loans are used for property
development, typically in Tokyo or other large urban areas in Japan, where land prices and
development costs are relatively high. During the fiscal year ended March&nbsp;31, 2006, our average
principal amount of new secured loans to property developers per account was &#165;454&nbsp;million. As a
result, we are subject to the risk that declines in real estate values, and in turn the value of
our collateral for such loans, could subject us to significant unsecured risk on these loans.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Secured Loans to Individuals and Small and Medium-Sized Enterprises. </I>Our secured loans to
individuals and small and medium sized enterprises are typically general purpose loans secured by
equity in real property or securities. Many of our customers for these loans are consumers who do
not qualify for our unsecured Wide loans or other consumer loans. Our customers for these loans
often have other outstanding secured loans, and we make loans secured by second mortgages in the
customer&#146;s property in amounts generally based on the market value of the mortgaged property in
excess of the outstanding balances of other loans to that customer secured by such property. The
weighted period-end average interest rate on secured loans to individuals at March&nbsp;31, 2006 was
7.1% per year. We also generally charge an upfront origination fee of typically around 2% on each
of these loans. The
average maturity of secured loans to individuals at March&nbsp;31, 2006 was 2.0&nbsp;years.</DIV>
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->-25-<!-- /Folio -->

</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Wide Loans &#151; Debt Consolidation Loans</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We also provide debt-consolidation loans to individuals in Japan indebted to multiple lenders.
We believe this product to be innovative and brand these loans as Wide loans. Major consumer
finance companies in Japan generally do not offer debt-consolidation loans. These loans comprised
24.0% of our total average loans outstanding for the year ended March&nbsp;31, 2006 and 17.3% of our
total balance of loans outstanding as of March&nbsp;31, 2006. Our balances of Wide loans have declined
both in absolute amounts and as a percentage of total loans outstanding in recent fiscal years,
primarily as a result of the growth of our secured loan and small business owner loan products and
or our sales and marketing emphasis in these areas.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We extend Wide loans of up to &#165;10&nbsp;million at a fixed contractual interest rate of no greater
than 24.09% per year. In addition, we charge an up-front origination fee of no greater than 3% at
the time of disbursement. The loans are repaid in equal monthly payments, comprising both interest
and principal, over a period of up to ten years and two months. The average maturity of Wide loans
as of March&nbsp;31, 2006 was 5.1&nbsp;years. The borrower must supply one or more guarantors with an
income source separate from that of the borrower. We require the proceeds from these loans to be
applied to the consolidation of loans from other consumer finance companies. Under normal
circumstances, we do not extend additional credit to Wide customers until they pay off their
existing Wide loan contracts. Our Wide loans usually cater to customers who already have a high
level of outstanding debt with several consumer finance lenders. As of March&nbsp;31, 2006, 55.9% of
the borrowers were male, and 47.7% earned less than &#165;3&nbsp;million a year. In addition, a substantial
number of our Wide loan customers were former customers of our consumer loans. The following table
provides information on the total number of Wide loan accounts and the balance of Wide loans per
account:
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="40%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="19" style="border-bottom: 1px solid #000000"><B>As of March 31,</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2002</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2003</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2006</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Number of Wide loan accounts</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">32,075</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">36,482</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">35,126</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">31,440</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">27,701</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Balance of loans per account (in thousands)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">1,716</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">1,754</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">1,636</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">1,514</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">1,486</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table provides information on advances, recognized on the disbursement
date, to our customers of Wide loans:
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="40%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="19" style="border-bottom: 1px solid #000000"><B>Year ended March 31,</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2002</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2003</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2006</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="19"><B>(in millions)</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Advances</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">28,321</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">34,294</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">20,709</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">15,897</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">14,977</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As we do not generally make additional advances under existing Wide loan contracts,
almost all advances are to new Wide loan customers, including current customers for our consumer
loans, with the balance being made to existing Wide loan customers under new contracts.
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->-26-<!-- /Folio -->
</DIV>


<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>
<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Consumer Loans</I>
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Consumer loans comprised 1.6% of our total average loans outstanding for the year ended March
31, 2006 and 1.3% of our total balance of loans outstanding as of March&nbsp;31, 2006. We extend these
unguaranteed revolving loans to individuals in amounts of up to &#165;500,000 or, for more creditworthy
customers who qualify for our VIP consumer loans, up to
&#165;1&nbsp;million. These loans are currently contracted at a fixed interest rate of up to 27.01% per year or, for VIP loans, up to 25.55%
per year. We do not restrict use of proceeds from the loan.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In recent years, we have increasingly shifted our resources away from our consumer loan
business, because of competition from the major consumer finance companies, which benefit
significantly from the scale of their consumer loan operations. In line with this strategic shift,
pursuant to an agreement between us and Orient Credit, on June&nbsp;1, 2004, we sold most of the
outstanding balance of our consumer loans to Orient Credit for &#165;32,697&nbsp;million. Following the
sale, we continue to offer consumer loans to prospective customers, particularly those who are
referred to us by our alliance partners, but we expect that our consumer loan business will operate
on a substantially reduced scale for the foreseeable future.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Other Loans/Leasing</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other loans comprised 5.6% of our total average loans outstanding for the year ended March&nbsp;31,
2006 and 4.5% of our total balance of loans outstanding as of March&nbsp;31, 2006. These loans
primarily include installment credits and collateralized lease financing to small and medium-sized
businesses through our wholly-owned subsidiary, NIS Lease. The average maturity of other loans at
March&nbsp;31, 2006 was 4.3&nbsp;years.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our leasing business is a key growth business, particularly in China. In July&nbsp;2004 we
established Nissin Leasing (China), our wholly-owned subsidiary in China. In September&nbsp;2005,
Nissin Leasing (China) obtained a leasing license from the Chinese government and began operating
full-scale leasing business in China, providing operating leases, finance leases and services for
offices and commercial facilities in China. Nissin Leasing (China) also engages in consulting
business with respect to Chinese incorporation procedures, credit investigations and product test
marking. Nissin Leasing (China) also serves as an origination channel for investments by us in China.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Other Products and Services</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Credit Guarantee</I>. We guarantee loans to customers of third party lenders for which we receive
guarantee fees. We provide credit-guarantee services, including for third party loan transactions,
to customers of our affiliate, Chuo Mitsui Finance Service Co., Ltd., or Chuo Mitsui Finance
Service, as well as customers of several third parties including Shinsei Business Finance Co. Ltd.,
or Shinsei Business Finance, our former affiliate, and Sanyo Club Co., Ltd., or Sanyo Club.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Real Estate Investment. </I>We also invest in real estate through our wholly-owned subsidiary,
NIS Property, as well as obtain real estate through entities which are consolidated by us in
accordance with Financial Accounting Standards Board (&#147;FASB&#148;) Interpretation (&#147;FIN&#148;) No.&nbsp;46(R),
&#147;Consolidation of Variable Interest Entities.&#148; Because of the recently brisk Japanese real estate
market, we have begun to purchase real estate properties, and seek to add value by undertaking
improvements and increasing tenancy rates and sell the properties at a value-added price.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;During the fiscal year ended March&nbsp;31, 2006, we sold 10 commercial and residential properties,
variously to real property investment funds and property companies in Japan. As of March&nbsp;31,
2006, we had &#165;20,792&nbsp;million in real estate available for sale, consisting of 38 commercial and
residential properties.
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->-27-<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Investment Banking, Securities and Venture Capital Business. </I>In December&nbsp;2004, we started
investment banking and securities businesses through the acquisition of our wholly-owned
subsidiary, NIS Securities, which provides investment banking services. We seek to take advantage of our
network of relationships with small and medium-sized enterprises in Japan. As these businesses
grow, we believe that we can take advantage of our knowledge gained through lending in this market
to provide investment banking and securities services to emerging companies, such as arrangement of
financings, initial public offerings, securities brokerage and listings on exchanges and other
financial advisory, asset financing and asset management services. In December&nbsp;2005, we completed
our first transaction as lead underwriter in an initial public offering with the listing of Gamepot
Inc. on the Ambitious market of the Sapporo Securities Exchange.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;NIS Securities also engages in trading for its own account, realizing trading profits of &#165;265
million in the fiscal year ended March&nbsp;31, 2006.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition, we engage in principal investment activities, conducting principal investment in
growing enterprises. During the fiscal year ended March&nbsp;31, 2006, we invested &#165;12,878&nbsp;million in
54 companies. We seek principal investment opportunities primarily through our network of
relationships with small and medium-sized enterprises in Japan.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Loan Servicing</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our net interest income after provision for loan losses from our loan servicing segment was
&#165;1,311&nbsp;million, or 5.7% of our consolidated net interest income after provision for loan losses for
the year ended March&nbsp;31, 2004, &#165;2,286&nbsp;million, or 11.0% of our consolidated net interest income
after provision for loan losses for the year ended March&nbsp;31, 2005, and &#165;3,369&nbsp;million, or 15.8% of
our consolidated net interest income after provision for loan losses for the year ended March&nbsp;31,
2006. Our net income from our loan servicing segment was &#165;406&nbsp;million, or 6.7% of our consolidated
net income for the year ended March&nbsp;31, 2004, &#165;1,018&nbsp;million, or 14.0% of our consolidated net
income for the year ended March&nbsp;31, 2005, and &#165;2,338&nbsp;million, or 27.7% of our consolidated net
income for the year ended March&nbsp;31, 2006.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Mainly through our subsidiary, Nissin Servicer, which commenced its operations in October
2001, we service distressed loans that we purchase from other financial institutions for our own
portfolio. We seek to renegotiate the terms and conditions of these loans with the borrowers and
carry and service the loans through their maturities. These loans are normally collateralized or
carry personal guarantees.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table shows information on the aggregate purchase price and aggregate principal
and interest collection of the purchased loans:
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="40%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="19" style="border-bottom: 1px solid #000000"><B>Year ended March 31,</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>

<TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2002
 <SUP style="font-size: 85%; vertical-align: text-top">(1)</SUP></B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2003</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2006</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="19"><B>(in millions)</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Aggregate purchase price of distressed loans</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">403</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">4,854</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">4,502</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">16,896</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">19,779</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Aggregate principal and interest collection
of distressed loans</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">33</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,859</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,538</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,095</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11,923</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">(1)</TD>
    <TD>&nbsp;</TD>
    <TD>Commenced operations in October&nbsp;2001.</TD>
</TR>

</TABLE>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As a part of our plans to further develop our loan servicing segment, in September&nbsp;2004,
Nissin Servicer listed its shares on the Mothers market of the Tokyo Stock Exchange and became
Japan&#146;s first loan servicing company to go public.
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->-28-<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Channels for the Origination, Guarantee and Acquisition of Loans</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have various loan acquisition channels for the origination and guarantees of loans for our
integrated financial service segment and for the acquisition of distressed loans for our loan
servicing segment. Our direct channels include our loan offices and automated telephone services.
In addition, through alliances primarily with financial institutions, we originate business through
affiliates and third parties, taking advantage of their customer databases and brand recognition.
We refer to this as our &#147;financial OEM&#148; strategy, in the sense that we provided our original
financial products through our alliance companies&#146; brands and marketing channels.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Integrated Financial Services</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have sought to improve our operating efficiency by relying less on costly physical
infrastructure. Most of our competitors rapidly spread their physical presence throughout Japan,
particularly in the 1990s, with the establishment of networks of automated loan machines and
proprietary ATMs. Instead we shifted our focus to eliminate unnecessary physical infrastructure,
relying on telephone, loan office and Internet interaction with our customers. More recently, we
have diversified our loan acquisition channels by increasingly using the channels of our affiliates
and third parties, as we seek new ways to develop our loan business while avoiding deterioration in
the credit levels of our customers. To further diversify our business, we also started a loan
guarantee business whereby we guarantee loans provided to customers of our affiliates and third
parties. Additionally, we have grown our secured loan business, particularly with respect to
secured loans to property developers, through our direct channels, primarily our loan offices. The
following table shows loans originated and loans guaranteed through our various distribution
channels:
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="10" style="border-bottom: 1px solid #000000"><B>Year ended March 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2006</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="10"><B>(in millions)</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Loan origination channels:</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Direct channels</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">53,068</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">59,363</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">109,524</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Channels of our affiliates<SUP style="font-size: 85%; vertical-align: text-top"> (1)</SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,825</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,829</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,573</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Channels of third parties<SUP style="font-size: 85%; vertical-align: text-top"> (1)</SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,075</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13,993</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11,552</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Total</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">67,968</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">78,185</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">125,649</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Channels
for loans that we
guarantee</B><SUP style="font-size: 85%; vertical-align: text-top">
<B>(2)</B></SUP><B>:</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Direct channels</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Channels of our affiliates</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,318</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,080</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,769</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Channels of third parties</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,301</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,621</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,081</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Total</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">3,619</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">7,701</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">12,850</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">(1)</TD>
    <TD>&nbsp;</TD>
    <TD>We acquired through Ascot Co., Ltd., or Ascot, loans in the amount of &#165;920&nbsp;million for the
year ended March&nbsp;31, 2004, &#165;467&nbsp;million for the year ended March&nbsp;31, 2005 and &#165;203&nbsp;million for
the year ended March&nbsp;31, 2006. Because Ascot was our affiliate for the year ended March&nbsp;31,
2004, but not for the years ended March&nbsp;31, 2005 and 2006, we have included the amount of &#165;920
million under &#147;Channels of our affiliates&#148; for the year ended March&nbsp;31, 2004 and the amount of
&#165;467&nbsp;million and \203&nbsp;million under &#147;Channels of third parties&#148; for the years ended March&nbsp;31,
2005 and 2006, respectively.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(2)</TD>
    <TD>&nbsp;</TD>
    <TD>As of March&nbsp;31 of each of the respective period.</TD>
</TR>

</TABLE>


<P align="center" style="font-size: 10pt"><!-- Folio -->-29-<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">






<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Channels for Loan Origination</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Direct Channels</I>: The following are our principal direct channels, which have traditionally
been and continue to be our most important channels to acquire loans for our loan business:
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Loan Offices</I>: Our loan offices enable loan applicants and current borrowers to meet
with our employees, who provide a full range of services, including disbursement of
cash, collection of repayments and responses to balance inquiries. Loan offices are
generally located near train stations and city centers in buildings owned or used by
banks and insurance companies. The total number of loan offices as of March&nbsp;31, 2005
decreased significantly compared to that as of March&nbsp;31, 2004, because we have
eliminated a substantial number of our general branches following the sale of most of
the outstanding balance of our consumer loans to Orient Credit in June&nbsp;2004 and
concentrated our resources in providing loans to small business owners. The total
number of loan offices, however, increased as of March&nbsp;31, 2006 because of the
acquisition of Aprek, which also originates loans to small business owners. The
following table shows selected information regarding our loan offices:</TD>
</TR>

</TABLE>
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="40%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="19" style="border-bottom: 1px solid #000000"><B>As of March 31,</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2002</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2003</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2006</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total loan offices</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">72</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">72</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">70</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">50</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">60</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Full-time employees</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">859</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">832</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">851</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">818</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">998</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">of which are dedicated to loan origination</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">641</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">615</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">571</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">487</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">571</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Regarding our loan offices, most of them specialize in small business owner loans
and Business Timely loans in order to target small to medium-sized business financing
market. However, the number of full-time employees at loan offices decreased since
March&nbsp;31, 2003 as we have increased the number of seconded employees to affiliates and
alliance partners in connection with our alliance strategy. Then again, as of March&nbsp;31,
2006, the number of employees dedicated to loan origination increased because of the
acquisition of Aprek for development of the small to medium-sized business financing
market in Japan&#146;s Kyushu region.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In addition, we established the Real Estate Finance Department in February&nbsp;2004 to
provide secured loans backed by real estate to property developers in order to take
advantage of recent brisk real estate market conditions. Also, we established the Tokyo
Sales Department in July&nbsp;2004 and the Osaka Sales Department in February&nbsp;2005 to further
enhance our provision of loans to owners of small to medium-sized enterprises.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Automated Telephone Service</I>. We primarily serve our Business Timely and consumer
loan customers through our automated telephone service, which we call the telephone
cashing system. Loan applications through the telephone currently comprise a majority
of all applications and all loans extended. After opening an account, customers place a
toll-free call and follow pre-recorded instructions on our computer system to receive
computerized services such as for balance inquiries and withdrawal of funds up to their
authorized limit. These services enhance convenience for our customers by eliminating
the need, and for some customers, embarrassment of visiting a loan office or ATM of a
consumer finance company. They also greatly reduce the need and costs of personal
service from our staff.</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt"><!-- Folio -->-30-<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Channels of Our Affiliates</I>: The following are the principal channels of our affiliates we use
for our loan business:
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Shinsei Business Finance</I>: In November&nbsp;2002, we established Shinsei Business Finance
as a joint venture with Shinsei Bank, to expand our provision of loans to small
business owners. We owned a 25% interest in the joint venture; however, our interest
in Shinsei Business Finance became less than 20% in April&nbsp;2006. Shinsei Business
Finance will no longer be categorized as an affiliate in the fiscal year ending March
31, 2007. The amount of loans provided through Shinsei Business Finance was &#165;841
million for the year ended March&nbsp;31, 2004, &#165;2,339&nbsp;million for the year ended March&nbsp;31,
2005 and &#165;866&nbsp;million for the year ended March&nbsp;31, 2006.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Chuo Mitsui Finance Service</I>: In November&nbsp;2004, we established Chuo Mitsui Finance
Service as a joint venture with The Chuo Mitsui Trust and Banking Co., Ltd., to expand
our provision of loans to small business owners. We own a 30% interest in the joint
venture. The amount of loans provided through Chuo Mitsui Finance Service was &#165;35
million for the year ended March&nbsp;31, 2005 and &#165;570&nbsp;million for the year ended March&nbsp;31,
2006.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Webcashing.com</I>: We accepted applications, until January&nbsp;2006, for all loan products
through our affiliate Webcashing.com Co., Ltd., or Webcashing.com, a former
wholly-owned subsidiary and a current 60% online loan marketing subsidiary of livedoor
MARKETING Co., Ltd. The amount of
loans provided through Webcashing.com was &#165;4,064&nbsp;million for the year ended March&nbsp;31,
2004, &#165;2,455&nbsp;million for the year ended March&nbsp;31, 2005 and &#165;3,137&nbsp;million for the year
ended March&nbsp;31, 2006.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Channels of Third Parties: </I>We maintain numerous referral relationships with other consumer
finance companies and financial institutions. These relationships provide an opportunity for these
companies to generate fees, in the form of commissions we pay based on acquired loan balances, in
respect of loans that these companies would otherwise reject because of the indebtedness level of
the applicants. We benefit from these relationships because we believe our credit assessment
expertise gives us an advantage in evaluating the creditworthiness of such borrowers. We continue
to negotiate actively to expand these channels. Our significant third party channels include the
following:
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>USEN Corp./USEN Partner Service Corp. </I>We commenced a relationship with USEN Corp.
in November&nbsp;2005 and its wholly owned subsidiary, USEN Partner Service Corp., which
commenced operations in January&nbsp;2005, through which we market our products to customers
of USEN, focusing on owners of small and medium-sized enterprises. We have 25 sales
personnel seconded from us to USEN. Primary products sold through this channel are
unsecured, unguaranteed USEN Business Timely loans and SME Loans, which are typically
unsecured loans guaranteed by third parties.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Gulliver International Co., Ltd. </I>We began our relationship with Gulliver
International Co., Ltd. in October&nbsp;2003 and target Gulliver&#146;s dues paying members,
particularly used car dealers. Our NIS Asset Finance product, which is a loan to used
car dealers secured by vehicles in stock, is a primary product sold through this
channel. NIS Lease also provides installment credit services to Gulliver&#146;s customers
for an annual membership fee.</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt"><!-- Folio -->-31-<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Channels for Loans That We Guarantee</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We currently rely exclusively on the channels of our affiliates and third parties to provide
loan guarantees.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Channels of Our Affiliates</I>: The following are the channels of our affiliates we use for our
loan guarantee business:
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Shinsei Business Finance</I>: In addition to acquiring loans through Shinsei Business
Finance, which ceased to be an affiliate in April&nbsp;2006, we use our credit assessment
and credit management expertise to provide guarantees to the loan customers of Shinsei
Business Finance. Our outstanding guarantees amounted to &#165;1,318&nbsp;million as of March
31, 2004, &#165;3,051&nbsp;million as of March&nbsp;31, 2005 and &#165;3,178&nbsp;million as of March&nbsp;31, 2006.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Chuo Mitsui Finance Service</I>: In addition to acquiring loans through Chuo Mitsui
Finance Service, we use our credit assessment and credit management expertise to
provide guarantees to the loan customers of Chuo Mitsui Finance Service. Our
outstanding guarantees amounted to &#165;29&nbsp;million as of March&nbsp;31, 2005 and &#165;591&nbsp;million as
of March&nbsp;31, 2006.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Channels of Third Parties</I>:
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our significant third party channels for guarantees include the following:
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Sanyo Club. </I>Our main third-party channel in providing loan guarantees is through
Sanyo Club. Our outstanding guarantees of loans to customers of Sanyo Club amounted to
&#165;2,280&nbsp;million as of March&nbsp;31, 2004, &#165;4,178&nbsp;million as of March&nbsp;31, 2005 and &#165;6,806
million as of March&nbsp;31, 2006.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>ShinGinko Tokyo, Ltd. </I>In January&nbsp;2006 we commenced our relationship with ShinGinko
Tokyo, Ltd., a recently formed bank operated by the city of Tokyo, targeting start-up
small and medium-sized enterprise customers of ShinGinko Tokyo. We use our credit
assessment and credit management expertise to provide guarantees to the loan customers
of ShinGinko Tokyo, Ltd. Our outstanding guarantees amounted to &#165;205&nbsp;million as of
March&nbsp;31, 2006.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Loan Servicing</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We acquire distressed loans for our loan servicing segment through various channels including
banks, investment funds and bankruptcy court proceedings. In the past, we primarily acquired
distressed loans from banks that provided various banking services to us in the ordinary course of
business. However, as the Japanese economy improves, asset quality and prices have increased,
while the volume of distressed loans has diminished. At the same time, competition for acquisition
of such loans has increased, including from domestic and foreign investment funds. This has
resulted in highly competitive auctions for distressed loans from banks, which have lowered our
margins on such loans. As a result, we have sought to broaden our acquisition strategy, and are
increasingly focusing on distressed real estate and real estate secured loans.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Strategic Investments</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We invest in enterprises that we believe have the potential to strategically complement our
business whose values we expect to appreciate. Some of these enterprises are our affiliates, and
our total initial investments in these affiliates amounted to &#165;792&nbsp;million as of March&nbsp;31, 2006. The
remainder of these enterprises is mostly small to medium-sized enterprises that we view as
potential strategic partners, rather than sources of potential capital gains, and our total initial
investments in these enterprises amounted to &#165;19,490&nbsp;million as of March&nbsp;31, 2006.
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->-32-<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Loan Disbursements</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We wire loan funds to accounts designated by borrowers. Unlike many of our competitors, we do
not use proprietary automated loan machines to disburse loans, in order to minimize physical
infrastructure. Until May&nbsp;31, 2004, we disbursed loans through ATMs operated by third parties such
as local and regional banks with whom we had entered into access agreements. On May&nbsp;31, 2004, we
ceased all arrangements to use these ATMs. As a result, we now rely on bank accounts designated by
borrowers to disburse cash in addition to cash disbursement at loan offices.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Opening of Loan Accounts</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Effective screening and approval of loan applicants and guarantors are critical factors in the
success of our business. The application procedure focuses principally on confirmation through an
interview of the identity and credit capacity of the customer and, if relevant, the guarantor. A
new customer or guarantor must first provide proof of identity, date of birth, address, place of
work, length and nature of employment, family situation, existing borrowings from other lenders,
and other details. To establish their credit standing, we check the customer information and, if
relevant, guarantor information against our proprietary database and also check the customer
information against other databases. One such database is maintained by numerous credit
information centers solely for use by consumer and small business finance companies, sales finance
companies and credit sales companies. These credit information centers for consumer and small
business finance companies record all transactions on a real-time basis, as participating companies
are required to provide customer credit information on an ongoing basis. Another database with
information on delinquent loans is shared by moneylenders, banks and installment sales finance
companies.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Small Business Owner Loans, Business Timely Loans and Wide Loans</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Loan approvals for small business owner loans, Business Timely loans and Wide loans depend on
both telephone and face-to-face interviews. The staff in the local loan office, a loan office
manager and our credit screening department review the information provided by applicants for small
business owner loans, Business Timely loans and Wide loans. The credit screening department
reviews and makes a decision based on the information relating to the customer and, if applicable,
the guarantor forwarded by the loan office after it completes its check. The information we
examine may include information about the applicant&#146;s employer or business, including its
registration and financial information.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;To determine the creditworthiness of potential borrowers, we examine a combination of factors
including their history of borrowings, employment, and outstanding loans, particularly those that
are secured.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For small business owner loans and Wide loans, within two or three business days from a
successful initial application, the staff at the local loan office normally visit the applicant and
the guarantor to execute the loan and guarantee agreements and to discuss the consequences of the
guarantee provision to ensure that both the applicant and the guarantor know the purpose of the
loan and the obligations they separately incur. We have never used blanket guarantees, a practice
for which some small business lenders came under widespread social criticism in 1999. A blanket
guarantee holds the guarantors liable for all current and future loans of the borrower, even those of which the
guarantor is not aware.</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For Business Timely loans, a credit line is established immediately following a successful
application. We generally conduct a credit assessment of an account holder every three months.
This credit assessment is conducted based on a credit reference on each customer from a credit
information center for consumer and small business finance companies. This credit reference,
together with our own data, helps us to maintain the customer&#146;s credit level at what we believe is
an appropriate level. We may terminate the account for a number of reasons.
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->-33-<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Secured Loans</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Because we provide loans backed by real estate, which is our principal secured loan product,
primarily to business entities, we tailor our screening and approval process to the individual
circumstances of the entities. Also, the terms and conditions of these loans are heavily
negotiated. To determine the creditworthiness of a potential borrower, we examine a combination of
factors including publicly available information about the borrower, such as its financial
statements, and the value and quality of the secured real estate.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Consumer Loans</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We rely almost entirely on telephone interviews for our unguaranteed consumer loans. Our
computerized credit scoring system weighs and analyzes the information provided by the applicant
and, if the loan is approved, produces a credit line recommendation, with a final review made by
the local loan office manager. Each loan office has authority to establish a credit limit of up to
&#165;500,000 per customer, subject to the credit limit established by our credit scoring system. Any
history of substantial outstanding borrowings or past defaults, shown in our database or databases
maintained by credit information centers, provides grounds for rejection. We generally conduct a
credit assessment of current account holders every three months.
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->-34-<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Collection</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If a borrower fails to make a timely repayment, the loan office that holds the loan account
has initial responsibility for collection of any overdue repayment. Overdue balances on all loans
accrue interest at a penalty rate of 29.2% per year. We have the right in case of non-payment of a
loan installment or any other specified event of default to accelerate the maturity of the loan
only if the borrower fails to repay the interest portion within the maximum rate set forth in the
Interest Rate Restriction Law. From the first day of delinquency, our computer system produces
automatic daily reports on overdue repayment; then loan office personnel attempt to contact by
telephone the customer and, if applicable, the guarantor. Most delinquent customers pay their
overdue balances shortly after this notice. When initial collection efforts fail, loan office
personnel continue their collection efforts, and if necessary, we transfer the loan collection
responsibility to our legal section for collection.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Each loan office is in charge of collection efforts for a loan account until it is deemed to
be a bad loan account. A loan account becomes bad when the borrower has deceased or become
bankrupt, or a legal proceeding has begun to recover the loan or in the following cases:
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In the case of a small business owner loan or Wide loan, when interest payments are
delinquent for 44&nbsp;days;</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In the case of a Business Timely loan, when contractual payments are past due for 7
days;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In the case of a secured loan, when interest payments are delinquent for 44&nbsp;days,
and there is a decline in the availability or value of the collateral; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In the case of a consumer loan, when interest payments are delinquent for 67&nbsp;days.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We transfer all bad loan accounts to our Research Group, which then takes on the collection
responsibility. When we choose to provide an allowance, the Research Group continues to examine
the possibility of collection and compile information with which to determine whether or not to
charge off the debts. See &#147;Allowance for Loan Losses, Loan Charge-offs and Provisions for Loan
Losses&#148; in Item&nbsp;5.A of this annual report on Form 20-F for discussion of the determination of our
allowance for loan losses.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Since February&nbsp;2004, we began extending real estate financing to property developers through
our Real Estate Finance Department. Although the amount of these real estate-backed loans has
grown significantly, we have not yet experienced any delinquent loans or charged-off any such
loans. We are currently devising collection procedures for these loans.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Technology</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Branch and Office Network</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The application and e-mail servers in our branches and offices are connected through dedicated
lines. We outsource our maintenance and operation work on the networks to an NEC affiliate.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Customer Information</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;An outsourcing center in Matsuyama houses our main computer, which stores all customer
information. Our main computer stores information for approximately 2.7&nbsp;million customers and can
store information for up to approximately 4&nbsp;million customers. Each transaction data is
transferred to our main computer in real time. We outsource our maintenance and operation work on
the main computer to another NEC affiliate. Although we have back-up systems for our data, we do
not maintain a back-up system that can replace our main computer in the event our main computer
becomes inoperative.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Loan Disbursements</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We extend funds to our customers accounts maintained by banks or financial institutions of
their choice through Sanyo Electric Credit, which provides wire transfer services.
</DIV>



<P align="center" style="font-size: 10pt"><!-- Folio -->-35-<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Competition</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Business Owner and Consumer Finance Industries</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Japan&#146;s business owner and consumer finance industries are becoming increasingly competitive.
In the past, the country&#146;s financial system was more strictly regulated. In recent years, however,
the Financial Services Agency, or FSA, and other government bodies have taken steps to deregulate
the financial system and allow increased competition.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We strategically target small and medium-sized enterprises and their owners for our products
and services. In this regard our products and services include those targeted at individual
business owners as well as those targeted at businesses, in some cases enhanced by guarantees or collateral of
the owners or third parties. To the extent we provide products and services to individuals, we
compete with companies that provide consumer or other personal finance services. To the extent we
provide products and services to small business enterprises, we compete with bank and non-bank
finance companies. Competition often overlaps among these competitors. Major categories of
competitors include the following:
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Large Japanese non-bank finance and leasing companies that provide financing,
leasing and related services to small and medium-sized enterprises, including Lopro,
SFCG, Orix, Sumisho Lease and Diamond Lease;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Japanese banks and other financial institutions expanding out of their traditional
markets, particularly by forming joint ventures and alliances with finance companies,
to the extent that they provide loans or other financial services to small and
medium-sized enterprises and individual business owners;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Large Japanese consumer finance companies and credit sales companies, including
Takefuji, Acom, Promise, and Aiful, which continue to seek greater market shares of the
consumer finance market through extensive marketing, to the extent that they provide
loans to individuals;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Foreign financial institutions, a number of which have been entering the Japanese
finance industry;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Credit card companies, particularly overseas companies such as MasterCard, which
have formed distribution relationships with major Japanese consumer finance companies;
and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Non-financial institutions, including East Japan Railway Company, a railway company
that provides consumer credit services through in-house cards with electronic money
functions, and information technology companies including Yahoo Japan and Rakuten, that
provide consumer credit services through the Internet.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We compete in our market on the basis of interest rates, speed and effectiveness of credit
assessment and credit risk management, product mix, ability to identify and maintain relationships
with strategic partners for customer referrals, brand recognition, location and network of offices
and marketing.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Loan Servicing Industry</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We compete in the Japanese loan servicing industry through our subsidiary, Nissin Servicer.
The industry has grown rapidly in the last few years due to the accelerated disposal of
nonperforming loans by Japanese financial institutions. However, the competition is also
intensifying as the number of entrants into the industry increased, resulting in increased prices
of distressed loans. According to the Ministry of Justice, as of March&nbsp;31, 2006, 94 companies were
registered as licensed servicing companies, of which we believe ten companies were affiliated with
consumer finance or small business owner loan companies. Our current and potential competitors
include the Japanese financial institutions that have obtained or may obtain a license to operate
in the loan servicing market. We compete in this market on the basis of our ability to identify
loan servicing opportunities, the purchase price we offer, loan servicing capability, effectiveness
of credit assessment and credit risk management and brand recognition.
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->-36-<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Investment Banking, Securities and Venture Capital Industries</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In the investment banking, securities and venture capital industries, we compete with the
major Japanese investment banks and securities firms. In addition, many foreign investment banks
and securities firms have gained strength in Japan, and many independent fund management companies
and other parties compete for attractive merchant banking opportunities. These businesses are
highly competitive in Japan, however, we believe that we differentiate ourselves by our focus small
and medium-sized enterprises and network with these companies. In this manner, we believe that can
successfully compete by focusing on customers who are not the primary targets of many of the major
companies competing in these markets.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Regulation</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>The Moneylending Business Restriction Law, Contributions Law and Interest Rate Restriction Law</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We are subject to an extensive regulatory scheme under Japanese law, including:
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the Law Concerning the Regulation, Etc. of the Money Lending Business, together with
a cabinet order and a ministerial ordinance, collectively referred to as the
Moneylending Business Restriction Law;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the Law for Control of Acceptance of Contributions, Money Deposits and Interest,
Etc., more commonly known as the Contributions Law; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the Interest Rate Restriction Law.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Financial Services Agency of Japan, or the FSA, has also released administrative
guidelines, or FSA Guidelines, to clarify the administrative application, business practices and
supervision procedures of the Moneylending Business Restriction Law.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Registration Requirements</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under the Moneylending Business Restriction Law, any company wishing to engage in moneylending
is required to register with the chief officer of the FSA if it lends through offices in more than
one prefecture. The registration is renewed every three years. The FSA must reject a registration
or renewal application if it contains any untrue statement or omission of a material fact or the
applicant is disqualified under the Moneylending Business Restriction Law. A disqualified person
includes:
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>any person who has had its registration revoked because of specified misconduct or
other reasons under the Moneylending Business Restriction Law within five years prior
to the application,</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>any person who was fined for violating the Moneylending Business Restriction Law or
other specified statues and five years have not passed since the person completed the
payment of the fine (or became excused from paying it),</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>any person who was sentenced to imprisonment for any reason and five years have not
yet passed since person completed the term of imprisonment (or became excused from
serving it),</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt"><!-- Folio -->-37-<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>any person in respect of which any of the directors, statutory auditors or specified
senior employees is a disqualified person,</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>any person who is a member of a crime syndicate, and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>any person who does not meet the minimum net asset requirement of &#165;3&nbsp;million, in the
case of an individual, or &#165;5&nbsp;million, in the case of a corporation.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We registered under the Moneylending Business Restriction Law in 1984, and have since renewed
our registration periodically as required. Our registration permits us to engage in the
moneylending business in all prefectures in which we presently conduct the business.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Government Supervision</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The FSA has general authority to supervise and discipline registered moneylenders under the
Moneylending Business Restriction Law. A registered moneylender with an outstanding loan balance
of more than &#165;50&nbsp;billion at the end of its fiscal year is required to submit an operational report
to the FSA concerning its operations during the fiscal year, including information on officers,
employees, loan offices, sources of funding and status of loans, together with its financial
statements for the fiscal year, within two months of the end of such fiscal year. The FSA may
request that a registered moneylender make further reports under the Moneylending Business
Restriction Law. A representative of the FSA may also enter a registered moneylender&#146;s offices,
inspect its books, documents and other materials or interview its officers, employees and other
related persons as may be necessary to protect the interest of its customers. The FSA may suspend
all or part of a registered moneylender&#146;s business for up to one year under specified
circumstances, including violation of the Moneylending Business Restriction Law. The FSA must
revoke the registration of a registered moneylender under specified circumstances, including when
it becomes a disqualified person for the purpose of registration or renewal or when it is in
significant violation of the Moneylending Business Restriction Law.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Restrictions on Usury</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Contributions Law and the Interest Rate Restriction Law primarily regulate the interest
rates we charge.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under the Contributions Law, no person in the moneylending business may charge interest at a
rate exceeding 29.2% per year. Charging or receiving interest at a rate exceeding 29.2% per year
is subject to criminal penalty. The violation of the maximum interest rate is subject to a
criminal sanction of imprisonment of 5&nbsp;years or less and/or penalty of &#165;10&nbsp;million or less, in the
case of an individual, and &#165;30&nbsp;million or less, in the case of a corporation. It is expected that
the Japanese Diet will discuss amendments to the Contributions Law in autumn 2006 and the maximum
interest rate legally chargeable is expected to be reviewed and reduced around January&nbsp;2007, in
consideration of funding circumstances, economic and financial conditions and business practices of
moneylenders.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Moneylending Business Restriction Law provides that a loan agreement with an interest rate
exceeding 109.5% per year is invalid.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Interest Rate Restriction Law provides that a loan with an interest rate exceeding a
prescribed rate is invalid with respect to the portion exceeding the maximum rate. Prescribed
rates are:
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>20% per year for loans of less than &#165;100,000,</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt"><!-- Folio -->-38-<!-- /Folio -->
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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>18% per year for loans of &#165;100,000 or more but less than &#165;1,000,000, and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>15% per year for loans of &#165;1,000,000 or more.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Moneylending Business Restriction Law provides, however, that a payment by a borrower or
guarantor of interest in excess of the rate prescribed by the Interest Rate Restriction Law to a
registered moneylender is valid and non-refundable so long as the excess interest is paid without
coercion, mistake or threat and additional requirements are satisfied.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;These additional requirements include:
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>delivery to the borrower or the guarantor, as the case may be, upon execution of the
relevant loan or guarantee agreement, of a prescribed written instrument setting forth
the principal terms of the loan or the guarantee, and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>delivery to the borrower or guarantor, upon the payment of the excess interest, of a
written receipt for the payment, unless the payment is transferred to the bank account
of the moneylender, in which case a written receipt is required upon the borrower&#146;s
request.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition, the FSA Guidelines require us to provide the borrower with written notice of the
terms of any loans extended under a loan agreement at the time of each disbursement, if multiple
loans may be provided under the same loan agreement.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As is typical for most other lenders in the Japanese consumer finance and business finance
industries, the interest rates of most of our current loans exceed the relevant maximum rates
permitted under the Interest Rate Restriction Law. Consequently, collection of unpaid excess
interest is legally unenforceable by lenders. These rates, however, are below the levels that
would subject us to criminal penalty under the Contributions Law. When paid by the borrower, the
excess interest portion of loans subject to such rates is non-refundable so long as we have met the
requirements stated above.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Previously virtually no borrowers refused to pay interest in excess of the Interest Rate
Restriction Law. More recently, the number of borrowers who refuse to pay or request refunds has
increased, largely due to increases in the number of individuals in Japan experiencing financial
difficulties as a result of ongoing economic difficulties in Japan. In addition, the Supreme Court
passed decisions concerning excess interest and the necessary requirements pertaining to excess
interest which were interpreted in the consumers&#146; favor, resulting in an increase in demand for
excess interest refunds by borrowers. In January&nbsp;2006, the Supreme Court further made decisions
with stricter interpretation of the requirement of delivery of documents and the requirement of
voluntary payment of the excess interests without coercion, mistake or threat explained above.
According to the court decisions, the Enforcement Regulations under the Moneylending Business
Restriction Law was amended with effect from July&nbsp;1, 2006. As a result of the court decisions,
when a borrower exercises his or her legal right to refuse to pay interest in excess of the level
set by the Interest Rate Restriction Law, we cannot collect the excess interest, despite the terms
of our contract. In addition, we are no longer able to demand immediate repayment of the remaining
balance in such instances. In addition, pursuant to the new regulations, the loan documentation
should provide that non-payment of interest constitutes an event of default only if the borrower
fails to repay the interest within the maximum rate under the Interest Rate Restriction Law.
Therefore, borrowers who fail to repay the unpaid excess interest portion will not be subject to
the general collection procedures applicable to borrowers discussed in &#147;Business &#151; Collection.&#148; On
occasion, we negotiate refunds of previously paid excess interest in certain situations primarily
involving threatened customer bankruptcy or threatened litigation. For the year ended March&nbsp;31,
2006, we agreed to return the excess interest payments totaling approximately &#165;387&nbsp;million, compared with approximately &#165;190&nbsp;million for the
year ended March&nbsp;31, 2005 and approximately &#165;134&nbsp;million for the year ended March&nbsp;31, 2004. Also,
as of March&nbsp;31, 2006, we recognized reserve of &#165;590&nbsp;million for estimated losses on excess interest
repayments to provide for estimated probable refunds claims of excess interest previously paid by
borrowers.
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->-39-<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Interest Rate Restriction Law also applies to discounted loans. A discounted loan results
when an interest amount is deemed to have been deducted in advance because the stated value of the
loan exceeds the actual cash disbursement in respect of the loan. This deemed interest amount is
subject to the general restrictions on interest under the Interest Rate Restriction Law. We do not
make any discounted loans.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Servicer Law</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;With the purpose of protecting borrowers from unfair collection practices, the Practicing
Attorney Law (the &#147;Attorney Law&#148;) stipulates that no person other than a qualified attorney can
engage in providing legal services or acquiring claims in order to enforce them against debtors.
In February&nbsp;1999, the Law on Debt Servicing Business by Servicing Companies (the &#147;Servicer Law&#148;)
was enforced in order to facilitate third-party debt servicing for performing and nonperforming
loans of financial institutions and to deal effectively with the sale, liquidation, and servicing
of their bad loans.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Servicer Law requires a minimum capital of &#165;500&nbsp;million for a company to be licensed by
the Minister of Justice to conduct third-party servicing. In addition, to make this law consistent
with the provisions of the Attorney Law, at least one attorney must be appointed as a director of a
licensed debt servicing company.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Servicer Law, as amended in September&nbsp;2001, covers a range of financial assets specified
in the law, including:
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>loan receivables held by financial institutions (including banks, insurance
companies and finance companies licensed under the Moneylending Business Restriction
Law and other miscellaneous financial entities), money claims under the Securitization
Law, and other claims as set out by cabinet orders; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>loan receivables under bankruptcy or rehabilitation proceedings and loan receivables
which are securitized through special purpose vehicles.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A licensed servicer is entitled to manage and collect receivables in relation to the above
claims on behalf of its clients or its own account. A servicer is also able to engage in real
estate transactions in connection with secured loans. According to the Ministry of Justice, as of
March&nbsp;31, 2006, there were 94 licensed servicing companies in Japan.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>The Law on Protection of Personal Information</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Personal Information Protection Law clarifies the legal duty of a business to protect
personal information by setting out basic principles for a proper treatment of such information.
The Personal Information Protection Law applies to information concerning individuals and does not
extend to corporations.
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->-40-<!-- /Folio -->
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<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Guidelines issued by several governmental authorities have supplemented the Personal
Information Protection Law. The Guidelines concerning Protection of Personal Information in
Financial Area issued by the FSA govern money-lending business. Industry associations have established
guidelines for their member organizations, detailing how such organizations must comply with the
Personal Information Protection Law.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Personal information, as defined by the Personal Information Protection Law, is any
information that distinguishes a living individual from another living individual. This includes a
person&#146;s name, address, birth date, birthplace, phone number, financial history, employment
history, academic history and occupation. The Personal Information Protection Law applies to
personal information-handling enterprises, or data collectors, defined as persons that use
databases that contain the personal information of 5,000 or more people. A personal information
database is defined as a collection of information, which is systematically arranged to conduct
searches.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Personal Information Protection Law provides the following general restrictions on the use
of personal information:
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the purpose of the use of information must be specified as much as possible;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>personal information may not be obtained through fraud or by other illegal means;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>upon acquiring the personal information, the use of information must be notified to
the relevant individual or published;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>personal information collected should be relevant to the purposes for which it is to
be used and, to the extent necessary for those purposes, should be accurate and kept up
to date;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>to prevent loss, unauthorized access, destruction, use, modification or disclosure
of personal information, security safeguards must be implemented;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>personal data may not be disclosed or made available to third parties without the
prior consent of the individual to whom the personal information relates; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the purpose of use of all personal data and the procedures of amendment,
suspensions, etc., of the use or deletion of personal data must be made available to
the individual to whom the personal information relates; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>corresponding to a person&#146;s requests to control his or her personal information,
including amendment, suspension of the use or deletion of his or her personal data.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Data collectors must deal adequately and promptly with complaints regarding their use of
personal information. For example, a data collector is expected to appoint a person who is
responsible for customer information, and establish complaint hotlines. If data collectors violate
their duty by disregarding the competent minister&#146;s orders, they may be subject to imprisonment not
exceeding six months, or a fine not exceeding &#165;300,000.
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->-41-<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Properties</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our head office in Tokyo, Japan occupies 3,206.88 square meters of office space, and our head
office in Matsuyama, Ehime, occupies 1,986.38 square meters of office space on 642.78 square meters
of land. We lease the Tokyo Head Office space and own the Matsuyama Head Office space. We lease
most of our 60 loan offices, located throughout Japan. Approximately one-third of the total number
of our loan offices operate in the metropolitan regions surrounding Tokyo and Osaka.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Legal Proceedings</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We are not a party to any material legal proceedings.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>C. Organizational Structure.</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The table below provides information about our principal subsidiaries, all of which were
incorporated under the laws of Japan, except for Nissin Leasing, which was incorporated under the
laws of China:
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="30%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="30%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center"><B>Shares and voting</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center"><B>rights held by us,</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center"><B>directly or</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Name</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>indirectly</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Principal business</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Nissin Servicer Co., Ltd.</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;74.6%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Loan servicing business</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">NIS Lease Co., Ltd.<SUP style="font-size: 85%; vertical-align: text-top"> (1)</SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">100.0</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Leasing business</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">NIS Property Co., Ltd.<SUP style="font-size: 85%; vertical-align: text-top"> (1)</SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">100.0</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Real estate-related business</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Nissin Leasing (China) Co., Ltd.<SUP style="font-size: 85%; vertical-align: text-top"> (2)</SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">100.0</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Leasing business</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">NIS Securities Co., Ltd.<SUP style="font-size: 85%; vertical-align: text-top"> (3)</SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">100.0</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Securities business</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Aprek Co., Ltd.<SUP style="font-size: 85%; vertical-align: text-top"> (4)</SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">&nbsp;&nbsp;69.3</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Loan business</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">(1)</TD>
    <TD>&nbsp;</TD>
    <TD>Prior to June&nbsp;22, 2004, NIS Property Co., Ltd., was named Nissin Credit Guarantee Co., Ltd.
and its principal business was providing credit guarantees. On June&nbsp;15, 2004, Nissin
Guarantee Co., Ltd. transferred its credit guarantee business operations to NIS Lease Co.,
Ltd.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(2)</TD>
    <TD>&nbsp;</TD>
    <TD>Established on July&nbsp;9, 2004, obtained leasing license from Chinese government on September
14, 2005, and changed its name from Matsuyama Nissin Leasing (Shanghai) Co., Ltd. on March&nbsp;13,
2006.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(3)</TD>
    <TD>&nbsp;</TD>
    <TD>Acquired on December&nbsp;3, 2004, and changed its name from Yamagen Securities Co., Ltd. on May
1, 2005.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(4)</TD>
    <TD>&nbsp;</TD>
    <TD>Acquired on December&nbsp;2, 2005 through a cash tender offer.</TD>
</TR>

</TABLE>



<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>D. Property, Plants and Equipment.</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The information required by this item is provided in Item&nbsp;4.B of this annual report on Form
20-F.
</DIV>



<P align="center" style="font-size: 10pt"><!-- Folio -->-42-<!-- /Folio -->
</DIV>


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<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="left">
<A name="106"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Item&nbsp;4A.
Unresolved Staff Comments.</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;None.
</DIV>
<DIV align="left">
<A name="107"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Item&nbsp;5. Operating and Financial Review and Prospects.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>A. Operating Results.</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>You should read the following discussion and analysis of our financial condition and results
of operations together with Item&nbsp;3.A of this annual report on </I><I>Form 20-F</I><I> and our audited U.S. GAAP
financial statements, including the notes to these statements, appearing beginning on page F-1 of
this annual report on </I><I>Form 20-F</I><I>. This discussion and analysis is based on U.S. GAAP financial
information except as noted otherwise. This discussion and analysis contains forward-looking
statements that involve risks, uncertainties and assumptions. Our actual results may differ
materially from those anticipated in these forward-looking statements as a result of factors
including but not limited to those in Item&nbsp;3.D of this annual report on </I><I>Form 20-F</I><I>.</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Overview</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
are primarily engaged in the business of providing secured and
unsecured loans to individuals, including small business owners,
consumers and small and medium-sized enterprises in Japan. Most of our income comes from interest
income on loans receivable from this business, which comprises our integrated financial services
segment. We also acquire non-performing debts from banks and other financial institutions in Japan
and service such non-performing debts as part of our loan servicing segment.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our net interest income after provision for loan losses was &#165;22,922&nbsp;million for the year ended
March&nbsp;31, 2004, &#165;20,820&nbsp;million for the year ended March&nbsp;31, 2005 and &#165;21,333&nbsp;million for the year
ended March&nbsp;31, 2006. Over the last three years, we have been strategically shifting away from
consumer loans and concentrating our resources on providing financial services to small and
medium-sized business owners. We sold most of the outstanding balance of our consumer loans in
June&nbsp;2004. We also seek to enhance loans to business owners, and have added focus on real estate
financing. Real estate financing contributed to a significant growth in our average amount of
loans outstanding during the year ended March&nbsp;31, 2006. Also, the growth of our loan servicing
business, full-scale operations of our leasing business and a decline of our interest expense has
counterbalanced the decline of our interest income from loans receivable and increase of our loan
loss-related costs, which resulted in an increase of our net interest income after provision for
loan losses.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our net income was &#165;6,077&nbsp;million for the year ended March&nbsp;31, 2004, &#165;7,262&nbsp;million for the
year ended March&nbsp;31, 2005 and &#165;8,455&nbsp;million for the year ended March&nbsp;31, 2006. Our net income has
increased steadily, reflecting the change in the mix of our operating assets portfolio, as well as
our efforts to contain the growth of our non-interest expenses.
</DIV>

<P align="center" style="font-size: 10pt">-43-
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp; <B><I>Integrated Financial Services</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We categorize our loans in our integrated financial services into the following five primary
categories:
</DIV>

<DIV style="margin-top: 12pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Small Business Owner Loans</I>: Small business owner loans are primarily unsecured
loans to self-employed individuals guaranteed by one or more guarantors. In recent
years, the amount of total small business owner loans outstanding and number of
customer accounts has increased, primarily as a result of our active promotion of these
loans through the direct telemarketing efforts of our loan offices specializing in
loans to small to medium-sized business owners, and newly established Tokyo and Osaka
Sales Departments, as well as through referrals from our strategic alliance partners.
Interest
income derived from small business owner loans has contributed significantly to our
total interest income.</TD>
</TR>

<TR>
    <TD style="font-size: 12pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Business Timely Loans</I>: Business Timely loans are unguaranteed, unsecured loans to
individual small business owners pursuant to revolving lines of credit. In recent
years, despite a slight decrease in the number of customer accounts between March&nbsp;31,
2005 and 2006, the amount of total Business Timely loans outstanding, as well as
interest income from Business Timely loans has increased, primarily as a result of our
active promotion of these loans through the direct telemarketing efforts of our loan
offices specializing in loans to small to medium-sized business owners, and newly
established Tokyo Sales Department and Osaka Sales Department.</TD>
</TR>

<TR>
    <TD style="font-size: 12pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Secured Loans</I>: Secured loans are conventional loans secured by real property or
securities to individuals and small and medium-sized enterprises in
Japan. Recently, our secured loans portfolio has grown
significantly, reflecting our strategic shift toward promotion of
secured loans to property developers, focusing on small and
medium-sized enterprises and their owners, through the
active sales and marketing efforts of our Real Estate Finance Department established in February&nbsp;2004. These loans are targeted primarily to be used as working
capital for property developers. As a result, the percentage of interest income
derived from secured loans has been increasing.</TD>
</TR>

<TR>
    <TD style="font-size: 12pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Wide Loans</I>: Wide loans are unsecured loans for which the proceeds are used to
consolidate individual debts which are guaranteed by one or more guarantors. In recent
years, the amount of total Wide loans outstanding and the number of customer accounts, as
well as interest income from Wide loans has decreased, primarily as a result of a
strategic shift over the last several years toward promotion of financial services to
small and medium-sized business owners.</TD>
</TR>

<TR>
    <TD style="font-size: 12pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Consumer Loans</I>: Consumer loans are unguaranteed, unsecured loans to individuals.
In line with a strategic shift over the last several years toward promotion of
financial services to small and medium-sized business owners, on June&nbsp;1, 2004, we sold
most of the outstanding balance of our consumer loans to Orient Credit for &#165;32,697
million. See &#147;&#151; Factors Affecting Our Financial Results &#151; Sale of Consumer Loans&#148;
below for a further discussion.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition, NIS Lease, a subsidiary, commenced full-scale leasing operations in February
2004. As a result, the amount of total lease receivables and installment loans outstanding
included in other loans has increased, and we expect the portfolio of
these loans to continue growing in
the short to medium term.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Further, we continue to develop our credit enhancement business by providing loan guarantees
to affiliates and third parties.
</DIV>

<P align="center" style="font-size: 10pt">-44-
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table provides information on the average balance of loans outstanding for each
of the years indicated for each of our main product categories and the percentage of total average
loans outstanding represented by each loan category:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="28%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="22" style="border-bottom: 1px solid #000000"><B>Year ended March 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000"><B>2006</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="22"><B>(in millions except percentages)</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Small business owner loans</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">55,647</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">31.6</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">56,964</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">38.3</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">63,320</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">34.4</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Business Timely loans</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17,909</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">19,687</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">23,656</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12.9</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Secured loans</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,235</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,976</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">39,496</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">21.5</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Wide loans</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">61,592</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">34.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">52,722</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">35.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">44,240</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">24.0</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Consumer loans<SUP style="font-size: 85%; vertical-align: text-top"> (1)</SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">38,600</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">21.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,296</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,010</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.6</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other loans</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">261</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,166</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,243</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5.6</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total average balance of loans outstanding</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">176,244</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">100.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">148,811</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">100.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">183,965</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">100.0</TD>
    <TD nowrap>%</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">(1)</TD>
    <TD>&nbsp;</TD>
    <TD>Pursuant to an agreement between us and Orient Credit, on June&nbsp;1, 2004, we sold most of the
outstanding balance of our consumer loans to Orient Credit for &#165;32,697&nbsp;million.</TD>
</TR>

</TABLE>



<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table shows the interest income from loans receivable and the percentage of
our total interest income from loans receivable derived from each major category of loans for the
years ended March&nbsp;31, 2004, 2005 and 2006:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="28%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="22" style="border-bottom: 1px solid #000000"><B>Year ended March 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000"><B>2006</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="22"><B>(in millions except percentages)</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Small business owner loans</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">11,411</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">30.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">11,189</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">38.2</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">11,233</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">38.9</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Business Timely loans</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,590</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,924</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,718</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">19.8</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Secured loans</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">205</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">960</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,886</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10.0</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Wide loans</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12,873</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">33.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,450</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">35.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,581</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">29.8</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Consumer loans</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,807</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">25.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,003</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">744</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.6</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other loans</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">35</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">502</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,095</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3.8</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total interest revenue from loans receivable</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">38,921</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">102.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">30,028</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">102.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">30,257</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">104.9</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Less amortization of loan origination costs</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(751</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2.0</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(540</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1.9</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(431</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1.5</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Less excess interest repayment costs<SUP style="font-size: 85%; vertical-align: text-top"> (1)</SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(134</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(0.3</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(190</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(0.6</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(977</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(3.4</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Interest income from loans receivable</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">38,036</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">100.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">29,298</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">100.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">28,849</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">100.0</TD>
    <TD nowrap>%</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">(1)</TD>
    <TD>&nbsp;</TD>
    <TD>Including provision for losses on excess interest repayments of &#165;590&nbsp;million for the year
ended March&nbsp;31, 2006.</TD>
</TR>

</TABLE>



<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;<B><I>Loan Servicing</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Through
our subsidiary, Nissin Servicer, we mainly service distressed loans that we purchase from third-party financial institutions for our own portfolio. The table below shows the aggregate
purchase price and aggregate principal and interest collection amount of distressed loans for the
years ended March&nbsp;31, 2004, 2005 and 2006:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="10" style="border-bottom: 1px solid #000000"><B>Year ended March 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2006</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="10"><B>(in millions)</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Aggregate purchase price of distressed loans</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">4,502</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">16,896</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">19,779</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Aggregate principal and interest collection
of distressed loans</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,538</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,095</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11,923</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We expect that the relative importance of this operating segment will continue to
increase in the short to medium term.
</DIV>


<P align="center" style="font-size: 10pt">-45-
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Factors Affecting Our Financial Results</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The principal determinants of our profitability have been our net interest income, the levels
of provisions for loan losses and the amount of non-interest expenses that we incur.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp; <B><I>Net Interest Income</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Integrated Financial Services</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net interest income from our integrated financial services is presented as interest income
minus interest expense from loans receivable. The principal determinants of total interest income
are our loan portfolio size, which is the average balance of loans outstanding and the average
interest rate we charge on our loans. Our interest expense reflects the funding cost to us of
making loans to our customers. The difference between the interest rates we charge our customers
and the interest rates we pay to finance our loans to customers largely determines our margins and
profitability. Because the average interest rate per account and average outstanding balance per
account vary by loan product, changes in the relative composition of loan products in our total
portfolio also affect net interest income. For the year ended March&nbsp;31, 2006, although our loan
portfolio grew significantly, our total interest revenue from loans receivable did not change in
proportion to the increase in the portfolio size, due to a decrease in our average interest rate as
described below. In addition, our net interest income from loans receivable also declined due to
an increase in excess interest repayment costs, which is a deduction from total interest revenue.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Loan Portfolio Size</I>: Our loan portfolio grew steadily in recent years until June&nbsp;2004, at
which time we sold most of the outstanding balance of our consumer loans to a third party, which
has contributed to a significant decline in our loan portfolio between March&nbsp;31, 2004 and March&nbsp;31,
2005. See &#147;&#151;Factors Affecting Our Financial Results &#151; Sale of Consumer Loans&#148; below. Recently,
despite the fact that the average balance of loans outstanding for our Wide loans and consumer
loans continues to decline, our loan portfolio size grew significantly as a result of the increase
in the average balance of loans outstanding for our small business owner loans, Business Timely
loans and the enhancement of real estate financing, secured loans. Generally, in recent years
balances per account for our small business owner loans, Business Timely loans and secured loans
have increased, although balances per account for our Wide loans have decreased. For additional
information on account numbers and balances per account, see &#147;Our Products&#148; in Item&nbsp;4.B of this
annual report on Form 20-F. We believe that the number of customers and the portfolio size for our
small business owner loans, Business Timely loans and secured loans will continue to increase as a
result of expanded customer acquisition channels for our loans, including our Tokyo and Osaka Sales
Departments and Real Estate Finance Department, our referral arrangements with other financial
service providers and the overall demand for small and medium-sized business owner financing in
Japan. We also believe that our loan portfolio will resume growth over the medium to long term
reflecting increases in our portfolio, especially secured loans.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Interest Rates</I>: We determine the interest rates we charge on our loans based on factors
including competition from other lenders, legal restrictions on interest rates as discussed under
&#147;Regulation &#151; The Moneylending Business Restriction Law, Contributions Law and Interest Rate
Restriction Law&#148; in Item&nbsp;4.B of this annual report on Form 20-F and the willingness of our
customers to borrow at the interest rates we charge. The weighted period-end average contractual
interest rate on our outstanding loans has been decreasing, from 24.0% at March&nbsp;31, 2004, to 22.1%
at March&nbsp;31, 2005 and to 16.1% at March&nbsp;31, 2006.
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 12pt">The weighted period-end average is determined by
calculating the average interest rate for each of our loan products on the period-end date,
weighting these rates by the proportion of total loans outstanding represented by the loan category
on this date, and averaging these weighted interest rates. We last
lowered the contractual interest rate on each of our major loan products by 0.73% during the
year ended March&nbsp;31, 2002, but did not reduce the rate further during the years thereafter. The
gradual decrease mainly reflected the change in our loan portfolio mix, resulting from increased
acquisition of high quality receivables with lower interest lending rate. Also, the sale of most
of the outstanding balance of our consumer loans in June&nbsp;2004 contributed to a further decrease in
the weighted period-end average contractual interest rate on our outstanding loans, because
consumer loans normally carry higher interest rates than other loans. In addition to the above
factors, the enhancement of our real estate financing has contributed to a steep increase in the
amount of total secured loans outstanding, which normally carry the lowest interest rates among our
loan products.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Interest Expense</I>: Our interest expense fluctuates with changes in market interest rates,
market conditions, the mix of our funding sources, our credit ratings and the amount of our
borrowings.
</DIV>

<DIV style="margin-top: 12pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Market Interest Rates and Market Conditions</I>: In recent periods, we have benefited
from the extremely low interest rate environment in Japan created by government
policies intended to combat ongoing economic weakness. The weighted period-end average
rate of long-term borrowings was 2.3% at March&nbsp;31, 2004, 1.9% at March&nbsp;31, 2005 and
1.3% at March&nbsp;31, 2006. The weighted period-end average rate of short-term borrowings
was 1.3% at March&nbsp;31, 2004, 1.2% at March&nbsp;31, 2005 and 1.0% at March&nbsp;31, 2006. We
expect market interest rates to rise, as the Bank o Japan has begun raising interest
rates tightening the money supply in response to improved economic conditions and
possible emerging inflation in Japan.</TD>
</TR>

<TR>
    <TD style="font-size: 12pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Mix of Our Funding Sources and Credit Ratings</I>: Beginning in the year ended March
31, 2000, when legal restrictions on debt issuances to fund our lending business were
eliminated, we have increased our borrowings through debt issuances relative to bank
loans, which had previously accounted for substantially all of our borrowings. To the
extent that debt issuances have been available to us, we have benefited from their
typically lower funding costs than those of bank loans. The percentage of our debt
issuances to our total borrowings was 32.0% at March&nbsp;31, 2004, 22.6% at March&nbsp;31, 2005
and 31.1% at March&nbsp;31, 2006. The percentages as of March&nbsp;31, 2004, 2005 and 2006
reflect our asset backed securities, including asset backed commercial paper, which we
began issuing in October&nbsp;2002. The significant decline in the amount of debt issued as
a percentage of our total borrowings between March&nbsp;31, 2004 and 2005 is principally
attributable to a net decrease in bonds as our capital requirements decreased as a
result of the sale of most of the outstanding balance of our consumer loans in June
2004. Nonetheless, the effect of the smaller percentages of our debt issuances as
compared to that of March&nbsp;31, 2004 has been partly offset by a gradual decline in the
interest rates that banks charge us in recent years. On the other hand, the amount of
debt issuances as a percentage of our total borrowings between March&nbsp;31, 2005 and 2006
increased significantly, reflecting an increase in our issuance of commercial paper and
asset-backed securities as our capital requirements increased in connection with the
expansion of real estate-related financing. In addition, while any downgrades of our
credit ratings by rating agencies could harm our ability to tap the debt markets, our
current intention, subject to market conditions and other uncertainties, is to increase
our proportion of direct financing to around 40%.</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt">-47-
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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Amount of Our Borrowings</I>: To the extent that the size of our loan portfolio grows,
we rely primarily on borrowings to finance the growth of the portfolio. We expect the
amount of borrowings to increase in the near term, reflecting the expected growth of
our loan portfolio.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Loan Servicing</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our net interest income from loan servicing is our interest income minus our interest expense
from purchased loans. The factors that affect our interest expense in our loan servicing segment
are largely identical to those affecting our integrated financial service segment. However, the
principal determinants of our total interest income in our loan servicing segment differ
significantly from those affecting our integrated financial service segment. The principal
determinants of interest income from loan servicing are the amount of purchased loans in our
portfolio, our ability to service distressed loans, including through negotiation with the
borrowers and restructuring of the loan terms, and the prices at which we purchase the distressed
loans. Because we generally do not recognize interest income on a distressed loan until we fully
recover the purchase cost, our recognition of interest income may be significantly delayed compared
to the recognition of interest income for our integrated financial services. See &#147;&#151; Critical
Accounting Policies &#151; Purchased Loans Receivable and Revenue Recognition.&#148; Also, due to increasing
competition in this market, which has created an upward pressure on the purchase prices for the
distressed loans, we expect our interest income from purchased loans as a percentage of the amount
of our purchased loans to decrease over the long term.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;<B><I>Provisions for Loan Losses</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our provisions for loan losses are allocations made each period to our existing allowance for
loan losses. Our allowances for possible loan losses are based upon our estimates of probable
uncollectable loan losses from known and inherent risks in our loan portfolio. We determine these
allowances based upon various factors including the status and risk profile of the borrower and, if
applicable, guarantor, economic conditions, unemployment rates, bankruptcy cases and our historical
loss experience. Increases to our allowance are made by charges to our provision for loan losses.
Recoveries of previously charged-off amounts are deducted from our provision for loan losses for
the year in which the recoveries occur. Based upon our estimated allowance needs, we then
supplement the remaining balance through provisions for loan losses. Our provisions for loan
losses decreased during the year ended March&nbsp;31, 2005 compared to the year ended March&nbsp;31, 2004
reflecting the sale of most of the outstanding balance of our consumer loans to a third party. See
&#147;&#151; Sale of Consumer Loans&#148; below. However, our provision for loan losses increased during the year
ended March&nbsp;31, 2006, generally reflecting the growth in the amount of our total loans outstanding.
Also, our provision for loan losses in any given fiscal year depends partly on the adequacy of our
allowance for loan losses for the previous fiscal year, as we must make up for any such inadequacy,
if any, with increased provision for loan losses in the following fiscal year. To the extent that
our provision for loan losses increases, it signifies the increasing risk that our loan portfolio
carries. Additional detail on provisions for loan losses for our various loan products is included
below under &#147;Allowance for Loan Losses, Charge-offs and Provisions for Loan Losses.&#148;
</DIV>

<P align="center" style="font-size: 10pt">-48-
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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp; <B><I>Non-interest Expense</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The most significant components of our non-interest expense are salaries and employee
benefits, occupancy, furniture and equipment, and other general and administrative expenses.
</DIV>

<DIV style="margin-top: 12pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Salaries and Employee Benefits</I>: Our salaries and employee benefits depend on the
number of our employees and the compensation and benefits we provide to each employee.
The number of full-time employees decreased from 851 at March&nbsp;31, 2004 to 818 at March
31,
2005, but increased to 998 at March&nbsp;31, 2006. Our salaries and employee benefits
decreased slightly during the year ended March&nbsp;31, 2005 compared to the year ended
March&nbsp;31, 2004, reflecting a significant reduction in the scale of our consumer loan
business due to the sale of most of the outstanding balance of our consumer loans to a
third-party. However, to the
extent that our operational scale increases over the medium to long term, we expect our
salaries and employee benefits to continue to increase in the medium to long term.
Salaries and employee benefits for the year ended March&nbsp;31, 2006 increased as the number
of full-time employees increased, reflecting development in the business activities of
our subsidiaries.</TD>
</TR>

<TR>
    <TD style="font-size: 12pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Occupancy, Furniture and Equipment</I>: Our expense in connection with our occupancy,
furniture and equipment depends largely on the number of our loan offices and branches,
and the associated rents. The number of loan offices was 70 at March&nbsp;31, 2004,
decreased to 50 at March&nbsp;31, 2005 (following the sale of most of the outstanding
balance of our consumer loans and related closure of branches) and increased to 60 at
March&nbsp;31, 2006, due to the acquisition of Aprek. We expect office rents to remain
stable at the current level since we have no plan to significantly expand the number of
offices in the short term.</TD>
</TR>

<TR>
    <TD style="font-size: 12pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Other General and Administrative Expenses</I>: The major items in our other general and
administrative expense include communication expenses, taxes and duties, travel and
transportation expenses, recruiting expenses and commission fees. Although we continue
to make efforts to reduce operational inefficiencies, we expect our other general and
administrative expenses as a percentage of our non-interest expenses to increase in the
short term, reflecting the increase in our recruiting expenses and commission fees, and
the growth in activities of our subsidiaries.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Non-interest expense also includes advertising expenses, net losses on sale and impairment of
long-lived assets, minority interests, and other expenses. Regarding advertising expenses, despite
the fact that the amount has increased gradually, advertising expenses have remained at relatively
low levels for each of the past three fiscal years in line with the increasing importance of
referrals in origination. However, we expect our advertising expenses to continue to increase
gradually in the short to medium term, reflecting increases in Internet-related advertisements.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp; <B><I>Sale of Consumer Loans</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In June&nbsp;2004, we sold most of the outstanding balance of our unguaranteed consumer loans to
Orient Credit for &#165;32,697&nbsp;million. The effect of this sale was a decrease in our interest income
and net interest income after provision for loan losses for the year ended March&nbsp;31, 2005, as
compared to what our results would have been without the sale. However, our net income increased
slightly for the year ended March&nbsp;31, 2005, as compared to what our net income would have been
without the sale because the reduction of expenses associated with our consumer loan business, such
as loan loss-related expenses and non-interest expenses offset the decline in our interest income.
In addition, for the year ended March&nbsp;31, 2005, we recognized a non-interest gain as a result of
the sale. Following the sale, we continue to offer consumer loans to prospective customers,
particularly those who are referred to us by our alliance partners, but we expect that our consumer
loan business will operate at a substantially reduced scale for the foreseeable future.
</DIV>

<P align="center" style="font-size: 10pt">-49-
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Results of Operations</B>
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;<B><I>Consolidated Information</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table shows selected income statement data in yen amounts and as percentages of
total interest income for the years ended March&nbsp;31, 2004, 2005 and 2006:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="28%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="22" style="border-bottom: 1px solid #000000"><B>Year ended March 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000"><B>2006</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="14"><B>(in millions except percentages)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total interest income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">40,107</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">100.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">32,555</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">100.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">33,901</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">100.0</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total interest expense</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,724</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,159</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,105</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9.2</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Net interest income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">36,383</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">90.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">29,396</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">90.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">30,796</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">90.8</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Provision for loan losses, net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13,461</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">33.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,576</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">26.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,463</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">27.9</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net interest income after provision
for loan losses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">22,922</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">57.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20,820</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">64.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">21,333</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">62.9</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total non-interest income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">730</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,984</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">18.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,934</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">29.3</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Non-interest expense:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Salaries and employee benefits</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,735</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,521</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,181</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">21.2</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Occupancy, furniture and equipment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,060</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,395</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,654</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7.8</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Advertising</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">218</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">332</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">629</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.9</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Other general and administrative
expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,349</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,869</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,060</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14.9</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">

<TD nowrap><DIV style="margin-left:30px; text-indent:-15px">Losses on
sale, disposal and<BR>
impairment of long-lived assets,
net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">530</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">94</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.1</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Other</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">97</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">493</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">456</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.3</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Minority interests</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">192</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">602</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.8</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total non-interest expense</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12,993</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">32.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14,896</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">45.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16,598</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">49.0</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Income before income taxes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,659</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">26.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11,908</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">36.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14,669</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">43.2</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Income taxes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,582</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,646</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,214</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">18.3</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">6,077</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">15.2</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">7,262</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">22.3</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">8,455</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">24.9</TD>
    <TD nowrap>%</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<P align="center" style="font-size: 10pt">-50-
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>


<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp; <B><I>Segment Information</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For
financial reporting purposes, we operate under two business segments,
the integrated financial services segment and the loan servicing
segment. The integrated financial services segment is
comprised of the loan business, which includes small business owner, Business Timely, secured,
Wide, consumer and other loans as well as credit guarantees, leasing and securities business. In
the loan servicing segment, Nissin Servicer mainly acquires and services non-performing debts from
banks and financial institutions in Japan. The loan servicing segment is operated as a separate
segment for financial reporting purposes. Investment in real estate
properties, insurance agency and consultancy business are insignificant for financial reporting
purposes and are included in the integrated financial services segment for financial reporting
purposes. However, because of the increasing significance of these
businesses, we anticipate that they will be included in a separate
business segment for the fiscal year ending March 31, 2007. We currently conduct our operating activities mainly in Japan. We also conduct
activities in China, but these are currently insignificant for financial reporting purposes. The
following tables show selected information for our business segments for the years ended March&nbsp;31,
2004, 2005 and 2006:
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="4%">&nbsp;&nbsp;&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="10" style="border-bottom: 1px solid #000000"><B>Year ended March 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="10" style="border-bottom: 1px solid #000000"><B>2004</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Integrated</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Financial Services</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Loan Servicing</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Total</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="10"><B>(in millions)</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total interest income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">&nbsp;</TD>
    <TD align="right">&#165;38,038</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&nbsp;</TD>
    <TD align="right">&#165;2,069</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&nbsp;</TD>
    <TD align="center">&#165;40,107</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total interest expense</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,603</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">121</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,724</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Provision for loan losses, net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12,824</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">637</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13,461</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,671</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">406</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,077</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;&nbsp;&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="10" style="border-bottom: 1px solid #000000"><B>Year ended March 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="10" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Integrated</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Financial Services</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Loan Servicing</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Total</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="10"><B>(in millions)</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total interest income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
    <TD align="right">&#165;29,299</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
    <TD align="right">&#165;3,256</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
    <TD align="right">&#165;32,555</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total interest expense</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,006</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">153</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,159</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Provision for loan losses, net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,759</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">817</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,576</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,244</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,018</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,262</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;&nbsp;&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="10" style="border-bottom: 1px solid #000000"><B>Year ended March 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="10" style="border-bottom: 1px solid #000000"><B>2006</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Integrated</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Financial Services</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Loan Servicing</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Total</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="10"><B>(in millions)</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total interest income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
    <TD align="right">&#165;28,938</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
    <TD align="right">&#165;4,963</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
    <TD align="right">&#165;33,901</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total interest expense</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,697</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">408</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,105</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Provision for loan losses, net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,277</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,186</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,463</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,117</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,338</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,455</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
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<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;<B><I>Year Ended March&nbsp;31, 2006, Compared to Year Ended March&nbsp;31, 2005</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Total Interest Income</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total interest income for the year ended March&nbsp;31, 2006 was &#165;33,901&nbsp;million, an increase of
&#165;1,346&nbsp;million, or 4.1%, from &#165;32,555&nbsp;million for the previous fiscal year.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Integrated Financial Services</I>: Interest income from loans receivable was &#165;28,849&nbsp;million, a
decrease of &#165;449&nbsp;million, or 1.5%, compared to &#165;29,298&nbsp;million for the previous year despite an
increase in the average balance of outstanding loans from &#165;148,811&nbsp;million for the year ended March
31, 2005 to &#165;183,965&nbsp;million for the year ended March&nbsp;31, 2006. The decrease in interest income
from loans receivable reflected a decline in the weighted period-end average contractual rate on
our outstanding loans from 22.1% at March&nbsp;31, 2005 to 16.1% at March&nbsp;31, 2006. In addition, excess
interest repayment costs, including provision for estimated losses from excess interest repayments
since March&nbsp;31, 2006, of &#165;977&nbsp;million for the year ended March&nbsp;31, 2006, compared to &#165;190&nbsp;million
for the year ended March&nbsp;31, 2005, also contributed to the decrease in interest income from loans
receivable. See &#147;Critical Accounting Policies &#151; Interest Income from Loans Receivable and Loan
Origination Costs&#148; below for further discussion of reserves for estimated losses from excess
interest repayments.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The increase in the average balance of our loans outstanding was led by an increase in our
average balance of small business owner loans of &#165;6,356&nbsp;million, or 11.2%, to &#165;63,320&nbsp;million for
the
year ended March&nbsp;31, 2006 compared to &#165;56,964&nbsp;million for the previous fiscal year, an
increase in our average balance of Business Timely loans of &#165;3,969&nbsp;million, or 20.2%, to &#165;23,656
million for the year ended March&nbsp;31, 2006 compared to &#165;19,687&nbsp;million for the previous fiscal year,
and an increase in our average balance of secured loans of &#165;29,520&nbsp;million, or 295.9%, to &#165;39,496
million for the year ended March&nbsp;31, 2006 compared to &#165;9,976&nbsp;million for the previous fiscal year.
This increase was partially offset by a decrease in our average balance of Wide loans of &#165;8,482
million, or 16.1%, to &#165;44,240&nbsp;million for the year ended March&nbsp;31, 2006 compared to &#165;52,722&nbsp;million
for the previous fiscal year, and a decrease in our average balance of consumer loans of &#165;2,286
million, or 43.2%, to &#165;3,010&nbsp;million for the year ended March&nbsp;31, 2006 compared to &#165;5,296&nbsp;million
for the previous fiscal year.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The decline of the weighted period-end average contractual rate was primarily attributable to
a decline in the weighted period-end average rate of secured loans of 2.1 points to 6.5% at March
31, 2006, compared to 8.6% at March&nbsp;31, 2005 due to the growing share of real estate financing in
our loan portfolio, which generally carries the lowest interest rates among our products, as well
as a decline in the weighted period-end average rate of small business owner loans of 1.4 points to
21.7% at March&nbsp;31, 2006, compared to 23.1% at March&nbsp;31, 2005 due to our increased acquisition of
high quality loans receivable derived from referral relationships, including our affiliates, which
amounted to &#165;33,029&nbsp;million as of March&nbsp;31, 2006, an
increase of &#165;739&nbsp;million, or 2.3%, compared to
&#165;32,290&nbsp;million as of the end of the previous fiscal year.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Regarding excess interest repayment costs, we recognized reserves for estimated losses on
excess interest repayments to provide for probable refund claims beginning in the year ended March
31, 2006. See &#147;Business Overview &#151; Regulation&#148; in
Item&nbsp;4.B. of this annual report on Form 20-F for
details. We agreed to refund excess interest payments of
&#165;387&nbsp;million and provided reserves of &#165;590
million for estimated losses on excess interest for the year ended March&nbsp;31, 2006.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Loan Servicing</I>: Interest income from purchased loans amounted to &#165;4,960&nbsp;million for the year
ended March&nbsp;31, 2006, an increase of &#165;1,705&nbsp;million, or 52.4%, compared to &#165;3,255&nbsp;million for the
previous fiscal year. This increase was principally due to the growth of our loan servicing
business through our subsidiary, Nissin Servicer.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Total Interest Expense</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total interest expense for the year ended March&nbsp;31, 2006 decreased by &#165;54&nbsp;million, or 1.7%, to
&#165;3,105&nbsp;million from &#165;3,159&nbsp;million for the previous fiscal year. The decrease in total interest
expense reflected our efforts in negotiating improved borrowing terms, particularly from banks,
which reduced our weighted period-end average rate of long-term borrowings from 1.9% as of March
31, 2005 to 1.4% as of March&nbsp;31, 2006, despite the fact that our overall average balance of
borrowings for the year ended March&nbsp;31, 2006 increased by &#165;58,120&nbsp;million, or 43.7%, to &#165;191,081
million from &#165;132,961&nbsp;million for the previous fiscal year, reflecting increased capital
requirements for loan originations centering on secured loans.
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<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Net Interest Income</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As a result of the increase in the total interest income and the decrease in our total
interest expense, net interest income for the year ended March&nbsp;31, 2006 increased by &#165;1,400
million, or 4.8%, to &#165;30,796&nbsp;million from &#165;29,396&nbsp;million for the previous fiscal year.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Net Interest Income After Provision for Loan Losses</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net interest income after provision for loan losses for the year ended March&nbsp;31, 2006
increased by &#165;513&nbsp;million, or 2.5%, to &#165;21,333&nbsp;million from &#165;20,820&nbsp;million for the previous fiscal
year. Net provision for loan losses increased by &#165;887&nbsp;million, or 10.3%, to &#165;9,463&nbsp;million for the
year ended March&nbsp;31, 2006, compared to &#165;8,576&nbsp;million for the previous fiscal year. Provision for
loan losses as a percentage of total interest income increased slightly from 26.3% for the previous
fiscal year to 27.9% for the year ended March&nbsp;31, 2006. The increase in the net provision for loan
losses reflected the increase in the outstanding balance of our loans receivable and purchased
loans receivable, causing our net provision for loan losses to increase accordingly. However,
allowance for loan losses as a percentage of total loans outstanding declined from 6.46% at March
31, 2005 to 4.64% at March&nbsp;31, 2006 resulting from increasing secured real estate financing, which
generally results in a lower charge-off ratio. See &#147;Allowance for Loan Losses, Loan Charge-offs
and Provision for Loan Losses &#151; Integrated Financial Services &#151; Charge-off Ratios and Allowance
Ratios&#148; below for details. We expect our provision for loan losses to continue to increase as the
outstanding balance of our loans receivable increases.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Total Non-interest Income</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total non-interest income increased by &#165;3,950&nbsp;million, or 66.0%, to &#165;9,934&nbsp;million for the
year ended March&nbsp;31, 2006 from &#165;5,984&nbsp;million for the previous fiscal year. The increase was
primarily attributable to an increase of &#165;4,221&nbsp;million in net gains on sales of investment
securities to &#165;3,708&nbsp;million, compared to net losses of &#165;513&nbsp;million for the previous fiscal year.
Further, revenue from real estate for sale of &#165;1,584&nbsp;million, income from investment funds of
&#165;1,857&nbsp;million and commission fees from securities business of &#165;712&nbsp;million, which were included in
rents, dividends and other, also contributed to the increase of total non-interest income. These
contribution factors were partially offset by a decrease of &#165;1,382&nbsp;million in net gain on sales of
subsidiaries and affiliates to net losses of &#165;43&nbsp;million for the year ended March&nbsp;31, 2006 from net
gain of &#165;1,339&nbsp;million for the previous fiscal year, reflecting a gain on equity interest in Nissin
Servicer recognized in the previous fiscal year in connection with its listing on the Mothers
market of the Tokyo Stock Exchange. In addition, the absence of any gain on sale of consumer loans
receivable for the year ended March&nbsp;31, 2006 also offset increases in our total non-interest
income. We recognized a gain on sale of consumer loans receivable in an amount of &#165;3,327&nbsp;million
for the previous fiscal year.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Total Non-interest Expense</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total non-interest expense increased by &#165;1,702&nbsp;million, or 11.4%, to &#165;16,598&nbsp;million for the
year ended March&nbsp;31, 2006 from &#165;14,896&nbsp;million for the previous fiscal year. The increase resulted
primarily from increases in the operations of our subsidiaries, including Aprek, a newly acquired
subsidiary during the year ended March&nbsp;31, 2006, which contributed to increases in our selling,
general and administrative expenses of &#165;1,407&nbsp;million, or 10.0%, to &#165;15,524&nbsp;million for the year
ended March&nbsp;31, 2006 from &#165;14,117&nbsp;million for the previous fiscal year. This was primarily due to
increases in expenses such as salaries and employee benefits, occupancy, furniture and equipment,
and advertising costs. Further, income transferred to minority interests increased by &#165;410&nbsp;million,
to &#165;602&nbsp;million for the year ended March&nbsp;31, 2006 from &#165;192&nbsp;million for the previous fiscal year,
which reflected an increase in net income of Nissin Servicer. These contributing factors were
partially offset by a decrease in net losses on sale, disposal and impairment of long-lived assets
of &#165;78&nbsp;million, or 83.0%, to &#165;16&nbsp;million for the year ended March&nbsp;31, 2006 from &#165;94&nbsp;million for the
previous fiscal year.
</DIV>


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<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Income Before Income Taxes</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Income before income taxes increased by &#165;2,761&nbsp;million, or 23.2%, to &#165;14,669&nbsp;million for the
year ended March&nbsp;31, 2006 from &#165;11,908&nbsp;million for the previous fiscal year. Despite the slight
increase in net interest income after provision for loan losses, the increase of 23.2% in our
income before income taxes resulted primarily from an increase in our total non-interest income
reflecting net gains on sales of investment securities.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Income Taxes</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Income taxes increased by &#165;1,568&nbsp;million, or 33.7%, to &#165;6,214&nbsp;million for the year ended March
31, 2006 from &#165;4,646&nbsp;million for the previous fiscal year. The effective tax rate applicable to us
increased from 38.4% for the previous fiscal year to 40.7% for the year ended March&nbsp;31, 2006. For
the year ended March&nbsp;31, 2006, the absence of a non-taxable gain on change of equity interest in
Nissin Servicer, which was recognized for the previous fiscal year, contributed to the increase in
the effective tax rate applicable to us.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Net Income</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As a result of these factors, net income increased by &#165;1,193&nbsp;million, or 16.4%, to &#165;8,455
million for the year ended March&nbsp;31, 2006 from &#165;7,262&nbsp;million for the previous fiscal year.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;<B><I>Year Ended March&nbsp;31, 2005, Compared to Year Ended March&nbsp;31, 2004</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Total Interest Income</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total interest income for the year ended March&nbsp;31, 2005 was &#165;32,555&nbsp;million, a decrease of
&#165;7,552&nbsp;million, or 18.8%, from &#165;40,107&nbsp;million for the previous fiscal year.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Integrated
Financial Services</I>: Interest income from loans receivable was &#165;29,298&nbsp;million, a
decrease of &#165;8,738&nbsp;million, or 23.0%, as compared to &#165;38,036&nbsp;million for the previous year. This
was primarily due to a decrease in the average balance of our loans outstanding which amounted to
&#165;148,811&nbsp;million for the year ended March&nbsp;31, 2005 as compared to &#165;176,244&nbsp;million for the previous
fiscal year. This decrease reflected the sale of most of the outstanding balance of our consumer
loans in June&nbsp;2004, and a decrease in the weighted period-end average contractual interest rate on
our loans outstanding from 24.0% at March&nbsp;31, 2004 to 22.1% at March&nbsp;31, 2005. The decrease in
this rate reflected the growing share of small business owner loans and secured loans in our loan
portfolio, which carry lower interest rates than consumer loans.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The decrease in the average balance of our loans outstanding was led by a decrease in our
average balance of consumer loans of &#165;33,304&nbsp;million, or 86.3%, to &#165;5,296&nbsp;million for the year
ended March&nbsp;31, 2005 compared to &#165;38,600&nbsp;million for the previous fiscal year, and a decrease in
our average balance of Wide loans of &#165;8,870&nbsp;million, or 14.4%, to &#165;52,722&nbsp;million for the year
ended March&nbsp;31, 2005 compared to &#165;61,592&nbsp;million for the previous fiscal year. This decrease is
despite an increase in our average balance of small business owner loans of &#165;1,317&nbsp;million, or
2.4%, to &#165;56,964&nbsp;million for the year ended March&nbsp;31, 2005 compared to &#165;55,647&nbsp;million for the
previous fiscal year, an increase in our average balance of Business Timely loans of &#165;1,778
million, or 9.9%, to &#165;19,687&nbsp;million for the year ended March&nbsp;31, 2005 compared to &#165;17,909&nbsp;million
for the previous fiscal year, and an increase in our average balance of secured loans of &#165;7,741
million, or 346.4%, to &#165;9,976&nbsp;million for the year ended March&nbsp;31, 2005 compared to &#165;2,235&nbsp;million
for the previous fiscal year.
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Despite increased customer acquisition efforts and customer acquisition channels mainly
through referral relationships with financial service providers and significant growth in our
secured loans, the average balance of our loans outstanding has decreased primarily as a result of
the sale of most of the outstanding balance of our consumer loans in June&nbsp;2004. The balance of
loans outstanding derived from referral relationships, including with our affiliates, as of March
31, 2005 was &#165;32,290&nbsp;million, or 20.8% of our balance of loans outstanding as of the same date, and
we expect that percentage to increase in future periods as we increase our dependence on referral
relationships.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Loan
Servicing</I>: Interest income from purchased loans amounted to &#165;3,255&nbsp;million for the year
ended March&nbsp;31, 2005, an increase of &#165;1,186&nbsp;million, or 57.3%, as compared to &#165;2,069&nbsp;million for
the previous fiscal year. This increase was principally due to the rapid growth of our loan
servicing business through our subsidiary Nissin Servicer.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Total Interest Expense</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total interest expense for the year ended March&nbsp;31, 2005 decreased by &#165;565&nbsp;million, or 15.2%,
to &#165;3,159&nbsp;million from &#165;3,724&nbsp;million for the previous fiscal year. The decrease in total interest
expense reflected our efforts in negotiating improved borrowing terms, particularly from banks,
which reduced our weighted period-end average rate of long-term borrowings from 2.3% as of March
31, 2004 to 1.9% as of March&nbsp;31, 2005. Further, this decrease was also contributed by the decrease
in our average balance of borrowings for the year ended March&nbsp;31, 2005 of &#165;13,495&nbsp;million, or 9.2%,
to &#165;132,961&nbsp;million from &#165;146,456&nbsp;million for the previous fiscal year, reflecting our reduced
capital requirement for loan originations following the decrease in our average balance of loans
outstanding.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Net Interest Income</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As a result of the decrease in our total interest income and the decrease in our total
interest expense, net interest income for the year ended March&nbsp;31, 2005 decreased by &#165;6,987
million, or 19.2%, to &#165;29,396&nbsp;million from &#165;36,383&nbsp;million for the previous fiscal year.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Net Interest Income After Provision for Loan Losses</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net interest income after provision for loan losses for the year ended March&nbsp;31, 2005
decreased by &#165;2,102&nbsp;million, or 9.2%, to &#165;20,820&nbsp;million from &#165;22,922&nbsp;million for the previous
fiscal year. Net provision for loan losses decreased by &#165;4,885&nbsp;million, or 36.3%, to &#165;8,576
million for the year ended March&nbsp;31, 2005, compared to &#165;13,461&nbsp;million for the previous fiscal
year. Provision for loan losses as a percentage of total interest income decreased from 33.6% for
the previous fiscal year to 26.3% for the year ended March&nbsp;31, 2005. The decrease in our provision
for loan losses reflects the sale of most of the outstanding balance of our consumer loans in June
2004, despite an increase in loan defaults which reflects the difficult economic environment in
Japan. The allowance for loan losses as a percentage of total loans outstanding declined from
7.54% at March&nbsp;31, 2004 to 6.46% at March&nbsp;31, 2005 resulting from the sale. This reduction was
partially offset by increased allowance for loan losses caused by concerns over the Japanese
economy. We expect the number of loan defaults to continue to increase, given the current economic
conditions in Japan.
</DIV>


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<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Total Non-interest Income</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total non-interest income increased by &#165;5,254&nbsp;million, or 719.7%, to &#165;5,984&nbsp;million for the
year ended March&nbsp;31, 2005 from &#165;730&nbsp;million for the previous fiscal year. The increase resulted
primarily from a gain on sale of our consumer loans of &#165;3,327&nbsp;million. Further, net gain on sales
of subsidiaries
and affiliates increased by &#165;669&nbsp;million, or 99.9%, to &#165;1,339&nbsp;million for the year ended March
31, 2005 from &#165;670&nbsp;million for the previous fiscal year, which reflected a gain on equity interest
in Nissin Servicer in conjunction with its listing on the Mothers market of the Tokyo Stock
Exchange. Net guarantee fees received increased by &#165;204&nbsp;million, or 180.5%, to &#165;317&nbsp;million for
the year ended March&nbsp;31, 2005 from &#165;113&nbsp;million for the previous fiscal year, which reflected the
developments in our guarantee business. Revenue from property for sale of &#165;477&nbsp;million and
operation support fees received in connection with the sale of loans receivable of &#165;392&nbsp;million,
which were included in rents, dividends and other, also contributed to this increase. These
contributing factors were partially offset by an increase in net losses on sale and impairment of
investment securities of &#165;245&nbsp;million, or 91.4%, to &#165;513&nbsp;million for the year ended March&nbsp;31, 2005
from &#165;268&nbsp;million for the previous fiscal year.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Total Non-interest Expense</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total non-interest expense increased by &#165;1,903&nbsp;million, or 14.6%, to &#165;14,896&nbsp;million for the
year ended March&nbsp;31, 2005 from &#165;12,993&nbsp;million for the previous fiscal year. The increase resulted
primarily from increases in the operations of our subsidiaries, which contributed to increases in
our selling, general and administrative expenses of &#165;1,755&nbsp;million, or 14.2%, to &#165;14,117&nbsp;million
for the year ended March&nbsp;31, 2005 from &#165;12,362&nbsp;million for the previous fiscal year, which
reflected increases in expenses such as occupancy, furniture and equipment, advertising costs, and
taxes and duties. Further, income transferred to minority interests increased by &#165;188&nbsp;million, to
&#165;192&nbsp;million for the year ended March&nbsp;31, 2005 from &#165;4&nbsp;million for the previous fiscal year, which
reflected increases in net income of Nissin Servicer. These contributing factors were partially
offset by a decrease in losses on sale, disposal and impairment of long-lived assets of &#165;436
million, or 82.3%, to &#165;94&nbsp;million for the year ended March&nbsp;31, 2005 from &#165;530&nbsp;million for the
previous fiscal year.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Income Before Income Taxes</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Income before income taxes increased by &#165;1,249&nbsp;million, or 11.7%, to &#165;11,908&nbsp;million for the
year ended March&nbsp;31, 2005 from &#165;10,659&nbsp;million for the previous fiscal year. Although our net
interest income after provision for loan losses decreased compared to the previous fiscal year, the
increase in our income before income taxes resulted primarily from an increase in our total
non-interest income reflecting the gain on sale of our consumer loans.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Income Taxes</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Income taxes increased slightly by &#165;64&nbsp;million, or 1.4%, to &#165;4,646&nbsp;million for the year ended
March&nbsp;31, 2005 from &#165;4,582&nbsp;million for the previous fiscal year. The effective tax rate applicable
to us decreased from 43.0% for the previous fiscal year to 38.4% for the year ended March&nbsp;31, 2005
due to a non-taxable gain on change of equity interest in Nissin Servicer, which listed its shares
on the Mothers market of the Tokyo Stock Exchange.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Net Income</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As a result of these factors, net income increased by &#165;1,185&nbsp;million, or 19.5%, to &#165;7,262
million for the year ended March&nbsp;31, 2005 from &#165;6,077&nbsp;million for the previous fiscal year.
</DIV>

<P align="center" style="font-size: 10pt">-56-
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Financial Condition</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table provides selected balance sheet data as of March&nbsp;31, 2005 and 2006:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000"><B>As of March 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2006</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6"><B>(in millions)</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Total assets</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">228,401</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">359,943</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Cash and cash equivalents</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">25,709</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">22,860</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Loans receivable, net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">146,119</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">225,947</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Purchased loans receivable, net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13,581</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">24,155</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Real estate for sale</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,136</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20,792</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Investment securities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">28,443</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">42,071</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Property and equipment, net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,285</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11,169</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Deferred income taxes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">333</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">721</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Total liabilities</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">160,284</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">277,006</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Short-term borrowings</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12,600</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">60,411</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Long-term borrowings</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">136,844</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">198,924</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Deferred income taxes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,439</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,382</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Total shareholders&#146; equity</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">66,971</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">80,504</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total assets increased by &#165;131,542&nbsp;million to &#165;359,943&nbsp;million at March&nbsp;31, 2006,
compared to &#165;228,401&nbsp;million at the end of the previous fiscal year. The increase was primarily
due to a significant increase in net loans receivable reflecting the enhancement of loans to
business owners as we focused our efforts on real estate financing, which resulted in a significant
increase in secured loans. It was also due to the acquisition of Aprek, an increase in net
purchased loans receivable reflecting favorable growth in the loan servicing business, an increase
in real estate for sale reflecting the increases in the activities of our real estate-related
business, an increase in investment securities resulting from active investments in venture
businesses in hopes of producing synergies with our existing businesses, and an increase in
property and equipment resulting from acquisition of real estate by entities which are consolidated
by us in accordance with FIN No.&nbsp;46(R), &#147;Consolidation of Variable Interest Entities,&#148; or VIEs.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total liabilities increased by &#165;116,722&nbsp;million to &#165;277,006&nbsp;million at March&nbsp;31, 2006,
compared to &#165;160,284&nbsp;million at the end of the previous fiscal year. This change was due to a
significant increase in both short-term and long-term borrowings primarily reflecting our increased
capital requirements for loan origination centering on real estate financing. Also, our deferred
income tax liabilities decreased due to a decline in unrealized gains on marketable securities.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total shareholders&#146; equity increased by &#165;13,533&nbsp;million to &#165;80,504&nbsp;million at March&nbsp;31, 2006,
compared to &#165;66,971&nbsp;million at the end of the previous fiscal year. This was mainly attributable
to an increase in common stock and additional paid-in capital primarily due to conversion of
convertible bonds, as well as an increase in our net income, offset by a decrease in cumulative
other comprehensive income due to a decrease in unrealized gains on marketable securities, which
reflects the sales of certain marketable securities as well as decline in market valuation of our
marketable securities, compared to the previous fiscal year. However, as our total borrowings
increased considerably, shareholders&#146; equity as a percentage of total assets decreased by 6.9
points to 22.4% at March&nbsp;31, 2006, compared to 29.3% at the end of the previous fiscal year.
</DIV>


<P align="center" style="font-size: 10pt">-57-
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Allowance for Loan Losses, Loan Charge-offs and Provisions for Loan Losses</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We maintain our allowances for loan losses at a level that we believe is adequate to provide
for estimated probable uncollectible loan losses from known and inherent risks in our loan
portfolio. For all of our loan products, we generally determine our allowance for loan losses
based on various factors
including the risk profile and status of the borrower and, if applicable, guarantor, economic
conditions, unemployment rates, bankruptcy cases and historical loss experience. We have not made
any significant changes in estimation methods or assumptions in calculating the allowance for loan
losses in recent years.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;<B><I>Integrated Financial Services</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Increases in our allowance are made by charges to our provision for loan losses. Recoveries
of previously charged-off amounts are deducted from our provision for loan losses for the year in
which the recoveries occur. Based on the amount of our loans outstanding and our allowance ratio,
we then supplement the remaining balance through our provisions for loan losses. The following
table provides information on our allowance for loan losses along with amounts provided for our
loan losses and charge-offs, net of recoveries and other, with respect to our integrated financial
services segment for the years ended March&nbsp;31, 2004, 2005 and 2006:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="10" style="border-bottom: 1px solid #000000"><B>Year ended March 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2006</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="10"><B>(in millions)</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Balance at beginning of period</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">11,827</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">13,528</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">10,034</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Provision for loans receivable sold</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(3,327</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Provision for loan losses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12,824</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,759</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,277</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Charge-offs, net of recoveries, and other</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(11,123</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(7,926</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(7,308</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Balance at end of period</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">13,528</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">10,034</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">11,003</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>

<TD nowrap align="center" colspan="2" style="border-bottom: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Recent growth in our total loans outstanding reflecting increased loans to business
owners contributed to the rise in our provision for loan losses between the years ended March&nbsp;31,
2005 and 2006. However, the sale of most of the outstanding balance of our consumer loans in June
2004 contributed to the decrease in our provision for loan losses between the years ended March&nbsp;31,
2004 and 2005, despite an increase in loan defaults, which reflected the uncertainties in Japan&#146;s
current economic environment.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Upon closing each reporting period, we charge off our loans in the following manner:
</DIV>

<DIV style="margin-top: 12pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Guaranteed Loans</I>. We generally charge off or provide an allowance for loan losses
on small business owner loans and Wide loans in default at the end of the semi-annual
period in which the default occurs and we believe the likelihood of any future
collection from the borrower as well as the guarantor is minimal. We charge off
guaranteed loans to customers who have declared bankruptcy at the end of the
semi-annual period in which we become aware of the bankruptcy filing.</TD>
</TR>

<TR>
    <TD style="font-size: 12pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Unguaranteed Loans</I>. We generally charge off Business Timely loans and consumer
loans for which interest payments have been delinquent for 67&nbsp;days. We charge off
Business Timely loans and consumer loans to customers who have declared bankruptcy
immediately after we become aware of the bankruptcy filing. Because of our rapid
charge-off, we do not place Business Timely loans or consumer loans that have become
delinquent loans, which we define as loans on which interest payments are delinquent,
on non-accrual status before they are charged off.</TD>
</TR>

<TR>
    <TD style="font-size: 12pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Secured Loans</I>. We generally charge off or provide an allowance for loan losses on
secured loans in default at the end of the semi-annual period in which the default
occurs after considering the availability and value of collateral.</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt">-58-
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Charge-off Ratios and Allowance Ratios</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table provides information on our loans outstanding, allowance for loan losses,
the ratio of allowance for loan losses to total loans outstanding, as well as average balance of
loans outstanding, loans charged-off and the ratio of loans charged-off to the average balance of
loans outstanding:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="10" style="border-bottom: 1px solid #000000"><B>Year ended/as of March 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2006</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="10"><B>(in millions except percentages)</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Small business owner loans</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Loans outstanding</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">57,168</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">58,961</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">65,447</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Allowance for loan losses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,677</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,606</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,711</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Ratio of allowance for loan losses to loans outstanding</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">6.4</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">6.1</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">7.2</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Average balance of loans outstanding</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">55,647</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">56,964</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">63,320</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Loans charged-off</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,468</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,809</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,128</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Ratio of loans charged-off to average balance of loans
outstanding</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">4.4</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">4.9</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">4.9</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Business Timely loans</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Loans outstanding</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">18,659</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">20,862</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">25,282</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Allowance for loan losses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,962</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,231</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,694</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Ratio of allowance for loan losses to loans outstanding</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">10.5</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">10.7</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">10.7</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Average balance of loans outstanding</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17,909</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">19,687</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">23,656</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Loans charged-off</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,787</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,999</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,174</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Ratio of loans charged-off to average balance of loans
outstanding</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">10.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">10.2</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">9.2</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Secured loans</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Loans outstanding</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">10,003</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">18,812</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">91,610</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Allowance for loan losses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">274</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">761</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">558</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Ratio of allowance for loan losses to loans outstanding</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">2.7</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">4.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">0.6</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Average balance of loans outstanding</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,235</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,976</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">39,496</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Loans charged-off</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">100</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">22</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">22</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Ratio of loans charged-off to average balance of loans
outstanding</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">4.5</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">0.2</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">0.1</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Wide loans</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Loans outstanding</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">57,460</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">47,604</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">41,163</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Allowance for loan losses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,661</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,897</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,372</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Ratio of allowance for loan losses to loans outstanding</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">6.4</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">6.1</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">5.8</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Average balance of loans outstanding</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">61,592</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">52,722</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">44,240</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Loans charged-off</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,978</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,815</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,275</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Ratio of loans charged-off to average balance of loans
outstanding</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">4.8</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">5.3</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">5.1</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Consumer loans</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Loans outstanding</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">35,604</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">2,827</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">2,995</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Allowance for loan losses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,868</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">308</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">213</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Ratio of allowance for loan losses to loans outstanding</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">10.9</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">10.9</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">7.1</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Average balance of loans outstanding</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">38,600</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,296</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,010</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Loans charged-off</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,426</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">779</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">412</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Ratio of loans charged-off to average balance of loans
outstanding</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">11.5</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">14.7</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">13.7</TD>
    <TD nowrap>%</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<P align="center" style="font-size: 10pt">-59-
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>
<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="11" style="border-bottom: 1px solid #000000"><B>Year ended/as of March 31,</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2006</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="11"><B>(in millions except percentages)</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Other loans</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Loans outstanding</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">573</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">6,296</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">10,681</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Allowance for loan losses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">86</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">231</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">455</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Ratio of allowance for loan losses to loans outstanding</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">15.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">3.7</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">4.3</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Average balance of loans outstanding</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">261</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,166</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,243</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Loans charged-off</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">83</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">108</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Ratio of loans charged-off to average balance of loans
outstanding</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">0.8</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">2.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">1.1</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Total</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Loans outstanding</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">179,467</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">155,362</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">237,178</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Allowance for loan losses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13,528</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,034</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11,003</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Ratio of allowance for loan losses to loans outstanding</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">7.5</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">6.5</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">4.6</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Average balance of loans outstanding</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">176,244</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">148,811</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">183,965</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Loans charged-off</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11,761</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,507</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,119</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Ratio of loans charged-off to average balance of loans
outstanding</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">6.7</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">5.7</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">4.4</TD>
    <TD nowrap>%</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Charge-off Ratios</I>: Our Business Timely loans and consumer loans have higher charge-off
ratios than our small business owner loans and Wide loans primarily because Business Timely loans
and consumer loans do not require guarantors and have less rigorous screening requirements than
small business owner loans and Wide loans. We have changed our loan mix in recent years to improve
our charge-off ratios. For example, the sales of most of the outstanding balance of our consumer
loans in June&nbsp;2004, which had a charge-off ratio of over 10% in the previous 3&nbsp;years lowered our
overall charge-off ratio. We have also striven to accumulate high quality loans receivable
centering on real estate financing. As a result, our overall charge-off ratio decreased from 6.7%
for the year ended March&nbsp;31, 2004 to 5.7% for the year ended March&nbsp;31, 2005. This ratio decreased
further to 4.4% for the year ended March&nbsp;31, 2006, primarily due to the increase of secured loans,
which have a lower charge-off ratio.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Allowance Ratios</I>: The overall ratio of allowances for loan losses to total loans outstanding
decreased from 7.5% as of March&nbsp;31, 2004 to 6.5% as of March&nbsp;31, 2005, resulting from the change in
our loan mix resulting from the sale of most of the outstanding balance of our consumer loans in
June&nbsp;2004, and decreased further to 4.6% as of March&nbsp;31, 2006 due to the expansion of secured loans
centering on real estate financing, despite an increase in ratio of allowance for loan losses to
loans outstanding of our small business owner loans reflecting the uncertainties in Japan&#146;s
economic environment, which has negatively affected the repayment ability of many of our
long-standing customers. Regarding secured loans, ratio of allowance for loans losses to loans
outstanding declined remarkably from 4.0% as of March&nbsp;31, 2005 to 0.6% as of March&nbsp;31, 2006. This
decline reflected a significant increase in real estate financing to property developers by our
Real Estate Finance Department, which are specifically reviewed on determination of allowances for
estimated losses. We started offering these loans beginning in February&nbsp;2004 and we had not
charged off any of these loans in the past, therefore we maintained the allowances at a very low
level, which we believe is adequate to provide for the estimated losses from these loans. This
factor has contributed to a decline of approximately 9.1 points in the ratio of secured loans with
specific allowances provided to secured loans outstanding from 9.4% as of March&nbsp;31, 2005 to 0.3% as
March&nbsp;31, 2006. This represented an increased proportion of high quality secured loans receivable
in our loan portfolio.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Delinquent Loans and Non-accrual Loans</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Delinquent Loans</I>: Delinquent loans still accruing interest are loans with respect to which
interest payments are delinquent, but which have not been put on non-accrual status or charged off.
</DIV>

<P align="center" style="font-size: 10pt">-60-
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Non-accrual Loans</I>: Non-accrual loans are loans that no longer accrue interest, as collection
of the entire principal is deemed unlikely. We place loans on non-accrual status when they are
either partially or fully reserved for or are charged off due to our assessment that full or
partial collection is unlikely.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our non-accrual loans comprise restructured loans and loans with a specific allowance
provided.
</DIV>

<DIV style="margin-top: 12pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Restructured Loans</I>. Restructured loans are comprised of loans with respect to which
terms have been revised such as waiver, postponement or partial forgiveness of interest
or principal payments for the benefit of the borrower in order to secure some return on
the loan. Impaired loans are included in restructured loans and represent loans we
have specifically identified as partially or wholly uncollectable due to the bankruptcy
of the borrower, lack of collateral or other various reasons. We reserve for the
amounts of impaired loans and related accrued interest deemed uncollectable in our
allowance for loan losses. The decrease in impaired loans between March&nbsp;31, 2004 and
March&nbsp;31, 2005 reflected the decrease in impaired consumer loans as a result of the
sale of most of the outstanding balance of our consumer loans in June&nbsp;2004. The
decrease in impaired loans between March&nbsp;31, 2005 and March&nbsp;31, 2006 reflected the
decrease in impaired Wide loans as we strategically have shifted toward promotion of
financial services to business owners.</TD>
</TR>

<TR>
    <TD style="font-size: 12pt">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Loans with Specific Allowances Provided</I>. Loans with specific allowances provided
are delinquent loans for which we increase allowances beyond the general allowance. We
provide specific allowances only for small business owner loans, Wide loans, secured
loans and other loans.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table provides information on our delinquent loans still accruing interest and
our non-accrual loans, which comprise restructured loans, including impaired loans, and loans with
specific allowances provided:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="11" style="border-bottom: 1px solid #000000"><B>As of March 31,</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2006</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="11"><B>(in millions)</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Small business owner loans</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Delinquent loans still accruing interest</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">936</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">719</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">1,022</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Non-accrual loans<SUP style="font-size: 85%; vertical-align: text-top"> (1)</SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,412</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,064</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,717</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Restructured loans</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,768</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,371</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,917</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Impaired loans included in restructured loans</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,183</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,388</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,250</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Loans with specific allowance provided</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,644</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,693</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,800</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Business Timely loans</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Delinquent loans still accruing interest</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">430</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">351</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">515</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Non-accrual loans<SUP style="font-size: 85%; vertical-align: text-top"> (1)</SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">516</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">567</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">779</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Restructured loans</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">516</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">567</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">779</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Impaired loans included in restructured loans</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">120</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">158</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">188</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Loans with specific allowance provided</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Secured loans</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Delinquent loans still accruing interest</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">93</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">186</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">77</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Non-accrual loans<SUP style="font-size: 85%; vertical-align: text-top"> (1)</SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">156</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,836</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">963</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Restructured loans</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">87</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">71</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">665</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Impaired loans included in restructured loans</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Loans with specific allowance provided</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">69</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,765</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">298</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">-61-
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="11" style="border-bottom: 1px solid #000000"><B>As of March 31,</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2006</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="11"><B>(in millions)</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Wide loan</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Delinquent loans still accruing interest</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">903</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">500</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">693</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Non-accrual loans<SUP style="font-size: 85%; vertical-align: text-top"> (1)</SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,227</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,654</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,383</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Restructured loans</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,852</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,758</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,934</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Impaired loans included in restructured loans</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,688</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,757</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,398</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Loans with specific allowance provided</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,375</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,896</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,449</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Consumer loans</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Delinquent loans still accruing interest</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">1,148</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">94</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">124</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Non-accrual loans<SUP style="font-size: 85%; vertical-align: text-top"> (1)</SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,182</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">108</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">103</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Restructured loans</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,182</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">108</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">103</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Impaired loans included in restructured loans</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">528</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">19</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">34</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Loans with specific allowance provided</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Other loans</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Delinquent loans still accruing interest</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">10</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Non-accrual loans<SUP style="font-size: 85%; vertical-align: text-top"> (1)</SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">87</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">29</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">68</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Restructured loans</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Impaired loans included in restructured loans</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Loans with specific allowance provided</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">73</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">29</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">56</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Total</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Delinquent loans still accruing interest</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">3,510</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">1,850</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">2,441</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Non-accrual loans<SUP style="font-size: 85%; vertical-align: text-top"> (1)</SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">19,580</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20,258</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20,013</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Restructured loans</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14,419</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13,875</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14,410</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Impaired loans included in restructured loans</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,519</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,322</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,870</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Loans with specific allowance provided</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,161</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,383</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,603</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">(1)</TD>
    <TD>&nbsp;</TD>
    <TD>The amounts of non-accrual loans represent the balance of non-accrual loans outstanding
before allowances for loan losses.</TD>
</TR>

</TABLE>



<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;<B><I>Loan Servicing</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We record purchased loans at cost. We then establish an allowance for estimated loan losses
and employ one of two methods to determine if further allowances are appropriate. Under the cost
recovery method, if we determine that we cannot recover our cost, an allowance for the expected
uncollectible portion is established, and the loan is charged off once we deem the loan
uncollectible. Under the level yield method, which is used for those purchased loans for which we
can reasonably estimate the expected timing and amount of cash flows, if the carrying amounts of
those loans are greater than the present value of expected future cash flows from those loans, the
difference is recorded as an allowance for the uncollectible portion.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table provides information on our allowance for loan losses along with amounts
provided for loan losses and charge-offs with respect to our loan servicing segment:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="82%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="0%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="0%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="0%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="10" style="border-bottom: 1px solid #000000"><B>Year ended March 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2006</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="10"><B>(in millions)</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Balance at beginning of period</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">132</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">717</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">1,282</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Provision for loan losses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">637</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">817</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,186</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Charge-offs</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(52</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(252</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(676</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Balance at end of period</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">717</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">1,282</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">1,792</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;See also &#147;Critical Accounting Policies &#150; Purchased Loans Receivable and Revenue
Recognition&#148; below.
</DIV>

<P align="center" style="font-size: 10pt">-62-
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Critical Accounting Policies</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following describes our critical accounting policies that affect our more significant
judgments and estimates used in the preparation of our financial statements. The preparation of
our financial statements in conformity with U.S. GAAP requires us to make estimates and judgments
that affect the reported amounts of assets and liabilities, revenues and expenses, and related
disclosures of contingent assets and liabilities. These estimates are based on, but not limited
to, historical results, industry standards and current economic conditions, giving due
consideration to materiality. Our estimates are based on information that is currently available
to us and on various other assumptions that we believe are reasonable under the circumstances.
Actual results may vary materially from those estimates, and those estimates could differ, under
different assumptions or conditions.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On an ongoing basis, we evaluate our critical accounting policies, including those related to
interest income from loans receivable and loan origination costs, loans receivable and allowance
for loan losses, and purchased loans receivable and revenue recognition.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;<B><I>Interest Income from Loans Receivable and Loan Origination Costs</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We recognize interest income from our loans except for our purchased loans on an accrual basis
based on the principal amount outstanding. In Japan, the maximum interest rates are set by law at
two general levels: an absolute maximum rate (legal limit) and a lower interest rate based on the
principal amount of the loan (restricted rate). Our contractual loan interest rates do not exceed
the legal limit but may exceed the restricted rate. We may charge interest rates in excess of the
restricted rate as long as it meets the specified requirements. Borrowers have a right to refuse
to pay interest in excess of the restricted rate, and we cannot legally require borrowers to pay
the excess interest. However, once a borrower has paid interest in excess of the restricted rate,
and provided that we have complied with the specified legal documentation and notification
procedures, we have no legal or contractual obligation to refund or otherwise reimburse the excess
interest payments.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Based on our recognition of the risk involved in charging interest rates above the restricted
rate, even if under the legal limit, we recognize accrued interest income on our loans receivable
outstanding as of the balance sheet date at the lower of the restricted rate or the contractual
interest rate. Contractual interest in excess of the restricted rate is recognized as interest
income when collected, provided there are no remaining legal obligations to refund this excess
portion. Accrual of interest income is suspended when loan principal is charged off or is wholly
or partially reserved. The accrued interest portion of a charged off loan balance is deducted from
the current period interest income and the principal amount is charged off against the allowance
for loan losses.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We maintain reserves for estimated losses from the above-mentioned excess interest repayments
at a level that we believe is adequate to provide for estimated probable refund claims of excess
interest previously paid by borrowers. Provisions to the reserve are deducted from interest
income. In evaluating the adequacy of the reserve, we consider various factors, including recent
conditions on repayments of excess interest and historical loss experience.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We capitalize direct origination costs and defer fees on successful loan originations. Loan
origination costs, net of loan origination fees, are deferred and amortized over the contractual
life of loans, which averaged approximately 49&nbsp;months as of March&nbsp;31, 2006.
</DIV>

<P align="center" style="font-size: 10pt">-63-
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;<B><I>Loans Receivable and Allowance for Loan Losses</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We report loans receivable at the principal amount less an allowance for loan losses. The
allowance for loan losses is maintained at a level that we believe is adequate to provide for
estimated probable uncollectible loan losses from known and inherent risks in our loan portfolios.
Increases to the allowance are made by charges to the provision for loan losses. Recoveries of
previously charged-off amounts are deducted from the provision for loan losses. Allowances are
reviewed both on an individual loan and portfolio basis. In evaluating the adequacy of the
allowance, we consider various factors, including current economic conditions, such as unemployment
rates, bankruptcy cases and historical loss experience. Restructured loans include any loans for
which interest, principal or term is restructured. Allowances for restructured loans are based on
collection history or legal classification of the borrowers.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our policy is generally to charge off loan balances and cease accrual of interest as follows:
</DIV>

<DIV style="margin-top: 12pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Guaranteed Small Business Owner Loans and Wide Loans</I>: Loan balances are charged off
when we believe the likelihood of any future collection is minimal. Events triggering
charge-offs include bankruptcy of both the borrower and guarantor. In the case that
loans are restructured, we charge off the amount of the recorded loan balance less the
restructured loan balance. Interest accrual is terminated at the earlier of the date
when contractual payments are 97&nbsp;days delinquent or the date when all or a part of loan
principal is deemed uncollectible.</TD>
</TR>

<TR>
    <TD style="font-size: 12pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Unguaranteed Business Timely Loans and Consumer Loans</I>: Loan balances are charged
off and interest accrual is terminated when a loan&#146;s contractual payment becomes 67
days delinquent or upon the occurrence of other events such as bankruptcy of the
borrower.</TD>
</TR>

<TR>
    <TD style="font-size: 12pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Secured Loans</I>: Loan balances are charged off when we believe the likelihood of any
future collection is minimal. We consider the availability and value of collateral in
determining the level of charge-off. Interest accrual is terminated at the earlier of
the date when contractual payments are 97&nbsp;days delinquent or the date when all or a
part of loan principal is deemed uncollectible.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;<B><I>Purchased Loans Receivable and Revenue Recognition</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In December&nbsp;2003, the Accounting Standards Executive Committee issued Statement of Position
(&#147;SOP&#148;) 03-3, &#147;Accounting for Certain Loans or Debt
Securities Acquired in a Transfer&#148;. SOP 03-3
addresses accounting for differences between contractual cash flows and cash flows expected to be
collected from an investor&#146;s initial investment in loans or debt securities acquired in a transfer.
We have adopted SOP 03-3 beginning April&nbsp;1, 2005.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Cost Recovery Method</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Purchased loans represent loans purchased from third party originators and are reported at
purchased cost. We then establish an allowance for estimated loan losses on reduced credit quality
subsequent to acquisition. Due to the non-performing status of these loans when initially
purchased and lack of history with the borrowers, subsequent to acquisition, we initially recognize
revenue from these loans using the cost recovery method. Under this method, payments from a
borrower are first applied to loan principal. Once the purchased cost is fully recovered,
subsequent receipts are recognized as interest income. If we determine that we cannot recover our
cost, an allowance for the expected uncollectible portion is established. This determination is
made based on numerous factors including the length of non-payment, extent of deviation from the
agreed upon payment plan, accessibility of the borrower and
bankruptcy or death of the borrower. The loan is written off once we deem the loan
uncollectible. The amount of the book value of the loans accounted for under this method was
&#165;12,745&nbsp;million, or 93.8% of our net purchased loans receivable as of March&nbsp;31, 2005 and &#165;23,228
million, or 96.2% of our net purchased loans receivable as of March&nbsp;31, 2006.
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Level Yield Method</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For those purchased loans for which we can reasonably estimate the expected timing and amount
of cash flows, we use those expected future cash flows to record the loans receivable and amortize
the implied interest into revenue using the level yield method. Our determination to use the level
yield method, rather than the cost recovery method, to account for a purchased loan depends on our
judgment regarding the borrower&#146;s ability to meet the restructured payments following our
negotiation with the borrower. We will adjust the future yield rate for expected changes in
interest rates or collections. If the carrying amounts of those loans are greater than the present
value of expected future cash flows from those loans due to delinquency in payment or use of legal
means by the borrower, the difference is recorded as an allowance for the uncollectible portion.
The amount of the book value of the loans accounted for under the level yield method was &#165;836
million, or 6.2% of our net purchased loans receivable as of March&nbsp;31, 2005 and &#165;927&nbsp;million, or
3.8% of our net purchased loans receivable as of March&nbsp;31, 2006.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Accounting Developments</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In December&nbsp;2004, the FASB issued SFAS No.&nbsp;123-R (revised 2004) &#147;Share-Based Payment,&#148; a
revision of SFAS No.&nbsp;123 &#147;Accounting for Stock-Based Compensation.&#148; SFAS No.&nbsp;123-R requires a
public entity to measure the cost of employee services received in exchange for an award of equity
instruments based on the grant-date fair value of the award. In April&nbsp;2005, the Securities and
Exchange Commission (&#147;SEC&#148;) delayed the effective date of FASB Statement No.&nbsp;123-R to the annual
reporting period that began after June&nbsp;15, 2005, and for us, this date is April&nbsp;1, 2006. We expect
the adoption of this statement will reduce our reported net income and earnings per share. The
effect of adopting this statement on our historical consolidated financial statements of operations
is reflected on our pro forma in the &#147;Financial Statements &#151; Notes to Consolidated Financial
Statements &#151; Summary of Significant Accounting Policies&#148;.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>B. Liquidity and Capital Resources.</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Cash Flows</B>

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We had cash and cash equivalents (&#147;cash&#148;) totaling &#165;22,860&nbsp;million as of March&nbsp;31, 2006, a
decrease of &#165;2,849&nbsp;million, or 11.1%, from &#165;25,709&nbsp;million as of March&nbsp;31, 2005. We had cash
totaling &#165;25,709&nbsp;million as of March&nbsp;31, 2005, an increase of &#165;5,466&nbsp;million, or 27.0%, from
&#165;20,243&nbsp;million as of March&nbsp;31, 2004.
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table shows information about our cash flows during the years ended March&nbsp;31,
2004, 2005 and 2006:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="11" style="border-bottom: 1px solid #000000"><B>Year ended March 31,</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2006</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="11"><B>(in millions)</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net cash provided by operating activities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">21,942</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">14,686</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">24,270</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net cash used in investing activities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(18,301</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(12,546</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(135,976</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net cash (used in) provided by financing activities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(7,010</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,335</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">108,675</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Effect of exchange rate changes on cash</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(9</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">182</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net (decrease)&nbsp;increase in cash</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(3,369</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,466</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(2,849</TD>
    <TD nowrap>)</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;<B><I>Cash Flows during the Year Ended March&nbsp;31, 2006</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Operating Activities</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash provided by operating activities for the year ended March&nbsp;31, 2006 was &#165;24,270
million, an increase of &#165;9,584&nbsp;million, or 65.3%, compared to &#165;14,686&nbsp;million for the previous
fiscal year. Cash inflows were primarily attributable to an increase of &#165;1,193&nbsp;million, or 16.4%,
in our net income to &#165;8,455&nbsp;million for the year ended March&nbsp;31, 2006, &#165;9,463&nbsp;million in net
provision for loan losses and a &#165;5,521&nbsp;million in net increase of accrued income taxes and
expenses. These factors, resulting in the increase in net cash provided by operating activities,
were partially offset by &#165;3,708&nbsp;million in net gains on sales of investment securities, as well as
&#165;1,460&nbsp;million in deferred income tax benefits.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Investing Activities</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash used in investing activities for the year ended March&nbsp;31, 2006 was &#165;135,976&nbsp;million,
an increase of &#165;123,430&nbsp;million, or 983.8%, compared to &#165;12,546&nbsp;million for the previous fiscal
year. Cash outflows were primarily attributable to &#165;82,347&nbsp;million used in net origination of
loans receivable reflecting the growth in our loans to small and medium-sized business owners
centering on real estate financing, &#165;12,112&nbsp;million used in net acquisition of purchased loans
receivable reflecting the active operations in our loan servicing business, &#165;14,087&nbsp;million used in
net purchases of investment securities reflecting increases of investments in venture business in
hopes of producing synergies with our existing businesses, &#165;19,304&nbsp;million used in net acquisitions
of real estate for sale reflecting expansion of real estate-related businesses mainly operated by
NIS Property, and &#165;6,365&nbsp;million used in net purchases of property and equipment reflecting
acquisitions of real estate by VIEs consolidated by us in accordance with FIN No.&nbsp;46(R).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Financing Activities</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash provided by financing activities was &#165;108,675&nbsp;million for the year ended March&nbsp;31,
2006, an increase of &#165;105,340&nbsp;million, or 3,158.6%, compared to &#165;3,335&nbsp;million for the previous
fiscal year. Cash inflows were primarily attributable to &#165;65,493&nbsp;million provided by net proceeds
from long-term borrowings and &#165;46,828&nbsp;million provided by net proceeds from short-term borrowings
reflecting the increased capital requirement for our loan business, centering in real estate
financing, as well as &#165;2,207&nbsp;million provided by net proceeds from sale of treasury stock
reflecting exercises of stock options by our directors and employees. Inflow factors were
partially offset by &#165;2,571&nbsp;million in net increase of deposit of restricted cash mainly pledged as
collateral for borrowings from banks by Nissin Servicer and Nissin Leasing (China), and &#165;2,670
million used for dividend payments to our shareholders and minority shareholders of a subsidiary.
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;<B><I>Cash Flows during the Year Ended March&nbsp;31, 2005</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Operating Activities</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash provided by operating activities for the year ended March&nbsp;31, 2005 was &#165;14,686
million, a decrease of &#165;7,256&nbsp;million, or 33.1%, compared to &#165;21,942&nbsp;million for the previous
fiscal year. This change was primarily attributable to a decrease of &#165;6,987&nbsp;million, or 19.2%,
in our net interest income, a decrease of &#165;4,885&nbsp;million, or 36.3%, in our net provision for loan
losses and a gain on sale of loans receivable of &#165;3,327&nbsp;million, which reflected the sale of most
of the outstanding balance of our consumer loans to Orient Credit as discussed in further detail in
&#147;Results of Operations &#151; Year Ended March&nbsp;31, 2005, Compared to Year Ended March&nbsp;31, 2004&#148;.
Further, gain on equity interest in Nissin Servicer of &#165;1,339&nbsp;million in conjunction with its
listing on the Mothers market of the Tokyo Stock Exchange and a decrease of &#165;2,123&nbsp;million in net
changes in accrued income taxes and expenses also contributed to this change. These contributing
factors were offset by an increase of &#165;2,060&nbsp;million in deferred income tax expenses.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Investing Activities</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash used in investing activities for the year ended March&nbsp;31, 2005 was &#165;12,546&nbsp;million, a
decrease of &#165;5,755&nbsp;million, or 31.4%, compared to &#165;18,301&nbsp;million for the previous fiscal year.
This change was primarily attributable to proceeds of &#165;32,697&nbsp;million from the sale of most of the
outstanding balance of our consumer loans offset by an increase of &#165;3,851&nbsp;million in our net
origination of loans receivable, an increase of &#165;8,023&nbsp;million in our net purchases of distressed
loans, which reflected the developments in our loan servicing business, an increase of &#165;12,903
million in our purchases of investment securities and an increase of &#165;874&nbsp;million in our purchases
of property and equipment in connection with acquisition of software for the development of our new
operating system infrastructure.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Financing Activities</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash provided by financing activities was &#165;3,335&nbsp;million for the year ended March&nbsp;31,
2005, compared to net cash used in financing activities in the amount of &#165;7,010&nbsp;million for the
previous fiscal year. This change was primarily attributable to an increase of &#165;7,429&nbsp;million in
our net proceeds from short-term borrowings and a decrease of &#165;1,252&nbsp;million in our net repayment
of long-term borrowings, which reflected increased capital requirements for our loan servicing
business. Furthermore, an increase of &#165;1,607&nbsp;million in our proceeds from issuance of new shares
by subsidiaries, which reflected Nissin Servicer&#146;s listing on the Mothers market of the Tokyo Stock
Exchange. A decrease of &#165;1,208&nbsp;million in our purchases of treasury stock also contributed to this
change. These contributing factors were partially offset by a decrease of &#165;1,170&nbsp;million in our
proceeds from exercise of stock warrants and an increase of &#165;299&nbsp;million in dividend payments.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Capital Requirements</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In our business operations, our principal capital and liquidity needs are for funding loans to
customers and purchases of distressed loans from banks and other financial institutions, payment of
principal and interest on outstanding borrowings, general and administrative expenses, capital
expenditures to finance the growth of our business, strategic investments and payment of cash
dividends and stock repurchases.
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;<B><I>Funding Loan Origination and Loan Servicing</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We require capital to provide new loans and to purchase distressed loans from banks and other
financial institutions.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Loan
Origination</I>: As we are principally in the business of providing loans to customers, our
most critical capital requirement is loan origination. As of March&nbsp;31, 2006, our total loans
outstanding were in the amount of &#165;237,178&nbsp;million, an increase of &#165;81,816&nbsp;million, or 52.7%, as
compared to &#165;155,362&nbsp;million as of the end of the previous year reflecting the enhancement of loans
to business owners as we focused our efforts on real estate financing which resulted in significant
increase in secured loans, as well as the acquisition of Aprek in December&nbsp;2005. Our capital
requirements for loan origination have been easier to meet in recent years. However, because we
expect our loan portfolio to grow due to increasing demand for small and medium-sized business
owner financing, our capital requirements to fund loan origination may become more demanding.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Loan
Servicing</I>: Since October&nbsp;2001, when we commenced our loan servicing operations through
Nissin Servicer, our capital requirements for purchases of distressed loans from banks and other
financial institutions have been increasing. We purchased distressed loans in the aggregate amount
of &#165;16,896&nbsp;million for the year ended March&nbsp;31, 2005 and &#165;19,779&nbsp;million for the year ended March
31, 2006. We expect our capital requirements for our loan servicing segment to increase in the
short to medium term.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;<B><I>Payments of Interest and Principal Borrowings</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We require capital for payments of interest and principal on our outstanding borrowings. For
a further discussion, see &#147;&#151; Commitments&#148; below.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;<B><I>General and Administrative Expenses</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We require capital for general and administrative expenses, including salaries and employee
benefits, occupancy, furniture and equipment, etc. In recent years, we have made efforts to reduce
our general and administrative expenses as a percentage of our interest income, and intend to
continue these efforts. Our general and administrative expenses were &#165;14,117&nbsp;million, or 43.4% of
our total interest income, for the year ended March&nbsp;31, 2005 and &#165;15,524&nbsp;million, or 45.8%, for the
year ended March&nbsp;31, 2006, respectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;<B><I>Capital Expenditures</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table provides our capital expenditures calculated on a cash basis:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="11" style="border-bottom: 1px solid #000000"><B>For the year ended March 31,</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2006</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="11"><B>(in millions)</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Capital expenditures</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">880</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">1,754</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">6,368</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our capital expenditures for the above stated periods were mainly used to acquire
property and equipment in connection with the establishment and relocation of our loan and other
offices and branches throughout Japan, relocation of our subsidiary&#146;s head offices, as well as
acquisition of intangible assets in connection with the implementation and development of our new
operating system. Recently, we used our capital expenditures in acquisition of property and
equipment through VIEs which were consolidated by us in accordance
with FIN No. 46 (R). We have
budgeted main capital expenditures in the amount of approximately &#165;105&nbsp;million for the year ending March&nbsp;31, 2007, primarily for the
refurbishment and renovation of our head office, and renovation and relocation of our branches and
loan offices.
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;<B><I>Strategic Investments</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We invest in enterprises that have the potential to complement our business strategically
whose values are expected to appreciate:
</DIV>

<DIV style="margin-top: 12pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Affiliates</I>. Some of these enterprises are our affiliates. Our total initial
investments in these affiliates amounted to &#165;735&nbsp;million as of March&nbsp;31, 2005 and &#165;792
million as of March&nbsp;31, 2006. These affiliates had a book carrying value of &#165;514
million as of March&nbsp;31, 2005 and &#165;617&nbsp;million as of March&nbsp;31, 2006.</TD>
</TR>

<TR>
    <TD style="font-size: 12pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Non-affiliates</I>. These are investments in enterprises that we view as potential
strategic partners, rather than sources of potential capital gains. Our total initial
investments in these enterprises amounted to &#165;9,019&nbsp;million as of March&nbsp;31, 2005 and
&#165;19,490&nbsp;million as of March&nbsp;31, 2006. These enterprises had a book carrying value of
&#165;20,376&nbsp;million as of March&nbsp;31, 2005 and &#165;28,057&nbsp;million as of March&nbsp;31, 2006.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;<B><I>Dividends and Stock Repurchases</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Cash Dividends</I>: Historically we have paid cash dividends twice per year. Our board of
directors presently intends to continue to pay cash dividends on a semi-annual basis and to provide
a stable level of dividends to our shareholders. Pursuant to the Articles of Incorporation which
were amended on June&nbsp;24, 2006, the Board of Directors, instead of the Shareholders&#146; Meeting, have
the right to distribute retained earnings on the stipulated record dates and/or other dates as the
record date pursuant to the Japanese Corporate Law. Starting from the year ended March&nbsp;31, 2005,
in order to reflect consolidated results as an indicator for our business performance, we changed
our dividend policy and plan to maintain a dividend payout ratio of 30% on the consolidated net
income basis. The declaration and payment of dividends, however, depends on our future earnings,
financial condition and other factors, including statutory and other restrictions on the payment of
dividends. We paid cash dividends in an amount of &#165;1,001&nbsp;million for the year ended March&nbsp;31,
2004, &#165;1,300&nbsp;million for the year ended March&nbsp;31, 2005 and &#165;2,670&nbsp;million for the year ended March
31, 2006. For a further discussion of cash dividends, see &#147;Dividend Policy &#151; Cash Dividends&#148; under
Item&nbsp;8.A of this annual report on Form 20-F.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Stock Repurchases</I>: We repurchased 28,096 shares for an aggregate price of &#165;1&nbsp;million during
the year ended March&nbsp;31, 2005 and 37,502 shares for an aggregate price of &#165;2&nbsp;million during the
year ended March&nbsp;31, 2006. We sold 30,291,840 shares for an aggregate price of &#165;909&nbsp;million during
the year ended March&nbsp;31, 2005 and 52,833,762 shares for an aggregate price of &#165;2,209&nbsp;million during
the year ended March&nbsp;31, 2006 as a result of exercises of stock options. We also sold an
additional 9,245,120 shares between April&nbsp;1, 2006 and
August&nbsp;31, 2006 for an aggregate price of &#165;362
million as a result of exercise of stock options. For a further discussion of stock repurchases,
see &#147;Dividend Policy &#151; Stock Repurchases&#148; under Item&nbsp;8.A of this annual report on Form 20-F.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Capital Resources</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We seek to manage our capital resources and liquidity to provide adequate funds for current
and future financial obligations. We derive the funds we require to meet our capital requirements
principally from cash flow provided by operations, borrowings from financial institutions and
issuances of bonds and
commercial paper. We also may raise proceeds from the sale of our shareholdings in our
subsidiaries and affiliates.
</DIV>

<P align="center" style="font-size: 10pt">-69-
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We derive the funding necessary to provide loans to our customers through borrowings from
financial institutions, long-term debt issuances and interest income. We seek to enhance our
ability to tap a diverse range of funding sources and to lower our funding costs. In support of
this strategy, since the year ended March&nbsp;31, 2000, when legal restrictions on debt issuances to
fund our lending business were eliminated, we have increased our borrowings from capital markets
through issuances of commercial paper and medium-term and long-term bonds, and we have reduced the
proportion of our borrowings from banks, insurance companies and other financial institutions. Our
current intention, subject to market conditions and other uncertainties, is to increase our
proportion of direct financing to around 40%.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We believe that our existing cash and cash equivalents and the amount of cash that we
anticipate will be generated from our business operations, together with our existing access to
borrowings and capital markets, will be sufficient for us to continue to operate our business at
current levels through the year ending March&nbsp;31, 2007. We do not have current plans for any equity
offerings for Nissin Co., Ltd., and we do not currently expect to significantly increase our
indebtedness through the year ending March&nbsp;31, 2007.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Commitments</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our material commitments include long-term borrowings, short-term borrowings, unfunded credit
lines, and operating and capital leases. See Item&nbsp;5.F of this annual report on Form 20-F for a
tabular disclosure of our contractual obligations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;<B><I>Borrowings</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Long-Term Borrowings</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We require a significant amount of funds for payment of principal and interest on our
borrowings, most of which are used for extending loans to our customers. Generally, our borrowings
are denominated in yen. As of March&nbsp;31, 2006, we had long-term borrowings, including a convertible
bond and asset backed securities, totaling &#165;198,924&nbsp;million.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Of our total long-term borrowings at March&nbsp;31, 2006, &#165;169,952&nbsp;million were from loans,
principally from banks and other financial institutions, including asset backed securities.
Generally, our long-term loans have a maturity of one to five years and accrue interest on a fixed
rate basis or on a variable rate basis. At March&nbsp;31, 2006, the weighted average contractual rate
at period end of our long-term loans from banks and other financial institutions was 1.5%. As is
customary in Japan, bank loans are made under general agreements which provided that under certain
circumstances, security and guarantees for present and future indebtedness will be given upon
request of the bank, and that the bank shall have the right, as the obligations become due, or in
the event of their default, to offset cash deposits against such obligations due to the bank.
</DIV>


<P align="center" style="font-size: 10pt">-70-
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
addition, &#165;28,972&nbsp;million of our total long-term borrowings
at March&nbsp;31, 2006 was from the
issuance of long-term bonds, including convertible bonds. We have a limited history of debt
issuances because consumer finance companies and small business lenders were barred from using
direct financing to fund lending operations until May&nbsp;1999. Long-term bonds outstanding as of
March&nbsp;31, 2005 and 2006 comprised the following:
</DIV>


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="88%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="0%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="0%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000"><B>As of March 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2006</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6"><B>(in millions)</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2.35% unsecured bonds, due November&nbsp;1, 2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">5,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">1.18% unsecured bonds, due February&nbsp;25, 2008</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,500</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,500</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">1.90% unsecured bonds, due July&nbsp;31, 2006</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">500</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">500</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">0.75% unsecured bonds, due September&nbsp;19, 2008</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">210</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">150</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">0.64% unsecured bonds, due March&nbsp;26, 2007</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">500</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">500</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">0.45% unsecured bonds, due September&nbsp;27, 2006</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">500</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">500</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">0.67% unsecured bonds, due September&nbsp;27, 2007</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">500</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">500</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">1.17% unsecured bonds, due June&nbsp;20, 2008</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,500</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">1.08% unsecured bonds, due September&nbsp;16, 2008</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">0.90% unsecured bonds, due March&nbsp;27, 2009</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">1.70% unsecured convertible bonds, due September&nbsp;29, 2006</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,942</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">822</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total bonds</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">23,652</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">28,972</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The aggregate future annual principal and interest commitments of bonds, long-term loans
from banks and other financial institutions as of March&nbsp;31, 2006 are as follows:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="93%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="0%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000"><B>Year ending March 31,</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>(in millions)</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2007</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">76,272</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2008</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">71,155</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2009</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">43,471</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2010</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,513</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2011 and thereafter</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,125</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Total future payments for long-term borrowings</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">203,536</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Short-Term Borrowings</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our short-term borrowings are comprised of bank loans and commercial paper. Our short-term
borrowings were &#165;12,600&nbsp;million as of March&nbsp;31, 2005,
of which &#165;9,017&nbsp;million was bank loans,
&#165;3,500&nbsp;million was commercial paper and the remainder were rediscounted notes, and &#165;60,411&nbsp;million
as of March&nbsp;31, 2006, of which &#165;30,283&nbsp;million was
bank loans, &#165;30,000&nbsp;million was commercial
paper and the remainder were rediscounted notes.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Information
regarding interest rates of short-term borrowings as of March&nbsp;31, 2005 and 2006 is as follows:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #000000"><B>As of March 31,</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2006</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Bank loans
(under fixed or variable rate contracts):</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Minimum interest rate</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">1.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">1.0</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Maximum interest rate</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5.0</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Weighted average contractual rates</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.4</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Commercial
paper:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Minimum interest rate</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.3</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Maximum interest rate</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.0</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Weighted average contractual rates</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.7</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Rediscounted notes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.4</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;All short-term borrowings have terms ranging from approximately one month to twelve
months and are usually renewed at maturity subject to renegotiation of interest rates and other
factors. We pledge some of our loans receivable, cash and certain other assets as collateral for
these loans.
</DIV>

<P align="center" style="font-size: 10pt">-71-
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Commitment Facilities</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of March&nbsp;31, 2006, the total amount of prescribed limits of syndicated loans, overdraft
facilities, and loan commitment limits available from banks was &#165;21,737&nbsp;million. The outstanding
borrowings within the limits were &#165;15,810&nbsp;million and the
unused balance was &#165;5,927&nbsp;million.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Debt Service</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of March&nbsp;31, 2006, we had contractual commitments to repay &#165;73,875&nbsp;million in long-term
borrowings through the year ending March&nbsp;31, 2007. We expect to repay this amount through a
combination of new or existing loan credits from banks, bond offerings and new cash from
operations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Collateral for Borrowings</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of March&nbsp;31, 2006, we had pledged as collateral for short-term and long-term borrowings
with banks and other financial institutions the following assets: &#165;1,662&nbsp;million in restricted
cash, &#165;15,510&nbsp;million in loans receivable, &#165;380&nbsp;million in purchased loans receivable, and &#165;6,542
million in real estate for sale. The lender may obtain this collateral in the event of financial
default, including missed or delinquent payments as provided for in the loan agreements.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
addition, certain entities which are consolidated by us in accordance with FIN No.&nbsp;46 (R)
obtained non-recourse loans from financial institutions. For these loans, &#165;10,462&nbsp;million in these
entities&#146; assets was pledged as collateral as of March&nbsp;31, 2006.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;<B><I>Unfunded Credit Lines</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under the terms and conditions of our credit line agreements, we may, but are not committed
to, lend funds to our Business Timely loan, consumer loan and other loan customers. We review
credit lines and our related funding needs based on account usage and customer creditworthiness.
We had unfunded credit lines of &#165;57,679&nbsp;million as of
March&nbsp;31, 2006, of which &#165;9,642&nbsp;million was unfunded
credit lines with loans outstanding and &#165;48,037&nbsp;million was unfunded credit lines without
loans outstanding.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;<B><I>Operating and Capital Leases</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We lease office space under operating lease agreements that generally allow us to cancel
leases with six months&#146; advance notice. We have paid approximately &#165;965&nbsp;million under our office
lease agreements for the year ended March&nbsp;31, 2006. In addition, we lease certain equipment,
software and vehicles under capital lease obligations. We have paid &#165;614&nbsp;million under our capital
lease agreements for the year ended March&nbsp;31, 2006. Consequently, total lease payments under these
operating lease and capital lease agreements were &#165;1,579&nbsp;million for the year ended March&nbsp;31, 2006.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Contingencies</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have guarantee obligations on the borrowings by the customers of third parties. See Item
5.E of this annual report on Form 20-F for a further discussion.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We are not a party to any material legal proceedings.
</DIV>

<P align="center" style="font-size: 10pt">-72-
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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>C. Research and Development, Patents and Licenses, etc.</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have not implemented any material research and development policy and have not conducted
any material research and development activities during the period from April&nbsp;1, 2003 through the
date of this annual report on Form 20-F.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>D. Trend Information.</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The information required by this item is provided in Item&nbsp;5.B of this annual report on Form
20-F.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>E.
Off-Balance Sheet Arrangements.</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our off-balance sheet arrangements that have or are reasonably likely to have a current or
future material effect on us are those pursuant to which we guarantee the borrowings of customers
of third parties and bank loans borrowed by our equity-method affiliates, as follows:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;<B><I>Sanyo Club</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pursuant to an agreement with Sanyo Club, in exchange for guaranteeing 40% of the outstanding
balance of specified borrowings, we receive 40% of the interest income from the total amount of
these borrowings and pay 40% of the related administrative expenses and other expenses incurred by
Sanyo Club. We are required to pay out on our guarantees for 40% of the outstanding loan balance
of specified borrowings for which contractual payments are overdue by 120&nbsp;days or more as of the
end of each month, and distressed loans due to legal processes. Under a loan agreement, borrowers
are neither required to have a guarantor nor to provide collateral. We maintain reserves for
estimated guarantee losses in our other liabilities on our balance sheet.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;<B><I>Shinsei Business Finance</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In return for a fee, we guarantee borrowings and corresponding interest receivable from
customers of Shinsei Business Finance, an affiliate in which we owned a 25% interest until April
2006, with respect to the following loan products:
</DIV>

<DIV style="margin-top: 12pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>3S Loans</I>: 3S Loans are unsecured loans that require
one or more guarantees from third party individuals with an income
source separate from the customer, and are designed for small or
medium-sized corporations.
For a guarantee fee of the contractual interest rate minus 4%, we
guarantee 100% of loans outstanding and corresponding interest receivable from
borrowers of 3S loans. We are required to pay out on our guarantees of loans for which
contractual payments are overdue by 14&nbsp;days or more. Borrowers of 3S loans are
required to have one or more guarantors, but not collateral.</TD>
</TR>

<TR>
    <TD style="font-size: 12pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Business Loans</I>: Business Loans are unsecured loans
designed for small or medium-sized corporations. We guarantee 10% of loans outstanding and corresponding interest
receivable from borrowers of Business Loans and earn 10% of the interest received from
these loans. We are required to pay out on our guarantees of loans for which
contractual payment are overdue by 90&nbsp;days or more. Borrowers of Business Loans are
neither required to have a guarantor nor to provide collateral.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We are also liable as a guarantor for bank loans borrowed by Shinsei Business Finance, and
received guarantee fees equivalent to an annual interest rate of 1.5%. However, during the year
ended March&nbsp;31, 2006, we were released from our obligation as a guarantor for bank loans borrowed
by Shinsei Business Finance.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We maintain reserves for estimated guarantee losses in our other liabilities on our balance
sheet.
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;<B><I>Chuo Mitsui Finance Service</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In return for a fee, we guarantee borrowings and corresponding interest receivable from
customers of Chuo Mitsui Finance Service, an affiliate in which we own a 30% interest, with respect
to the following loan products:
</DIV>

<DIV style="margin-top: 12pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Business Card Loans</I>: Business Card Loans are unsecured
loans designed for small or medium-sized corporations.

We guarantee 10% of loans outstanding and corresponding
interest receivable from borrowers of Business Card Loans and earn 10% of the interest
received from these loans. We are required to pay out on our guarantees of loans for
which contractual payment are overdue by 90&nbsp;days or more. Borrowers of Business Card
Loans are neither required to have a guarantor nor to provide collateral.</TD>
</TR>

<TR>
    <TD style="font-size: 12pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Real Estate Finance</I>: Real Estate Finance is a secured
loan designed for small or medium-sized corporations.

We guarantee 10% of loans outstanding and corresponding
interest receivable from borrowers of Real Estate Finance and earn 10% of the interest
received from these loans. We are required to pay out on our guarantees of loans for
which contractual payment are overdue by 30&nbsp;days or more.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We are also liable as a guarantor for bank loans borrowed by Chuo Mitsui Finance Service, and
received guarantee fees equivalent to an annual interest rate of 1.0%.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We maintain reserves for estimated guarantee losses in our other liabilities on our balance
sheet.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;<B><I>Other</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our consolidated subsidiary NIS Lease guarantees accounts receivable of certain borrowers for
a fee determined based on borrower&#146;s creditworthiness and contract duration. As of March&nbsp;31, 2005
and 2006, the fee rate ranged from 0.5% to 5.0% and 0.4% to 21.6%, with an average fee rate of
1.95% and 2.25%, respectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We maintain reserves for estimated guarantee losses in our other liabilities on our balance
sheet.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Upon payment of any guarantees, we record corresponding receivables from the borrower, which
are offset by allowances for deemed uncollectible amounts. Receivables from payment of guarantees
were &#165;235&nbsp;million as of March&nbsp;31, 2005 and &#165;663&nbsp;million as of March&nbsp;31, 2006. Those were offset by
allowances of &#165;208&nbsp;million as of March&nbsp;31, 2005 and &#165;588&nbsp;million as of March&nbsp;31, 2006, and the
resulting amounts were recorded in our other assets on our balance sheets.
</DIV>

<P align="center" style="font-size: 10pt">-74-
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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table shows information about our guaranteed borrowings, guaranteed accounts
receivable, guarantees for borrowings of other companies and reserves for guarantee losses as of
March&nbsp;31, 2005 and 2006:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #000000"><B>As of March 31,</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2006</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7"><B>(in millions)</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Guaranteed borrowings</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">7,343</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">11,886</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Guaranteed accounts receivable</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">358</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">964</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Guarantees for borrowings of other companies:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Shinsei Business Finance</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,645</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Chuo Mitsui Finance Service</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">150</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,920</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Reserves for guarantee losses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">371</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">629</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table shows information about our guarantee fees received and related
administrative and other expenses paid by us during the years ended March&nbsp;31, 2004, 2005 and 2006:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="82%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="0%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="0%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="0%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="10" style="border-bottom: 1px solid #000000"><B>Year ended March 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2006</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="10"><B>(in millions)</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Guarantee fees received from:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Guaranteed borrowings and accounts receivable</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">362</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">845</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">1,386</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Guarantees for borrowings of other companies</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">34</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Total guarantee fees received</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">368</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">879</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,406</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Administrative expenses and other expenses paid</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(255</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(562</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(898</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Guarantee fees received, net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">113</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">317</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">508</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As a result of our guarantee commitments, we paid &#165;89&nbsp;million for the year ended March
31, 2004, &#165;270&nbsp;million for the year ended March&nbsp;31, 2005 and &#165;607&nbsp;million for the year ended March
31, 2006.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>F. Tabular Disclosure of Contractual Obligations.</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table shows our contractual payment obligations under our agreements as of March
31, 2006:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="70%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="0%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="0%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="0%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="0%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="0%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="18" style="border-bottom: 1px solid #000000"><B>Payments Due by Period</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>April 1,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>April 1,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>April 1,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2006 to</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2007 to</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2009 to</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>After</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>March 31,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>March 31,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>March 31,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>April 1,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000"><B>Contractual obligations</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Total</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2007</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2009</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2011</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2011</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="18"><B>(in millions)</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Long-term borrowings<SUP style="font-size: 85%; vertical-align: text-top"> (1)</SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">198,924</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">73,875</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">112,704</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">12,345</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Capital (finance)&nbsp;lease obligations</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,372</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">641</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">639</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">92</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Operating lease obligations</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,497</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">971</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">526</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Purchase commitments<SUP style="font-size: 85%; vertical-align: text-top"> (2)</SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">201,793</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">75,487</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">113,869</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">12,437</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">(1)</TD>
    <TD>&nbsp;</TD>
    <TD>Includes only principal payment obligations.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(2)</TD>
    <TD>&nbsp;</TD>
    <TD>These are obligations pursuant to agreements to purchase goods or services that are
enforceable and legally binding on us and that specify all significant terms.</TD>
</TR>

</TABLE>




<P align="center" style="font-size: 10pt">-75-
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>
<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>G. Safe Harbor.</B>
</DIV>


<DIV style="margin-top: 12pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="left">1.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The safe harbor provided in Section&nbsp;27A of the Securities Act and Section&nbsp;21E of
the Exchange Act (&#147;statutory safe harbors&#148;) shall apply to forward-looking information
provided pursuant to Item&nbsp;5.E and F of this annual report on Form 20-F, provided that the
disclosure is made by: an issuer; a person acting on behalf of the issuer; an outside
reviewer retained by the issuer making statement on behalf of the issuer; or an
underwriter, with respect to information provided by the issuer or information derived
from information provided by the issuer.</TD>
</TR>

<TR>
    <TD style="font-size: 12pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="left">2.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>For purpose of Item&nbsp;5.G.1 of this Item only, all information required by Item&nbsp;5.E
of this Item is deemed to be a &#147;forward looking statement&#148; as that term is defined in the
statutory safe harbors, except for historical facts.</TD>
</TR>

<TR>
    <TD style="font-size: 12pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="left">3.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>With respect to Item&nbsp;5.E of this annual report on Form 20-F, the meaningful
cautionary statements element of the statutory safe harbors will be satisfied if a
company satisfies all requirements of that same Item&nbsp;5.E of this annual report on Form
20-F.</TD>
</TR>

</TABLE>
</DIV>
<DIV align="left">
<A name="108"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Item&nbsp;6. Directors, Senior Management and Employees.</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>A. Directors and Senior Management.</B>

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Directors and Statutory Auditors</B>

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;All of our directors except Hidenori Nakagawa are engaged in our business on a full-time
basis. The business address of all of our directors except Hideo Sakioka is Shinjuku L-Tower 25F,
6-1, Nishi-Shinjuku l-chome, Shinjuku-ku, Tokyo 163-1525, Japan. The business address of Hideo
Sakioka is 7-6, Chifunemachi 5-chome, Matsuyama City, Ehime 790-8584, Japan. No director or member
of senior management was selected pursuant to any arrangement or understanding with major
shareholders, customers, suppliers or others.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Except as described below with respect to Hideo Sakioka, Kunihiko Sakioka and Akio Sakioka,
none of our directors are related to one another.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table provides detailed information about our directors and statutory auditors.
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="20%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="23%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="44%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center"><B>Position</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center"><B>Name</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center"><B>(Executive Officer</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>(Date of Birth)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Position)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Business Career</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Kunihiko Sakioka<SUP style="font-size: 85%; vertical-align: text-top"> (1)</SUP><br>
(January&nbsp;10, 1962)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Chairman,
Representative
Director and Co-CEO
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">April&nbsp;1986
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Joined Nissin Co., Ltd.</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">September&nbsp;1988
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Manager of Hiroshima Branch</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">March&nbsp;1989
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">December&nbsp;1989
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director and General Manager of Finance Department</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">February&nbsp;1991
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Executive Director, Advice to Finance and System
Information</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">December&nbsp;1992
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Senior Executive Director and Head of Sales &#038; Marketing
Control</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">October&nbsp;1996
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Representative Senior Executive Director and General
Manager of Tokyo Branch Office, Advice to Sales &#038;
Marketing Control</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">April, 1998
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Representative Senior Executive Director and Head of
Sales &#038; Marketing Control</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">June&nbsp;2000
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">President and Representative Director, and Head of
Sales &#038; Marketing Control</TD>
</TR>


<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">March&nbsp;2004
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Representative Director of Shuho Ltd. (current position)</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">July&nbsp;2005
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">President and Representative Director and Executive
Officer</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">June&nbsp;2006
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Chairman and Representative Director and Co-CEO
(current position)</TD>
</TR>




<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">-76-
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="20%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="23%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="44%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center"><B>Position</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center"><B>Name</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center"><B>(Executive Officer</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>(Date of Birth)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Position)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Business Career</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Shinsuke Amiya<br>
(October&nbsp;3, 1957)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">President,
Representative
Director and Co-CEO
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">June&nbsp;1994
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Joined Merrill Lynch Securities Inc. (currently Merrill
Lynch Japan Securities Co., Ltd.)</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">June&nbsp;2003
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director and Head of Investment Banking Group</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">March&nbsp;2005
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Vice-Chairman and Head of Investment Banking Group</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">May&nbsp;2006
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Joined Nissin Co., Ltd.</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Special Advisor</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">June&nbsp;2006
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">President and Representative Director and Co-CEO
(current position)</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Hideo Sakioka<SUP style="font-size: 85%; vertical-align: text-top"> (1) (2)</SUP><br>
(May&nbsp;14, 1928)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director and Advisor
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">August&nbsp;1953<br>
May&nbsp;1960
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Started money lending business
<BR>Founded Nissin Shoji Co., Ltd. (currently Nissin Co., Ltd.)<br>
President and Representative Director</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">January&nbsp;1980
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Founded Nissin Building Co., Ltd.
<BR>President and Representative Director</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">March&nbsp;1989
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Representative Director of Shuho Ltd.</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">June&nbsp;2000
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Chairman and Representative Director</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">May&nbsp;2001
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">President and Representative Director of Nissin
Building Co., Ltd. (current position)</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">January&nbsp;2004
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director of Nissin Servicer Co., Ltd. (current position)</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">June&nbsp;2006
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director and Advisor (current position)</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Hitoshi Higaki<br>
(December&nbsp;14, 1959)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Senior Executive
Director and
Executive Officer
<BR>(Head of Group
Strategy)
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">November&nbsp;1983<br>
March&nbsp;1994
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Joined Nissin Co., Ltd.<br>
General Manager of Accounting Department and Finance
Department</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">June&nbsp;1994
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director and General Manager of General Affairs
Department</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">May&nbsp;1995
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director, General Manager of Corporate Planning
Department and Accounting Department</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">June&nbsp;1996
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director and General Manager of Corporate Planning
Department, Advice to Accounting Department</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">June&nbsp;2000
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Executive Director and General Manager of Corporate
Planning Department</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">April&nbsp;2003
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Executive Director and Head of Operations Control</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">July&nbsp;2004
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Concurrently General Manager of Corporate Planning
Department</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">August&nbsp;2004
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Statutory Auditor of Venture Link Co., Ltd. (current
position)</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">July&nbsp;2005
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Senior Executive Director and Executive Officer</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">June&nbsp;2006
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Senior Executive Director, Executive Officer and Head
of Group Strategy (current position)</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Toshioki Otani<br>
(December&nbsp;22, 1970)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Executive Director
and Executive
Officer
(Head of Sales &#038;
Marketing)
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">April&nbsp;1994<br>
September&nbsp;1995<br>
July&nbsp;2000
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Joined Nissin Co., Ltd.<br>
Manager of Kumamoto Branch<br>
General Manager of Finance Department</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">January&nbsp;2001
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">General Manager of Finance Department and Business
Development Department</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">April&nbsp;2002
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">General Manager of Eastern Japan Sales Department</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">June&nbsp;2002
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">April&nbsp;2003
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director and General Manager of Business Development
Department</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">November&nbsp;2003
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">President and Representative Director of NIS Lease Co.,
Ltd. (current position)</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">July&nbsp;2004
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director and Deputy Head of Sales &#038; Marketing and
General Manager of Business Development Department</TD>
</TR>


<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">July&nbsp;2005
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Executive Director, Executive Officer and Head of Sales
&#038; Marketing and General Manger of Sales Department</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">November&nbsp;2005
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Concurrently General Manager of Osaka Branch Office</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">June&nbsp;2006
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Executive Director, Executive Officer and Head of Sales
&#038; Marketing (current position)</TD>
</TR>


<!-- End Table Body -->


</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">-77-
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="20%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="23%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="44%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center"><B>Position</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center"><B>Name</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center"><B>(Executive Officer</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>(Date of Birth)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Position)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Business Career</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Akihiro Nojiri<br>
(November&nbsp;15, 1968)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Executive Director
and Executive
Officer
<BR>(Head of Operations
Control)
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">April&nbsp;1991<br>
August&nbsp;2003<br>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Joined Ministry of Finance<br>
Joined Nissin Co., Ltd.<br>General Manager, Assistant to President</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">June&nbsp;2004
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">July&nbsp;2004
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director and General Manager of Finance Department</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">July&nbsp;2005
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Executive Director, Executive Officer and General
Manager of Finance Department</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">February&nbsp;2006
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Executive Director, Executive Officer and Head of
Operations Control (current position)</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Yunwei Chen<BR>
(January&nbsp;16, 1969)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Executive Director
and Executive
Officer<BR>
(General Manager of
Investor Relations
Department and
Officer-in-Charge
East Asia Region)
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">April&nbsp;1998<BR>
April&nbsp;2001<BR>
September&nbsp;2002<BR><BR>


April&nbsp;2003
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Joined Nissin Co., Ltd.<BR>
Manager of Corporate Planning Department 2nd Section<BR>
Concurrently Assistant General Manager of Corporate
Planning Department<br>
General Manager of Investor Relations Department</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">June&nbsp;2003
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">July&nbsp;2004
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Chairman of Matsuyama Nissin Investment &#038; Consulting
(Shanghai) Co., Ltd. (currently renamed to Nissin
Leasing (China) Co., Ltd.) (current position)</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">July&nbsp;2005
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Executive Director, Executive Officer, General Manager
of Investor Relations Department and Officer-in-Charge
East Asia Region (current position)</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Keishi Ishigaki<br>
(April&nbsp;3, 1971)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director and
Executive Officer
(Deputy Head of
Sales &#038; Marketing
and Sales &#038;
Marketing Group
Manager)
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">April&nbsp;1995<br>
April&nbsp;1996<br>
April&nbsp;2001<br>
April&nbsp;2002
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Joined Nissin Co., Ltd.<br>
Manager of Koriyama Branch<br>
General Manager of Finance Department<br>
General Manager of Osaka Branch Office and Western
Japan Sales Department</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">June&nbsp;2002
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">April&nbsp;2003
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director and General Manager of Finance Department</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">July&nbsp;2004
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director and General Manager, Advice to Sales &#038;
Marketing Control Division</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">August&nbsp;2004
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director of Venture Link Co., Ltd. (current position)</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">July&nbsp;2005
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Concurrently Executive Officer</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">June&nbsp;2006
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director, Executive Officer, Deputy Head of Sales &#038;
Marketing and Sales &#038; Marketing Group Manager (current
position)</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Katsutoshi Shimizu<br>
(April&nbsp;9, 1954)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director and
Executive Officer
(Deputy Head of
Sales &#038; Marketing,
Real Estate
Business Group
Manager and General
Manager of Real
Estate Business
Control Department)
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">April&nbsp;1999<br>
October&nbsp;2002<br>
June&nbsp;2003<br>
January&nbsp;2004<br><br>
March&nbsp;2004<br><br>
September&nbsp;2005
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Joined RISA Partners, Inc.
<BR>Director<br>
Joined A-MAX Corporation
<BR>Director<br>
Joined Nissin Servicer Co., Ltd.<br>
Director and General Manager of Credit Screening
Department<br>
Director and General Manager of Asset Management
Department<br>
Director, Advice to Asset Management Department
<BR>(current position)</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Joined Nissin Co., Ltd.</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">General Manager of Real Estate Business Control
Department</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">February&nbsp;2006
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Concurrently Executive Officer</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">June&nbsp;2006
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director, Executive Officer, Deputy Head of Sales &#038;
Marketing, Real Estate Business Group Manager and
General Manager of Real Estate Business Control
Department (current position)</TD>
</TR>


<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">-78-
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="20%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="23%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="44%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center"><B>Position</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center"><B>Name</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center"><B>(Executive Officer</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>(Date of Birth)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Position)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Business Career</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Akira Imaki<br>
(February&nbsp;15, 1949)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director and
Executive Officer
(Deputy Head of
Sales &#038; Marketing
and Strategic
Business
Development Group
Manager)
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">October&nbsp;2003<br><br>
September&nbsp;2004<br>
October&nbsp;2005<br>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Joined Capital Partners Securities Co., Ltd.
<BR>Managing Director of Investment Banking Division<br>
Joined Mercer Human Resource Consulting LLC.<br>
Joined Nissin Co., Ltd.<br>
General Manager, Assistant to President, Sales &#038;
Marketing Control Division</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">April&nbsp;2006
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Concurrently Executive Officer</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">June&nbsp;2006
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director, Executive Officer, Deputy Head of Sales &#038;
Marketing and Strategic Business Development Group
Manager (current position)</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Hidenori Nakagawa<SUP style="font-size: 85%; vertical-align: text-top"> (3)</SUP>
(November&nbsp;20, 1967)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director (Outside)
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">April&nbsp;1992
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Registered Daiichi Tokyo Bar Association
Joined the Law offices of Nagashima &#038; Ohno (currently
the Law offices of Nagashima Ohno &#038; Tsunematsu)</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">September&nbsp;1999
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Joined Merrill Lynch Securities Inc. (currently Merrill
Lynch Japan Securities Co., Ltd.)</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">June&nbsp;2004
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Joined TMI Associates as a Partner (current position)</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">June&nbsp;2006
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Outside Director (current position)</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Yoshiki Kishimura<br>
(August&nbsp;25, 1944)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Statutory Auditor<BR>
(Standing)
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">May&nbsp;1980<br>
February&nbsp;2001
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Joined Sanyo Shinpan Finance Co., Ltd.<br>
Joined Nissin Co., Ltd.</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Corporate Adviser of Finance Department</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">June&nbsp;2003
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Statutory Auditor (current position)</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">August&nbsp;2004
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Statutory Auditor of Venture Link Co., Ltd. (current
position)</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Akio Sakioka<SUP style="font-size: 85%; vertical-align: text-top"> (2)</SUP><br>
(September&nbsp;22,1950)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Statutory Auditor<BR>
(Standing)
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">March&nbsp;1971<br>
January&nbsp;1976
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Joined Nissin Co., Ltd.<br>
Manager of Takamatsu Branch</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">April&nbsp;1984
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">July&nbsp;1994
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Executive Director and General Manager of Tokyo Office</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">October&nbsp;1996
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Executive Director and General Manager of Finance
Department</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">October&nbsp;2000
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Executive Director, Advice to Business Audit Department</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">June&nbsp;2002
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Retired from Director</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Statutory Auditor (current position)</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Isao Narimatsu<SUP style="font-size: 85%; vertical-align: text-top">(4)</SUP><br>
(July&nbsp;6, 1949)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Statutory Auditor<BR>
(Outside)
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">April&nbsp;1979<br>
July&nbsp;1981
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Joined Miyata Certified Public Tax Accountant Office<br>
Opened Isao Narimatsu Certified Public Tax Accountant<BR>
Office</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">June&nbsp;2001
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Statutory Auditor (current position)</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Katsuhiko Asada<SUP style="font-size: 85%; vertical-align: text-top"> (4)</SUP><br>
(February&nbsp;10, 1955)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Statutory Auditor<BR>
(Outside)
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">October&nbsp;1979
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Joined Arthur Andersen Tokyo Office (currently KPMG
AZSA &#038; Co.)</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">September&nbsp;1985
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Opened Katsuhiko Asada Certified Public Accountant Firm</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">December&nbsp;2001
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Opened Konishi &#038; Asada Certified Public Accountant Firm</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">June&nbsp;2004
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Statutory Auditor (current position)</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">(1)</TD>
    <TD>&nbsp;</TD>
    <TD>Kunihiko Sakioka is the second son of Hideo Sakioka.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(2)</TD>
    <TD>&nbsp;</TD>
    <TD>Akio Sakioka is the nephew of Hideo Sakioka.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(3)</TD>
    <TD>&nbsp;</TD>
    <TD>Hidenori Nakagawa is a Director assigned from outside the
Group pursuant to Article&nbsp;2-15 of
the Corporate Law.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(4)</TD>
    <TD>&nbsp;</TD>
    <TD>Isao Narimatsu and Katsuhiko Asada are Statutory Auditors
assigned from outside the Group pursuant to Article&nbsp;2-16 of the Corporate Law.</TD>
</TR>

</TABLE>


<P align="center" style="font-size: 10pt">-79-
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">






<DIV style="margin-top: 12pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><B>B.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Compensation.</B></TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The aggregate compensation to our directors and statutory auditors as a group for the year
ended March&nbsp;31, 2006 was &#165;579&nbsp;million, which included &#165;392&nbsp;million for their services as directors
and statutory auditors, &#165;82&nbsp;million as compensation to the directors as our employees and &#165;105
million in bonuses.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Previously, in accordance with customary Japanese business practices, a retiring director or
statutory auditor would receive a lump-sum retirement payment, which amount was reserved, subject
to the approval of the general meeting of shareholders. However, all of our retirement plans have
been terminated and retirement liabilities as of termination date are now paid at the time of
retirement. During the year ended March&nbsp;31, 2006, we did not make any retirement payments to any
director or statutory auditor. As of March&nbsp;31, 2006, the balance of our retirement liability for
our directors and statutory auditors was &#165;382&nbsp;million.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;During the year ended March&nbsp;31, 2006, we issued stock options exercisable for a total of
1,920,000 shares to directors and statutory auditors in connection with our July&nbsp;2005 and March
2006 stock option plans. During the same year, our directors and statutory auditors exercised, as
a group, stock options for a total of 4,608,000 shares at a total price of &#165;194&nbsp;million. For a
description of our stock option plans, see Item&nbsp;6.E of this annual report on Form 20-F.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>C. Board Practices.</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table shows the terms of office of our directors and statutory auditors and
certain other information:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Start of</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Expiration of</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Name</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Start of first term</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>current term</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>current term</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Directors:</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Kunihiko Sakioka</DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">March 1989</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">June 2006</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">June 2007</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Shinsuke Amiya</DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">June 2006</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">June 2006</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">June 2007</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Hideo Sakioka</DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">May 1960</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">June 2006</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">June 2007</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Hitoshi Higaki</DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">June 1994</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">June 2006</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">June 2007</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Toshioki Otani</DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">June 2002</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">June 2006</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">June 2007</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Akihiro Nojiri</DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">June 2004</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">June 2006</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">June 2007</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Yunwei Chen</DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">June 2003</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">June 2006</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">June 2007</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Keishi Ishigaki</DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">June 2002</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">June 2006</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">June 2007</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Katsutoshi Shimizu</DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">June 2006</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">June 2006</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">June 2007</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Akira Imaki</DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">June 2006</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">June 2006</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">June 2007</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Hidenori Nakagawa<SUP style="font-size: 85%; vertical-align: text-top"> (1)</SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">June 2006</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">June 2006</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">June 2007</TD>
</TR>


<TR><TD>&nbsp;</TD></TR>

<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Statutory Auditors:</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>

    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Yoshiki Kishimura</DIV></TD>
    <TD>&nbsp;</TD>

    <TD colspan="3" align="center">June 2003</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">June 2003</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">June 2007</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Akio Sakioka</DIV></TD>

    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">June 2002</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">June 2005</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">June 2009</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Isao Narimatsu<SUP style="font-size: 85%; vertical-align: text-top"> (2)</SUP></DIV></TD>
    <TD>&nbsp;</TD>

    <TD colspan="3" align="center">June 2001</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">June 2004</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">June 2008</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Katsuhiko Asada<SUP style="font-size: 85%; vertical-align: text-top"> (2)</SUP></DIV></TD>

    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">June 2004</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">June 2004</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">June 2008</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">(1)</TD>
    <TD>&nbsp;</TD>
    <TD>Outside director pursuant to the Article&nbsp;2-15 of the Corporate Law.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(2)</TD>
    <TD>&nbsp;</TD>
    <TD>Outside statutory auditors pursuant to the Article&nbsp;2-16 of the Corporate Law.</TD>
</TR>

</TABLE>


<P align="center" style="font-size: 10pt">-80-
</DIV>

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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Board of Directors</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our board of directors has the ultimate responsibility for the administration of our affairs.
Our articles of incorporation provide for not more than twelve directors. Directors are elected at
a general meeting of shareholders, and the normal term of office of directors is one year, although
they may serve any number of consecutive terms. The board of directors elects one or more
representative directors, who have the authority individually to represent us. The board of
directors elects one president and may also elect from among its members a chairman of the board of
directors, one or more executive vice presidents, senior executive directors and executive
directors. Our executive officers serve at the discretion of the board of directors.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;None of our directors have service contracts with us or any of our subsidiaries providing for
benefits upon termination of employment.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Board of Statutory Auditors</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our articles of incorporation provide for not more than four statutory auditors, and the
Japanese Corporate Law sets the minimum at three for large companies, including us, and that, at
least 50% of statutory auditors must be from outside our company. Statutory auditors are elected
at a general meeting of shareholders, and the normal term of office of a statutory auditor is four
years, although they may serve any number of consecutive terms. Statutory auditors are under a
statutory duty to review the administration of our affairs by the directors and to examine our
financial statements and business reports to be submitted by the board of directors to the general
meetings of shareholders. Statutory auditors also have a statutory duty to provide their report to
the board of statutory auditors, which must submit its auditing reports to the board of directors.
They have the duties to attend meetings of the board of directors and to express their opinions,
but they are not entitled to vote. The statutory auditors elect from among themselves one or more
standing auditors who serve on a full-time basis. See Exhibit&nbsp;1.4 to this annual report on Form
20-F for our regulations of our board of statutory auditors.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Independent Registered Public Accounting Firm</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition to statutory auditors, we must appoint independent certified public accountants,
who have the statutory duties of examining the financial statements to be submitted by the board of
directors to the general meetings of shareholders, reporting to the board of statutory auditors and
directors, and examining the financial statements to be filed with the relevant local finance
bureau of the Ministry of Finance. Since the beginning of the year ended March&nbsp;31, 1992, we have
appointed BDO Sanyu &#038; Co., a member of the Japanese Institute of Certified Public Accountants and a
PCAOB registered public
accounting firm, as our independent certified public accountants. Its address is Aqua Dojima
Nishi-kan 14F, 4-16, Dojimahama 1-chome, Kita-ku, Osaka 530-0004, Japan.
</DIV>

<P align="center" style="font-size: 10pt">-81-
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Significant Differences Between Our Corporate Governance Practices and Those of New York Stock
Exchange-listed U.S. Companies</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Companies listed on the New York Stock Exchange, or NYSE, must comply with certain standards
regarding corporate governance under Section&nbsp;303A of the NYSE Listed Company Manual. However,
listed companies that are foreign private issuers, such as us, are permitted to follow home country
practice in lieu of certain provisions of Section&nbsp;303A.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table shows the significant differences between the corporate governance
practices followed by U.S. listed companies under Section&nbsp;303A of the NYSE Listed Company Manual
and those followed by us:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="48%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="48%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center"><B>Corporate Governance Practices Followed</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center"><B>Corporate Governance Practices Followed</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>by NYSE-listed U.S. Companies</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>by Us</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">A NYSE-listed U.S. company must have
a majority of directors meeting the
independence requirements under
Section&nbsp;303A of the NYSE Listed
Company Manual.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Under the Corporate Law effective as
of May&nbsp;1, 2006, Japanese joint stock
corporations are permitted to choose
between the traditional corporate
governance system based on a board
of statutory auditors (the
&#147;statutory auditor system&#148;) and a
corporate governance system based on
committees (the &#147;committee system&#148;).
The vast majority of Japanese
companies employ the statutory
auditor system. For Japanese
companies with the statutory auditor
system, including us, the Corporate Law
of Japan has no independence
requirement with respect to
directors. The task of overseeing
management and accounting firms is
assigned to the statutory auditors,
who are separate from the company&#146;s
management. Pursuant to the
Corporate Law which came into effect
as of May&nbsp;1, 2006, Japanese
companies with a board of statutory
auditors, including us, are required
to have at least 50% of our
statutory auditors be outside
statutory auditors who must meet
independence requirements under the
Corporate Law, by which he or she
must have not served as a director,
accounting officer (<I>kaikei-sanyo</I>),
executive officer, manager or any
other employee of the company or any
of its subsidiaries. Currently, we
have two outside statutory auditors.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">-82-
</DIV>

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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="48%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="48%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center"><B>Corporate Governance Practices Followed</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center"><B>Corporate Governance Practices Followed</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>by NYSE-listed U.S. Companies</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>by Us</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">A NYSE-listed U.S. company must have
an audit committee composed entirely
of independent directors, and the
audit committee must have at least
three members.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">As discussed above, we employ the
statutory auditor system. Under
this system, the board of statutory
auditors is a legally separate and
independent body from the board of
directors.</TD>
</TR>
<TR style="font-size: 6pt"><TD>&nbsp;</TD></TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">The function of the
board of statutory auditors is
similar to that served by
independent directors, including
those who are members of the audit
committee, of a U.S. company: to
monitor the performance of the
directors, and review and express
an opinion on the method of auditing by
our independent public accounting
firm and on such accounting firm&#146;s
audit reports, for the protection of
the company&#146;s shareholders.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Japanese companies with a board of
statutory auditors, including us,
are required to have at least three
statutory auditors. Currently, we
have four statutory auditors. The
term of each statutory auditor is
four years. In contrast, the term
of each director is one year.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Since July&nbsp;31, 2005, when the
requirements of Rule&nbsp;10A-3 under the
U.S. Securities Exchange Act of 1934
relating to listed company audit
committees became applicable to
foreign private issuers, we have
relied on an exemption under that
rule, which is available to foreign
private issuers with boards of
statutory auditors meeting certain
criteria. We make disclosure
regarding such reliance in Item&nbsp;16D
of this annual report on Form&nbsp;20-F.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">A NYSE-listed U.S. company must have
a nominating/corporate governance
committee composed entirely of
independent directors.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Directors are elected at a meeting
of shareholders. The board of
directors does not have the power to
fill vacancies in the board.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Statutory auditors are also elected
at a meeting of shareholders. Under
the Corporate Law, a proposal to a
meeting of shareholders by our board
of directors to elect a statutory
auditor must be approved by a
resolution of its board of statutory
auditors. The board of statutory
auditors is empowered to adopt a
resolution requesting that our
directors submit a proposal for
election of a statutory auditor to a
meeting of shareholders. Statutory
auditors have the right to state
their opinion concerning election
and resignation of a statutory
auditor at the meeting of
shareholders.</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">-83-
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="48%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="48%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center"><B>Corporate Governance Practices Followed</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center"><B>Corporate Governance Practices Followed</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>by NYSE-listed U.S. Companies</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>by Us</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">A NYSE-listed U.S. company must have
a compensation committee composed
entirely of independent directors.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">We determine the compensation for
our directors and statutory auditors
pursuant to the statutory auditor
system, which we employ. Unless
otherwise provided in our articles
of incorporation, total amounts of
compensation for our directors and
statutory auditors are respectively
proposed to, and voted on, a meeting
of shareholders. Our articles of
incorporation do not provide for
such total amounts. Once the
proposals for the total amounts of
compensation are approved at the
meeting of shareholders, our board
of directors allocates the total
amount for the directors among its
members and among our statutory
auditors, unless there is a
resolution at the shareholders&#146;
meeting or a provision in the
articles of incorporation relating
to allocation of compensation, for
the statutory auditors to allocate
the total amount among themselves.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">A NYSE-listed U.S. company must
generally obtain shareholder
approval with respect to any equity
compensation plan.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Under the Corporate Law, new share
subscription rights as stock options
granted to directors and employees
are not deemed to be an issuance of
new share subscription rights with
specifically favorable conditions,
even if the stock options are issued
at no charge, since a company would
receive benefits from the issuance
by enhancing their incentives for
services. While we are not required
to obtain shareholder approval for
any stock option to be issued to our
directors and employees, we must
obtain shareholder approval for
stock options if the options are to
be issued as compensation for our
directors and statutory auditors.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">A NYSE-listed U.S. company must have
an internal audit function, which
must be the sole responsibility of
the audit committee and may not be
allocated to a different committee.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">As discussed above, we employ the
statutory auditor system. Under
this system, our internal audit
function is maintained by the
Internal Audit Department. The
Internal Audit Department is
separate from the board of
statutory auditors, and reports
directly to our president.</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<P align="center" style="font-size: 10pt">-84-
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>
<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>D. Employees.</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our employees are mainly located in Japan. The following table shows the number of our
full-time, part-time and temporary employees at the end of the each of the years indicated:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="11" style="border-bottom: 1px solid #000000"><B>As of March 31,</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2006</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Full-time:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Integrated financial services<SUP style="font-size: 85%; vertical-align: text-top"> (1)</SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">811</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">759</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">924</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Loan servicing</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">40</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">59</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">74</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Sub-total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">851</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">818</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">998</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Part-time<SUP style="font-size: 85%; vertical-align: text-top"> (2)</SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">87</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">89</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">101</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Temporary<SUP style="font-size: 85%; vertical-align: text-top"> (3)</SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">181</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">181</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">198</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,119</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,088</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,297</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">(1)</TD>
    <TD>&nbsp;</TD>
    <TD>Includes the number of full-time employees engaged in other businesses, which was 2 at March
31, 2004, 33 at March&nbsp;31, 2005 and 23 at March&nbsp;31, 2006.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(2)</TD>
    <TD>&nbsp;</TD>
    <TD>The average number of part-time employees was 94 for the year ended March&nbsp;31, 2004, 85 for
the year ended March&nbsp;31, 2005 and 100 for the year ended March&nbsp;31, 2006.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(3)</TD>
    <TD>&nbsp;</TD>
    <TD>Temporary employees are employees dispatched from personnel agencies.</TD>
</TR>

</TABLE>



<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have never experienced any labor disputes and consider our labor relations to be
excellent. None of our employees are members of a trade union or participate in any collective
bargaining organizations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We consider our levels of remuneration, fringe benefits, working conditions and other
allowances, which include lump-sum payments, to be generally competitive with those offered in
Japan by other enterprises in our industry. Our employees normally must retire when they reach 60
years of age. We terminated all of our sponsored pension and retirement plans, and now only
participate in the mandatory fully-funded contributory funded plan under the Japanese Welfare
Pension Insurance Law.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>E. Share Ownership.</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Share Ownership by Directors and Statutory Auditors</B>

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table provides information about our directors, who include our senior
management, and statutory auditors. The shareholdings of certain directors in the table below
overlap to the extent that multiple individuals may be deemed to share beneficial ownership over
the same shares:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="24%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="21%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="19%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center"><B>Percentage of</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Number of Shares</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center"><B>Common Stock</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Beneficially</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center"><B>Outstanding as of</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Owned as of</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center"><B>March 31,</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Name</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Position</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Date of Birth</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>March 31, 2006<SUP style="font-size: 85%; vertical-align: text-top"> (1)</SUP></B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>2006<SUP style="font-size: 85%; vertical-align: text-top"> (2)</SUP></B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><B>Directors:</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Kunihiko Sakioka
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Chairman,
Representative
Director and Co-CEO
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">January&nbsp;10, 1962
</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">753,987,732
</TD>
    <TD valign="top"><SUP style="font-size: 85%; vertical-align: text-top">(3)</SUP></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">27.6%<SUP style="font-size: 85%; vertical-align: text-top"> (3)</SUP></TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Shinsuke Amiya
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">President,
Representative
Director and Co-CEO
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">October&nbsp;3, 1957
</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&#151;</TD>
    <TD nowrap align="LEFT" valign="top"><SUP style="font-size: 85%; vertical-align: text-top">(5)</SUP>
</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&#151;<SUP style="font-size: 85%; vertical-align: text-top">(5)</SUP></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Hideo Sakioka
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director and Advisor
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">May&nbsp;14, 1928
</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">743,074,044</TD>
    <TD nowrap align="left" valign="top"><SUP style="font-size: 85%; vertical-align: text-top">(4)</SUP>
</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">27.2<SUP style="font-size: 85%; vertical-align: text-top"> (4)</SUP></TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">-85-
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="24%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="21%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="19%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center"><B>Percentage of</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Number of Shares</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center"><B>Common Stock</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Beneficially</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center"><B>Outstanding as of</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Owned as of</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center"><B>March 31,</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Name</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Position</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Date of Birth</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>March 31, 2006<SUP style="font-size: 85%; vertical-align: text-top"> (1)</SUP></B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>2006<SUP style="font-size: 85%; vertical-align: text-top"> (2)</SUP></B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Hitoshi Higaki
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Senior Executive
Director and
Executive Officer
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">December&nbsp;14, 1959
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">7,843,128</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">*</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Toshioki Otani
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Executive Director
and Executive
Officer
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">December&nbsp;22, 1970
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">3,662,308</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">*</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Akihiro Nojiri
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Executive Director
and Executive
Officer
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">November&nbsp;15, 1968
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">682,120</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">*</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Yunwei Chen
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Executive Director
and Executive
Officer
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">January&nbsp;16, 1969
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">3,269,116</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">*</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Keishi Ishigaki
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director and
Executive Officer
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">April&nbsp;3, 1971
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">3,003,160</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">*</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Katsutoshi Shimizu
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director and
Executive Officer
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">April&nbsp;9, 1954
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">96,000</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">*</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Akira Imaki
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director and
Executive Officer
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">February&nbsp;15, 1949
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&#151;</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&#151;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Hidenori Nakagawa
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director (Outside)
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">November&nbsp;20, 1967
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&#151;</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&#151;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><B>Statutory Auditors:</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Yoshiki Kishimura
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Statutory Auditor<BR>
(Standing)
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">August&nbsp;25, 1944
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">2,001,664</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">*</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Akio Sakioka
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Statutory Auditor<BR>
(Standing)
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">September&nbsp;22, 1950
</TD>
    <TD>&nbsp;</TD>    <TD>&nbsp;</TD>
    <TD nowrap colspan="1" align="right" valign="top">24,620,032<SUP style="font-size: 85%; vertical-align: text-top"></SUP>
</TD>    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">*</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Isao Narimatsu
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Statutory Auditor<BR>
(Outside)
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">July&nbsp;6, 1949
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">768,000</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">*</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Katsuhiko Asada
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Statutory Auditor<BR>
(Outside)
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">February&nbsp;10, 1955
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">144,000</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">*</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">(1)</TD>
    <TD>&nbsp;</TD>
    <TD>As adjusted for our April&nbsp;2006 stock split.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(2)</TD>
    <TD>&nbsp;</TD>
    <TD>Asterisks indicate beneficial ownership of less than 1%.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(3)</TD>
    <TD>&nbsp;</TD>
    <TD>Comprised of 89,610,440 over which Kunihiko Sakioka has sole voting and dispositive power;
335,702,016 shares held by Nissin Building Co., Ltd. (&#147;Nissin Building&#148;) over which Kunihiko
Sakioka may be deemed to share beneficial ownership with Hideo Sakioka and voting or
dispositive power with Michimasa Sakioka and Midori Moriyama; and 328,675,276 shares held by
Shuho Ltd. (&#147;Shuho&#148;) over which Kunihiko Sakioka may be deemed to share voting or dispositive
power with Hideo Sakioka. Exclude shareholdings of other Sakioka family members. Members of
the Sakioka family, including the ones listed above, directly and indirectly held an aggregate
of 1,022,230,316 shares, or 37.4% of our outstanding shares of common stock, as of March&nbsp;31,
2006.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(4)</TD>
    <TD>&nbsp;</TD>
    <TD>Comprised of 78,696,752 shares over which Hideo Sakioka has sole voting and dispositive
power; 335,702,016 shares held by Nissin Building over which Hideo Sakioka may be deemed to
share voting or dispositive power with Kunihiko Sakioka, Michimasa Sakioka and Midori
Moriyama; and 328,675,276 shares held by Shuho over which Hideo Sakioka may be deemed to share
voting or dispositive power with Kunihiko Sakioka. Exclude shareholding of other Sakioka
family members. Members of the Sakioka family, including the ones listed above, directly and
indirectly held an aggregate of 1,022,230,316 shares, or 37.4% of our outstanding shares of
common stock, as of March&nbsp;31, 2006.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(5)</TD>
    <TD>&nbsp;</TD>
    <TD>In June&nbsp;2006, Shinsuke Amiya acquired 1,000,000 shares from Shuho. As a result, the number
of shares beneficially owned by Kunihiko Sakioka and Hideo Sakioka decreased by 1,000,000
shares, respectively.</TD>
</TR>

</TABLE>



<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of March&nbsp;31, 2006, our directors and statutory auditors, as a group, owned
878,774,012 shares of common stock, if the shares of Nissin Building and Shuho are included,
representing 32.2% of our outstanding common stock. Other than Kunihiko Sakioka and Hideo Sakioka,
whose holdings are disclosed above, no director or statutory auditor owned 1% or more of our
shares.
</DIV>

<P align="center" style="font-size: 10pt">-86-
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Stock Option Plans</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have the following stock option plans, where upon exercise of stock options we grant to
directors and employees a specified number of shares:
</DIV>

<DIV style="margin-top: 12pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


<TR>
    <TD style="font-size: 12pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>March&nbsp;2006 Stock Option Plan</I>: We granted options exercisable for a total of
1,920,000 shares at a purchase price per share of&nbsp;&#165;131 to 28 of our directors and
employees and those of our subsidiaries and affiliates on March&nbsp;23, 2006. These are
exercisable until March&nbsp;31, 2009.</TD>
</TR>

<TR>
    <TD style="font-size: 12pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>July&nbsp;2005 Stock Option Plan</I>: We granted stock options exercisable for a total of
14,400,000 shares at a purchase price per share of &#165;58 to 251 of our directors and
employees and those of our subsidiaries and affiliates on July&nbsp;15, 2005. These are
exercisable until July&nbsp;31, 2008.</TD>
</TR>

<TR>
    <TD style="font-size: 12pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>April&nbsp;2005 Stock Option Plan</I>: We granted stock options exercisable for a total of
7,142,400 shares at a purchase price per share of &#165;67 to 120 of our employees and those
of our subsidiaries and affiliates on April&nbsp;21, 2005. These are exercisable until
April&nbsp;30, 2008.</TD>
</TR>

<TR>
    <TD style="font-size: 12pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>January&nbsp;2005 Stock Option Plan</I>: We granted stock options exercisable for a total of
768,000 shares at a purchase price per share of &#165;55 to 9 of our employees on January
20, 2005. These are exercisable until January&nbsp;31, 2008.</TD>
</TR>

<TR>
    <TD style="font-size: 12pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>July&nbsp;2004 Stock Option Plan</I>: We granted stock options exercisable for a total of
63,936,000 shares at a purchase price per share of &#165;53 to 1,149 of our directors and
employees and those of our subsidiaries and affiliates on July&nbsp;15, 2004. These are
exercisable until July&nbsp;31, 2007.</TD>
</TR>

<TR>
    <TD style="font-size: 12pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>July&nbsp;2003 Stock Option Plan</I>: We granted stock options exercisable for a total of
25,920,000 shares at a purchase price per share of &#165;28 to 183 of our directors and
employees and those of our subsidiaries and affiliates on July&nbsp;16, 2003. These are
exercisable until July&nbsp;31, 2006.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under the Corporate Law, we are not required to obtain shareholder approval for issuance of
stock options to our directors and employees; however, we must obtain shareholder approval for
issuance of stock options to our directors as compensation for their services. A resolution
adopted at our general shareholders&#146; meeting on June&nbsp;24, 2006 allowed us to issue stock options for
up to a maximum annual total of 30,000,000 shares to our directors as compensation, separately from
the revised amount of directors&#146; compensation.
</DIV>

<P align="center" style="font-size: 10pt">-87-
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table shows the stock options exercisable by our directors and statutory
auditors as of March&nbsp;31, 2006:
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="26%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="56%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Number of shares</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>issuable upon exercise</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>of stock options as of</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Name</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Position</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>March 31, 2006</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->

<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><B>Directors:</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Kunihiko Sakioka
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Chairman, Representative Director and Co-CEO
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">160,000</TD>
    <TD nowrap valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Shinsuke Amiya
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">President, Representative Director and Co-CEO
</TD>
    <TD>&nbsp;</TD>    <TD>&nbsp;</TD>
    <TD nowrap colspan="1" align="right" valign="top">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Hideo Sakioka
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director and Advisor
</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="1" align="right" valign="top">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Hitoshi Higaki
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Senior Executive Director and Executive Officer
</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="1" align="right" valign="top">&#151;</TD>
    <TD>&nbsp;</TD>

</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Toshioki Otani
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Executive Director and Executive Officer
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">160,000</TD>
    <TD nowrap valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Akihiro Nojiri
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Executive Director and Executive Officer
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">544,000</TD>
    <TD nowrap valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Yunwei Chen
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Executive Director and Executive Officer
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">544,000</TD>
    <TD nowrap valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Keishi Ishigaki
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director and Executive Officer
</TD>
    <TD>&nbsp;</TD>
<TD>&nbsp;</TD>
    <TD nowrap colspan="1" align="right" valign="top">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Katsutoshi Shimizu
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director and Executive Officer
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">424,000</TD>
    <TD nowrap valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Akira Imaki
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director and Executive Officer
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">120,000</TD>
    <TD nowrap valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Hidenori Nakagawa
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director
</TD>
    <TD>&nbsp;</TD>
<TD>&nbsp;</TD>
    <TD nowrap colspan="1" align="right" valign="top">&#151;</TD>
    <TD>&nbsp;</TD></TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><B>Statutory Auditors:</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Yoshiki Kishimura
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Statutory Auditor
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">544,000</TD>
    <TD nowrap valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Akio Sakioka
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Statutory Auditor
</TD>
    <TD>&nbsp;</TD>
<TD>&nbsp;</TD>
    <TD nowrap colspan="1" align="right" valign="top">&#151;</TD>
    <TD>&nbsp;</TD></TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Isao Narimatsu
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Statutory Auditor
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">160,000</TD>
    <TD nowrap valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Katsuhiko Asada
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Statutory Auditor
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">448,000</TD>
    <TD nowrap valign="top">&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD nowrap valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">3,104,000</TD>
    <TD nowrap valign="top">&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD nowrap valign="top">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Employee Stock Purchase Plan</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our full-time employees are eligible to participate in our employee shareholders&#146; association,
which purchases our shares with contributions from our employees deducted from their salaries. As
of March&nbsp;31, 2006, the association owned 26,482,212 shares of common stock. We provide a 10%
subsidy in cash on top of the contribution of any employee who has participated in the association
for less than a year and 13% subsidy for those who have participated for one year or longer. The
board of our employee shareholders&#146; association makes decisions as to how to vote all of its
shares.
</DIV>
<P align="center" style="font-size: 10pt">-88-
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left">
<A name="109"></A>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Item&nbsp;7. Major Shareholders and Related Party Transactions.</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>A. Major Shareholders.</B>

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;To our knowledge, the persons in the following table are the only owners or beneficial owners
or holders of 5% or more of our outstanding common stock as of March&nbsp;31, 2006. We are not required
by Japanese law to disclose beneficial ownership of our common stock. As explained in &#147;Reporting
Requirements of Shareholders &#151; Report of Substantial Shareholdings&#148; in Item&nbsp;10.B of this annual
report on Form 20-F, any person who becomes, beneficially and solely or jointly, a holder of more
than 5% of our outstanding common stock must file a report with the relevant local finance bureau
of the Ministry of Finance. The information in this table is based upon our shareholders of record
and reports filed with the Financial Services Agency and U.S. Securities and Exchange Commission.
The shareholdings of the major shareholders in the table below overlap to the extent that multiple
individuals may be deemed to share beneficial ownership over the same shares:
</DIV>


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Number of Shares</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Percentage of</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>of Common Stock</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Common Stock</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Owned as of</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Outstanding as of</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000"><B>Shareholders</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>March 31, 2006<SUP style="font-size: 85%; vertical-align: text-top"> (5)</SUP></B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>March 31, 2006<SUP style="font-size: 85%; vertical-align: text-top"> (5)</SUP></B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Kunihiko Sakioka<SUP style="font-size: 85%; vertical-align: text-top"> (1) (5) (6)</SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">753,987,732</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">27.6</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Hideo Sakioka<SUP style="font-size: 85%; vertical-align: text-top"> (2) (5) (6)</SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">743,074,044</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">27.2</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Midori Moriyama<SUP style="font-size: 85%; vertical-align: text-top"> (3) (5)</SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">375,476,120</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13.7</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Michimasa Sakioka<SUP style="font-size: 85%; vertical-align: text-top"> (4) (5)</SUP>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">371,956,836</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13.6</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">(1)</TD>
    <TD>&nbsp;</TD>
    <TD>Comprised of 89,610,440 shares over which Kunihiko Sakioka has sole voting and dispositive
power; 335,702,016 shares held by Nissin Building over which Kunihiko Sakioka may be deemed to
share beneficial ownership with Hideo Sakioka and voting or dispositive power with Michimasa
Sakioka and Midori Moriyama; and 328,675,276 shares held by Shuho, over which Kunihiko Sakioka
may be deemed to share voting and dispositive power with Hideo Sakioka.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(2)</TD>
    <TD>&nbsp;</TD>
    <TD>Comprised of 78,696,752 shares over which Hideo Sakioka has sole voting and dispositive
power; 335,702,016 shares held by Nissin Building over which Hideo Sakioka may be deemed to
share voting and dispositive power with Kunihiko Sakioka, Michimasa Sakioka and Midori
Moriyama; and 328,675,276 shares held by Shuho, over which Hideo Sakioka may be deemed to
share voting and dispositive power with Kunihiko Sakioka.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(3)</TD>
    <TD>&nbsp;</TD>
    <TD>Comprised of 39,774,104 shares over which Midori Moriyama has sole voting and dispositive
power; and 335,702,016 shares held by Nissin Building over which Midori Moriyama may be deemed
to share voting and dispositive power with Hideo Sakioka, Kunihiko Sakioka and Michimasa
Sakioka.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(4)</TD>
    <TD>&nbsp;</TD>
    <TD>Comprised of 36,254,820 shares over which Michimasa Sakioka has sole voting and dispositive
power; and 335,702,016 shares held by Nissin Building over which Michimasa Sakioka may be
deemed to share voting and dispositive power with Hideo Sakioka, Kunihiko Sakioka and Midori
Moriyama.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(5)</TD>
    <TD>&nbsp;</TD>
    <TD>Exclude shareholding of other Sakioka family members. Members of the Sakioka family,
including the ones listed above, directly and indirectly held an aggregate of 1,022,230,316
shares, or 37.4% of our outstanding shares of common stock, as of March&nbsp;31, 2006.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(6)</TD>
    <TD>&nbsp;</TD>
    <TD>In June&nbsp;2006, Shinsuke Amiya, our president, representative director and Co-CEO, acquired
1,000,000 shares from Shuho. As a result, the number of shares beneficially owned by Kunihiko
Sakioka and Hideo Sakioka decreased by 1,000,000 shares, respectively.</TD>
</TR>

</TABLE>



<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;According to our register of shareholders, as of March&nbsp;31, 2006, 31 shareholders of
record with addresses in the United States held 1.95% of our outstanding common stock.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;To our knowledge, we are not directly or indirectly owned or controlled by any government. We
know of no arrangements the operation of which may at a later time result in a change of control of
us. Our major shareholders have the same voting rights as other holders of our common stock.
There were no major changes in our major shareholders between March&nbsp;31, 2004 and March&nbsp;31, 2006.
</DIV>

<P align="center" style="font-size: 10pt">-89-
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 12pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>B. Related Party Transactions.</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Except as described below, during the period beginning April&nbsp;1, 2003 through the date of this
annual report on Form 20-F, there has been no material transaction with or loan between us or any
of our subsidiaries and:
</DIV>

<DIV style="margin-top: 12pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>any enterprise that directly or indirectly controls, is controlled
by, or is in common control with us or any of our subsidiary;</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 12pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>any director, officer, statutory auditor or family member of any
of the preceding or any enterprise over which such person directly
or indirectly is able to exercise significant influence;</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 12pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>any individual shareholder directly or indirectly having
significant influence over us or any of our subsidiary or a family
member of such individual or any enterprise over which such person
directly or indirectly is able to exercise significant influence,
or their respective family members or enterprises over which they
exercise significant influence, or</TD>
</TR>

<TR>
    <TD style="font-size: 12pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>any unconsolidated enterprise in which we have a significant
influence or which has a significant influence over us.</TD>
</TR>

</TABLE>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Transactions with Our Directors, Corporate Officers, Statutory Auditors or Companies with Whom They
Have a Relationship</B>
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 1%"><B><I>Transactions with Shuho</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of March&nbsp;31, 2006, members of the Sakioka family owned 100% of Shuho. We received
insurance agency services from this entity prior to the year ended March&nbsp;31, 2005. We also lease
office space to this entity. The following table shows transactions with this entity for the years
ended March&nbsp;31, 2004, 2005 and 2006.
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="11" style="border-bottom: 1px solid #000000"><B>Year ended March 31,</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2006</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="11"><B>(in millions)</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Insurance paid</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Rent income received</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The terms of these transactions were determined in reference to equivalent transactions
with unrelated parties, and the prices for these transactions were equivalent to those set for the
equivalent transactions. Following the establishment in April&nbsp;2003 of Nissin Insurance Co., Ltd.,
a wholly-owned subsidiary, that provides insurance agency services to us, we no longer receive
insurance agency services from Shuho, and do not intend to engage in any insurance transaction with
Shuho in the future.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 1%"><B><I>Transactions with Nissin Building</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of March&nbsp;31, 2006, members of the Sakioka family owned 93.3% of Nissin Building. We lease
office space and parking lots to this entity. The following table shows transactions with this
entity for the years ended March&nbsp;31, 2004, 2005 and 2006.
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="11" style="border-bottom: 1px solid #000000"><B>Year ended March 31,</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2006</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="11"><B>(in millions)</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Rent income received</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">1</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The terms of these transactions were determined in reference to equivalent transactions
with unrelated parties, and the prices for these transactions were equivalent to those set for the
equivalent transactions.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 1%"><B><I>Transactions with Susumu Sakioka</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Susumu Sakioka is the cousin of Kunihiko Sakioka, our chairman, representative director and
Co-CEO. On March&nbsp;18, 2004, we received &#165;117&nbsp;million from Susumu Sakioka in connection with his
purchase of a 90% equity interest in Big Apple, our subsidiary. The purchase price was determined
based on a third-party market value assessment.
</DIV>

<P align="center" style="font-size: 10pt">-90-
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Transactions with Our Principal Shareholders or Affiliates</B>
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 1%"><B><I>Transactions with Ascot</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We paid commissions on customer referrals of &#165;35&nbsp;million to Ascot during the year ended March
31, 2004. We formerly held 25% of Ascot, previously an affiliate. The terms of these transactions
were determined in reference to equivalent transactions with unrelated parties, and the prices for
these transactions were equivalent to those set for the equivalent transactions.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 1%"><B><I>Transactions with Shinsei Business Finance</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of March&nbsp;31, 2006, we owned 25% of Shinsei Business Finance; however, our interest in
Shinsei Business Finance became less than 20% as of April&nbsp;14, 2006. The following table shows
transactions with this entity for the years ended March&nbsp;31, 2004, 2005 and 2006:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="11" style="border-bottom: 1px solid #000000"><B>Year ended March 31,</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2006</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="11"><B>(in millions)</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Commissions on customers referral paid</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">11</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">32</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">13</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Agency commissions received</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Loan guarantee fees received</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">90</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">316</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">467</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Bank loan guarantee fees received</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">34</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The terms of these transactions were determined in reference to equivalent transactions
with unrelated parties, and the prices for these transactions were equivalent to those set for the
equivalent transactions.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 1%"><B><I>Transactions with Webcashing.com</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of March&nbsp;31, 2006, we owned 38% of Webcashing.com.
We subsequently sold our entire interest in Webcashing.com on
September&nbsp;5, 2006. The following table shows transactions
with this entity for the years ended March&nbsp;31, 2004, 2005 and 2006:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="11" style="border-bottom: 1px solid #000000"><B>Year ended March 31,</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2006</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="11"><B>(in millions)</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Commissions on customers referral paid</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">291</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">205</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">151</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Advertising expenses and other fees paid</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">175</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">518</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Proceeds from sale of equipment and software</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">22</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The terms of these transactions were determined in reference to equivalent transactions
with unrelated parties, and the prices for these transactions were equivalent to those set for the
equivalent transactions.
</DIV>


<P align="center" style="font-size: 10pt">-91-
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 1%"><B><I>Transactions with Chuo Mitsui Finance Service</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of March&nbsp;31, 2006, we owned 30% of Chuo Mitsui Finance Service. The following table shows
transactions with this entity for the years ended March&nbsp;31, 2005 and 2006:
</DIV>


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #000000"><B>Year ended March 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2006</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7"><B>(in millions)</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Commissions on customers referral paid</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">9</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Loan guarantee fees received</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">26</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Bank loan guarantee fees received</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition, for the year ended March&nbsp;31, 2005, we paid commissions on customers referral
of &#165;6 thousand, and received loan guarantee fees of &#165;6 thousand and bank loan guarantee fees of &#165;29
thousand. The terms of these transactions were determined in reference to equivalent transactions
with unrelated parties, and the prices for these transactions were equivalent to those set for the
equivalent transactions.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0%"><B>C. Interests of Experts and Counsel.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Not applicable.
</DIV>
<DIV align="left">
<A name="110"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Item&nbsp;8. Financial Information.</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>A. Consolidated Statements and Other Financial Information.</B>

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Financial Statements</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The consolidated financial statements required by this item begin on page F-1 in this annual
report on Form 20-F.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Legal or Arbitration Proceedings</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The information on legal or arbitration proceedings required by this item is set forth in Item
4.B. of this annual report on Form 20-F.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Dividend Policy</B>
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 1%"><B><I>Cash Dividends</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Historically we have paid cash dividends twice per year. Our board of directors recommends
the year-end dividend to be paid following the end of each fiscal year, subject to approval by
shareholders at the general meeting of shareholders held in June of each year. Our articles of
incorporation now provide that the Board of Directors is authorized to decide distribution of
dividends without shareholders&#146; approval pursuant to the requirement of the Corporate Law.
Following the approval by resolution of our Board of Directors, we pay the year-end dividend to
shareholders of record as of March&nbsp;31 and semi-annual dividends to our shareholders of record as of
September&nbsp;30 in each year. In addition to these annual and semi-annual dividends, our Board of
Directors may resolve the record date for interim dividends and distribute the profits to our
shareholders as further explained in Item&nbsp;10.B, Memorandum and Article of Association, &#147;Rights of
Our Shareholders &#151; Rights with Respect to Distribution of Surplus, Stock Repurchase and Stock
Splits &#151; Dividends&#148; below.
</DIV>


<P align="center" style="font-size: 10pt">-92-
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table shows the year-end and interim dividends paid to shareholders of record of
our common stock. &#147;Dividends per share (As adjusted)&#148; presents each dividend payments as adjusted
to reflect the 2-for-1 stock split that took effect on May&nbsp;21, 2002, the 2-for-1 stock split that
took effect on May&nbsp;20, 2003, the 2-for-1 stock split that took effect on May&nbsp;20, 2004, the 2-for-1 stock
split that took effect on November&nbsp;19, 2004, the 1.2-for-1 stock split that took effect on May&nbsp;20,
2005, the 2-for-1 stock split that took effect on November&nbsp;18, 2005, and the 2-for-1 stock split
that took effect on April&nbsp;1, 2006:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Dividends per</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Dividends per</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>share</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>share</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000"><B>Record Date</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>(Actual)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>(As adjusted)</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">September&nbsp;30, 2001 (interim)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">12.50</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">0.16</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">March&nbsp;31, 2002</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12.50</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.16</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">September&nbsp;30, 2002 (interim)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6.50</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.17</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">March&nbsp;31, 2003</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8.50</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.22</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">September&nbsp;30, 2003 (interim)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3.75</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.20</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">March&nbsp;31, 2004</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4.75</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.25</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">September&nbsp;30, 2004 (interim)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">1.375</TD>
    <TD nowrap><SUP style="font-size: 85%; vertical-align: text-top">(1)</SUP></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.29</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">March&nbsp;31, 2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.50</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.52</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">September&nbsp;30, 2005 (interim)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">1.00</TD>
    <TD nowrap><SUP style="font-size: 85%; vertical-align: text-top">(2)</SUP></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.50</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">March&nbsp;31, 2006</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.10</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.55</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">(1)</TD>
    <TD>&nbsp;</TD>
    <TD>Adjusted to reflect the 2-for-1 stock split that took effect on November&nbsp;19, 2004. The actual
interim dividend payment per share was &#165;2.75.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(2)</TD>
    <TD>&nbsp;</TD>
    <TD>Adjusted to reflect the 2-for-1 stock split that took effect on November&nbsp;18, 2005. The actual
interim dividend payment per share was &#165;2.00.</TD>
</TR>

</TABLE>



<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We presently intend to continue to pay cash dividends, generally on a semi-annual basis,
and to provide a stable level of dividends to our shareholders. Since the year ended March&nbsp;31,
2005, in order to reflect consolidated results as an indicator for our business performance, we
have a dividend policy to maintain a dividend payout ratio of 30% on a consolidated net income
basis. The declaration and payment of dividends, however, depend on our future earnings, financial
condition and other factors, including statutory and other restrictions on the payment of
dividends.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Dividends paid to shareholders outside Japan on shares of our common stock, including shares
represented by ADSs, are generally subject to a Japanese withholding tax at the maximum rate of
20%. Reduced rates for withholding apply to shareholders in some countries that have income tax
treaties with Japan. The withholding rate for U.S. holders is generally 10%, subject to a
temporary measurement. See &#147;Japanese Tax Considerations&#148; in Item&nbsp;10.E of this annual report on
Form 20-F.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;There are generally no U.S. or Japanese governmental restrictions on the distribution of
dividends to our shareholders.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 1%"><B><I>Stock Repurchases</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table shows information about our repurchases, net of distributions in the past:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="28%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Number of</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Aggregate</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Number of</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Net aggregate</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>repurchased</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>repurchase</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Number of</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Aggregate</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>repurchased</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>purchase</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000"><B>Year ended/ending March 31,</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>shares</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>price</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>shares sold</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"  style="border-bottom: 1px solid #000000"><B>sale price</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>shares, net</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>price</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 0px solid #000000"><B>(in million)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 0px solid #000000"><B>(in million)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>(in million)</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2002</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15,409,304</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">347</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15,409,304</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">347</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2003</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">103,710,180</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,493</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">768,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">102,942,180</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,473</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2004</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">57,671,212</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,209</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12,867,840</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">338</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">44,803,372</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">871</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">28,096</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">30,291,840</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">909</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(30,263,744</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(908</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2006</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">37,502</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">52,833,762</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,209</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(52,796,260</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(2,207</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2007
(through August&nbsp;31, 2006)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,291</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,245,120</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">362</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(9,243,829</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(362</TD>
    <TD nowrap>)</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our article of incorporation permits us to repurchase our shares by resolution of our
Board of Directors. The repurchased shares are sold to directors and employees upon exercises of
their new share subscription rights as stock options.
</DIV>

<P align="center" style="font-size: 10pt">-93-
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>B. Significant Changes.</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Except as otherwise disclosed in this annual report on Form 20-F, there has been no
significant change since March&nbsp;31, 2006, the date of our last audited financial statements.
</DIV>
<DIV align="left">
<A name="111"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Item&nbsp;9. The Offer and Listing.</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>A. Offer and Listing Details.</B>

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Tokyo Stock Exchange</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table shows the reported high and low trading prices and the average daily
trading volume of our common stock on the Tokyo Stock Exchange as adjusted to reflect the 2-for-1
stock split that took effect on May&nbsp;21, 2002, the 2-for-1 stock split that took effect on May&nbsp;20,
2003, the 2-for-1 stock split that took effect on May&nbsp;20, 2004, the 2-for-1 stock split that took
effect on November&nbsp;19, 2004, the 1.2-for-1 stock split that took effect on May&nbsp;20, 2005, the
2-for-1 stock split that took effect on November&nbsp;18, 2005, and the 2-for-1 stock split that took
effect on April&nbsp;1, 2006:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Average Daily</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Trading</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #000000"><B>Price Per Share</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Volume</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Year ended/ending March 31,</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>High</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Low</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>(in shares)</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2002</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">38</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">19</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,053,996</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2003</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">30</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">19</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,838,764</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2004</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">48</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,692,160</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">69</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">34</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,489,400</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">First Quarter</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">47</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">34</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,660,076</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Second Quarter</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">53</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">45</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,501,044</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Third Quarter</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">54</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">44</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,326,084</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Fourth Quarter</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">69</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">51</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,486,356</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2006</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">154</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">50</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">31,057,455</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">First Quarter</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">64</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">50</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,539,338</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Second Quarter</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">83</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">52</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15,323,019</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Third Quarter</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">154</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">70</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">62,482,161</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Fourth Quarter</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">145</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">100</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">38,401,184</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2007</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">131</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">77</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">19,311,997</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">First Quarter</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">131</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">77</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">19,311,997</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Average Daily</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Trading</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #000000"><B>Price Per Share</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"  style="border-bottom: 1px solid #000000"><B>Volume</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Calendar month</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>High</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Low</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>(in shares)</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">January&nbsp;2006</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">145</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">109</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">48,724,011</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">February&nbsp;2006</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">139</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">100</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">35,189,920</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">March&nbsp;2006</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">135</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">105</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">32,405,345</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">April&nbsp;2006</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">131</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">107</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">18,603,805</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">May&nbsp;2006</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">117</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">88</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20,342,990</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">June&nbsp;2006</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">98</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">77</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">19,018,541</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">July&nbsp;2006</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">91</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">52</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">36,152,225</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">August&nbsp;2006</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">82</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">62</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">27,902,736</TD>
    <TD>&nbsp;</TD>
</TR>


<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">-94-
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>


<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Share prices on Japanese stock exchanges are determined on a real-time basis by the
equilibrium between bids and offers. These exchanges set daily price limits, which limit the
maximum range of fluctuation within a single trading day. Daily price limits are set according to
the previous day&#146;s closing price or special quote. Although transactions may continue at the
upward or downward limit price if the limit price is reached on a particular trading day, no
transactions may take place outside these limits. Consequently, an investor wishing to sell at a
price above or below the relevant daily limit may not be able to sell his shares at such price on a
particular trading day, or at all.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On
September&nbsp;27, 2006, the closing price of our shares on the Tokyo
Stock Exchange was &#165;75 per
share. The following table shows selected daily price limits for a stock on the Tokyo Stock
Exchange:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="52%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Maximum daily</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="11">Previous day&#146;s closing price or special quote</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">price movement</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD colspan="13" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap>Less than</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">100</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">30</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Over</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">100</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">Less than</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">200</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">50</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Over</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">200</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">Less than</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">500</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">80</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Over</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">500</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">Less than</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">100</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>New York Stock Exchange</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The current ADS/share ratio is one ADS per ten shares of our common stock. The following
table indicates the trading price of our American Depositary Shares on the New York Stock Exchange:
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Average Daily</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Trading</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7"><B>New York Stock Exchange price</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Volume of</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #000000"><B>per ADS</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>ADSs</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Year ended/ending March 31,</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>High</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Low</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2003(since August&nbsp;2, 2002)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">1.89</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">1.56</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14,089</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2004</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4.76</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.66</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,202</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4.33</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3.03</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,629</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">First Quarter</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4.33</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3.03</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,504</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Second Quarter</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4.81</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4.14</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,880</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Third Quarter</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5.41</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4.09</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,550</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Fourth Quarter</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6.29</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4.85</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,167</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2006</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14.69</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4.50</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,345</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">First Quarter</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5.74</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4.51</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,555</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Second Quarter</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7.50</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4.50</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,971</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Third Quarter</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14.69</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6.13</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15,596</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Fourth Quarter</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12.72</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8.69</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20,661</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2007</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11.00</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6.64</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,589</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">First Quarter</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11.00</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6.64</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,589</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>
<P align="center" style="font-size: 10pt">-95-
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Average Daily</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Trading</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7"><B>New York Stock Exchange price</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Volume of</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #000000"><B>per ADS</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>ADSs</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>High</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Low</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Calendar Month</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">January&nbsp;2006</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">12.72</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">9.86</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">40,900</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">February&nbsp;2006</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11.71</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9.00</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14,347</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">March&nbsp;2006</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11.20</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8.69</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,278</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">April&nbsp;2006</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11.00</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9.35</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,547</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">May&nbsp;2006</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10.05</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7.77</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,736</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">June&nbsp;2006</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8.58</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6.64</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,341</TD>
    <TD>&nbsp;</TD>
</TR>


<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">July&nbsp;2006</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7.39</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4.88</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,605</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">August&nbsp;2006</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7.38</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5.41</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12,417</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The table above has been adjusted to reflect the 2-for-1 stock split that took effect on
May&nbsp;20, 2004, the 2-for-1 stock split that took effect on November&nbsp;19, 2004, the 1.2-for-1 stock
split that took effect on May&nbsp;20, 2005, the 2-for-1 stock split that took effect on November&nbsp;18,
2005, and the 2-for-1 stock split that took effect on April&nbsp;1, 2006.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>B. Plan of Distribution.</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Not applicable.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>C. Markets.</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In Japan, our common stock has been listed on the First Section of the Tokyo Stock Exchange
since September&nbsp;1999. In September&nbsp;2002, we delisted our shares from the Osaka Securities
Exchange, where our shares had been traded since September&nbsp;1999. Our common stock began trading on
the Japan Securities Dealers Association&#146;s over-the-counter market in April&nbsp;1994.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In August&nbsp;2002, we listed our common stock on the New York Stock Exchange in the form of ADSs
evidenced by ADRs. For further information regarding our American Depositary Receipt program,
see our registration statement filed with the Securities and Exchange Commission on Form F-1
(File No.&nbsp;333-97229) declared effective on August&nbsp;1, 2002.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>D. Selling Shareholders.</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Not applicable.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>E. Dilution.</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Not applicable.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>F. Expenses of the Issue.</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Not applicable.
</DIV>

<P align="center" style="font-size: 10pt">-96-
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left">
</DIV>
<A name="112"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Item&nbsp;10. Additional Information.</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">
<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>A. Share Capital.</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Not required.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>B. Memorandum and Articles of Association.</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Purposes in Our Article of Incorporation</B>

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Article&nbsp;2 of the Article of Incorporation states our purposes as follows:
</DIV>

<DIV style="margin-top: 12pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Consumer credit business, enterprise credit business, and financial mediation,
guarantee and agency of these;</TD>
</TR>

<TR>
    <TD style="font-size: 12pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Credit management and collection business;</TD>
</TR>

<TR>
    <TD style="font-size: 12pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The business of leasing, rental , buying and purchasing (including buying and
purchasing by installments), and managing all types of movable estate;</TD>
</TR>

<TR>
    <TD style="font-size: 12pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The buying and selling, exchange, rental, mediation, appraisement, management,
possession and operation of real estate;</TD>
</TR>

<TR>
    <TD style="font-size: 12pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Civil engineering, building work and contracting business;</TD>
</TR>

<TR>
    <TD style="font-size: 12pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The buying and selling, mediation, commissioning or agency of securities;</TD>
</TR>

<TR>
    <TD style="font-size: 12pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Non-life insurance agent business, business related to the offering of life
insurance, and insurance agent business based on the Automobile Liability Security Law;</TD>
</TR>

<TR>
    <TD style="font-size: 12pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Investment and management consultancy business for enterprises;</TD>
</TR>

<TR>
    <TD style="font-size: 12pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Business agency for rental contracts for corporate housing, offices and parking
space and sales contracts;</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt">-97-
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 12pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV style="margin-top: 12pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The business of supplying temporary labor;</TD>
</TR>

<TR>
    <TD style="font-size: 12pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Importing and exporting products and distribution business;</TD>
</TR>

<TR>
    <TD style="font-size: 12pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Collection agency business;</TD>
</TR>

<TR>
    <TD style="font-size: 12pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Computing work agency business;</TD>
</TR>

<TR>
    <TD style="font-size: 12pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Contracting for advertising and publicity;</TD>
</TR>

<TR>
    <TD style="font-size: 12pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Factoring business;</TD>
</TR>

<TR>
    <TD style="font-size: 12pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Development and distribution of computer software;</TD>
</TR>

<TR>
    <TD style="font-size: 12pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Distribution of computers and peripherals devices;</TD>
</TR>

<TR>
    <TD style="font-size: 12pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Management and rental of sports facilities;</TD>
</TR>

<TR>
    <TD style="font-size: 12pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Office work agency business such as enterprise accounting or labor services</TD>
</TR>

<TR>
    <TD style="font-size: 12pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Internet provider business;</TD>
</TR>

<TR>
    <TD style="font-size: 12pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Internet advertising and publicity business;</TD>
</TR>

<TR>
    <TD style="font-size: 12pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Mediation of money borrowing and lending using the Internet;</TD>
</TR>

<TR>
    <TD style="font-size: 12pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Business related to the planning and development of Internet software and the
commissioning of its production, as well as consulting business related to these;</TD>
</TR>

<TR>
    <TD style="font-size: 12pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Business related to general bridal services;</TD>
</TR>

<TR>
    <TD style="font-size: 12pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Business related to the planning, management and coordination of all types of events;</TD>
</TR>

<TR>
    <TD style="font-size: 12pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Business related to all types of training and courses for the acquisition of all
types of licenses;</TD>
</TR>

<TR>
    <TD style="font-size: 12pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Planning and production of advertising and publicity, as well as advertising agency
business;</TD>
</TR>

<TR>
    <TD style="font-size: 12pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Business of offering automobile inspection services; and</TD>
</TR>

<TR>
    <TD style="font-size: 12pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>All business that is ancillary to each of the preceding items.</TD>
</TR>

</TABLE>
</DIV>



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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Provisions Regarding Our Directors</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;There is no provision in our articles of incorporation as to our directors&#146; power to vote on a
proposal, arrangement or contract in which a director is materially interested. The Corporate Law
of Japan, however, requires such director to refrain from voting on such matters at meetings of the
board of directors.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Corporate Law provides that compensation for directors be determined at a general meeting
of shareholders. Our board of directors will determine the compensation for each director without
exceeding the upper limit on the aggregate amount of compensation for directors as a group approved
by the shareholders&#146; meeting. Our board of directors may, by its resolution, leave this decision
to the discretion of our president.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Corporate Law provides that the board of directors must approve significant loans from any
third party to the company. Our regulations of the board of directors have adopted this policy.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Neither the Corporate Law nor our articles of incorporation set a mandatory retirement age for
our directors.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;There is no requirement concerning the number of shares an individual must hold to qualify as
a director under the Corporate Law or our articles of incorporation.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Rights of Our Shareholders</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Corporate Law which came into effect on May&nbsp;1, 2006 allows (and the former Commercial Code
allowed) a change in the number of authorized shares, or total number of shares issuable, in
correspond to the ratio of a stock split upon approval by the Board of Directors. Pursuant to the
Commercial Code, then in effect, on April&nbsp;1, 2006 in accordance with a partial amendment of our
articles of incorporation upon approval by the Board of Directors on December&nbsp;20, 2005, the number
of authorized shares was increased from 3,840&nbsp;million shares to 7,680&nbsp;million shares.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;<B><I>Rights with Respect to Distribution of Surplus, Stock Repurchases and Stock Splits</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Dividends</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under the Corporate Law, distributions of cash or other assets by joint stock corporations to
their shareholders, so called &#147;dividends&#148;, are referred to as &#147;distributions of Surplus&#148; (&#147;Surplus&#148;
is defined in &#147;Restriction on Distributions of Surplus&#148; below). The Japanese Corporate Law
permits a joint stock corporation to distribute Surplus to its shareholders any number of times per
fiscal year, subject to certain limitations on the distributable profits as described in
&#147;Restriction on Distributions of Surplus&#148;. Under the Corporate Law, distributions of Surplus are
required to be authorized by a resolution of a general meeting of shareholders, or by the Board of
Directors if its articles of incorporations so provide and the following requirements are met:
</DIV>

<DIV style="margin-top: 12pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(a)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The company employs independent certified public accountant and corporate
governance system based on a board of statutory auditors or committees, and the normal
term of office of directors is not longer than one year; and</TD>
</TR>

<TR>
    <TD style="font-size: 12pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(b)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>non-consolidated annual financial statements and certain documents for the last
fiscal year present fairly our assets and profit or loss, as required by the ordinances
of the Ministry of Justice.</TD>
</TR>

</TABLE>
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;After the latest amendment of our articles of incorporation approved by the ordinary general
meeting of shareholders held on June&nbsp;24, 2006, our articles of incorporation provide that our Board
of Directors is authorized to decide distributions of Surplus and we meet the relevant corporate
governance requirements including one-year office term of directors. Therefore, our Board of
Directors has the authority to decide to make future distributions of Surplus upon meeting the
financial statements requirement of (b)&nbsp;above. When we distribute Surplus to shareholders, we have
to set a record date so as to identify the shareholders (or pledgees) who are entitled for the dividends by way of the
public announcement unless we set fixed record dates in our articles of incorporation. Our
articles of incorporation provides that March&nbsp;31 of each year shall be a fixed record date for the
year-end dividends and September&nbsp;30 of each year shall be a fixed record date for the semi-annual
dividends, therefore we may distribute dividends to shareholders (or pledgees) appearing in the
register of shareholders as of March&nbsp;31 and September&nbsp;30 of each year, respectively, pursuant to a
resolution of our Board of Directors. Under our articles of incorporation, we are not obligated to
pay any dividends left unclaimed for a period of three years after the date on which they first
became payable. For information as to Japanese taxes on dividends, see &#147;Japanese Tax
Considerations&#148; in Item&nbsp;10.E of this annual report on Form 20-F.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Dividends may be distributed in cash or in kind in proportion to the number of shares held by
each shareholder. A resolution of our Board of Directors (or, if shareholder has no option to
receive cash, a special resolution of shareholders meeting) authorizing a distribution of Surplus
must specify the kind and aggregate book value of the assets to be distributed, the manner of
allocation of such assets to shareholders, and the effective date of the distribution. In case that
a distribution in kind is authorized by a resolution of our Board of Directors, the approval by a
special resolution of a general meeting of shareholders is required unless we grant a right to
shareholders to receive such distribution in cash instead of in kind.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Restriction on Distributions of Surplus</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;When we make a distribution of Surplus, we must, until the aggregate amount of our additional
paid-in capital and legal reserve reaches one-quarter of our stated capital, set aside in our
additional paid-in capital and/or legal reserve an amount equal to one-tenth of the amount of
Surplus so distributed.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The amount of Surplus at any given time must be calculated in accordance with the following
formula:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A &#043; B &#043; C &#043; D &#150; (E &#043; F &#043; G)
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In the above formula:
</DIV>

<DIV style="margin-top: 12pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&#147;A&#148;=</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the total amount of &#145;other additional paid-in capital (other than general
additional paid-in capital)&#146; and &#145;other retained earnings (other than legal
reserve)&#146;, each such amount being that appearing on our non-consolidated balance
sheet as of the end of the last fiscal year;</TD>
</TR>

<TR>
    <TD style="font-size: 12pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&#147;B&#148;=</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>(if we have disposed of our treasury stock after the end of the last
fiscal year) the amount of the consideration for such treasury stock received by us
less the book value thereof;</TD>
</TR>

<TR>
    <TD style="font-size: 12pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&#147;C&#148;=</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>(if we have reduced our stated capital after the end of the last fiscal
year) the amount of such reduction less the portion thereof that has been transferred
to additional paid-in capital or legal reserve (if any);</TD>
</TR>

<TR>
    <TD style="font-size: 12pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&#147;D&#148;=</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>(if we have reduced our additional paid-in capital or legal reserve after
the end of the last fiscal year) the amount of such reduction less the portion
thereof that has been transferred to stated capital (if any);</TD>
</TR>

<TR>
    <TD style="font-size: 12pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&#147;E&#148;=</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>(if we have cancelled our treasury stock after the end of the last fiscal
year) the book value of such treasury stock;</TD>
</TR>

<TR>
    <TD style="font-size: 12pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&#147;F&#148;=</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>(if we have distributed Surplus to our shareholders after the end of the
last fiscal year) the total book value of the Surplus so distributed;</TD>
</TR>

<TR>
    <TD style="font-size: 12pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&#147;G&#148;=</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>certain other amounts set forth in the ordinances of the Ministry of
Justice, including (if we have reduced Surplus and increased our stated capital,
additional paid-in capital or legal reserve after the end of the last fiscal year)
the amount of such reduction and (if we have distributed Surplus to our shareholders after the end of the last fiscal year)
the amount set aside in our additional paid-in capital or legal reserve (if any) as
required by the ordinances of the Ministry of Justice.</TD>
</TR>



</TABLE>
</DIV>
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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The amount of Surplus distributed by us may not exceed a prescribed distributable amount (the
&#147;Distributable Amount&#148;), as calculated on the effective date of such distribution. The
Distributable Amount at any given time shall be equal to the amount of Surplus less the aggregate
of the followings:
</DIV>

<DIV style="margin-top: 12pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(a)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the book value of our treasury stock;</TD>
</TR>

<TR>
    <TD style="font-size: 12pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(b)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the amount of consideration for our treasury stock disposed of by us
after the end of the last fiscal year; and</TD>
</TR>

<TR>
    <TD style="font-size: 12pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(c)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>certain other amounts set forth in the ordinances of the Ministry of
Justice, including (if the sum of one-half of good will and the deferred assets
exceeds the total of stated capital, additional paid-in capital and legal reserve,
each such amount being that appearing on our non-consolidate balance sheet as of the
end of the last fiscal year) all or certain part of such exceeding amount as
calculated in accordance with the ordinances of the Ministry of Justice.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If we have become at our option a company with respect to which consolidated balance sheets
should also be taken into consideration in the calculation of the Distributable Amount (<I>renketsu
haito kisei tekiyo kaisha</I>), it will be required to further deduct from the amount of Surplus the
excess amount (if the amount is zero or below zero, zero) of (x)&nbsp;the total amount of shareholders&#146;
equity appearing on our non-consolidated balance sheet as at the end of last fiscal year and
certain other amounts set forth in the ordinances of the Ministry of Justice over (y)&nbsp;the total
amount of shareholders&#146; equity and certain other amounts set forth in the ordinances of the
Ministry of Justice appearing on our consolidated balance sheet as at the end of the last fiscal
year.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If we have prepared interim financial statements as described below, and if such interim
financial statements have been approved by (unless exempted by the Corporate Law) a general meeting
of shareholders, the Distributable Amount must be adjusted to take into account the amount of
profit or loss, and the amount of consideration for our treasury stock disposed of by us, during
the period in respect of which such interim financial statements have been prepared. We may
prepare non-consolidated interim financial statements consisting of a balance sheet as of any date
subsequent to the end of the last fiscal year and an income statement for the period from the first
day of the current fiscal year to the date of such balance sheet. Interim financial statements so
prepared by us must be approved by the Board of Directors and audited by our independent auditors,
as required by the ordinances of the Ministry of Justice.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Repurchase of Our Shares</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under the Corporate Law and our articles of incorporation, we may, pursuant to the same
requirement as the authorization of distribution of the Surplus, upon approval by the Board of
Directors, flexibly acquire our own shares during a fiscal year and may determine the amount and
timing of the purchase of our shares without having pre-approval at a shareholders meeting of the
total number of shares or aggregate price of shares to be acquired. In such case, we may acquire
our shares (i)&nbsp;by way of purchase on any Japanese stock exchange on which our shares are listed or
by way of take over bids (TOB), (ii)&nbsp;by soliciting all our shareholders to offer to sell our shares
held by them (on a pro-rata basis), or (iii)&nbsp;from any of our subsidiaries.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition, we may also acquire our shares from a specific shareholder other than any of our
subsidiaries pursuant to a special resolution of a general meeting of shareholders. In such case,
any other shareholder may make a request to the Board of Directors that such other shareholder be
included as a seller in the proposed purchase, provided that no such right will be available if the
purchase price or any other consideration to be received by the relevant specific shareholder will
not exceed the last trading price of the shares on the Tokyo Stock Exchange on the day immediately
preceding the date on which the resolution was adopted (or, if there is no trading in the shares on
the Tokyo Stock Exchange or if the Tokyo Stock Exchange is not open on such day, the price at which
the shares are first traded on the Tokyo Stock Exchange thereafter).
</DIV>


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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;However, under the Corporate Law, any acquisition of our shares pursuant to articles of
incorporation must satisfy the requirement that the total purchase price (the amount of the cash or
the book value of the consideration in kind) should not exceed the Distributable Amount as at the
effective date of such acquisition (as described in &#147;<I>Distribution of Surplus</I>&#148; above).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Further, in the event such acquisition of our shares cause a deficit of the Surplus a the end
of the fiscal year, the directors shall be liable to compensate the deficit of the company.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition, subsequent to the acquisition of these shares, the company is required to provide
certain disclosure pursuant to the Securities and Exchange Law and the relevant Stock Exchange
regulations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We may hold our own shares acquired in compliance with the Corporate Law and may generally
cancel or dispose those shares by a resolution of our board of directors.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition, we may acquire our shares by:
</DIV>

<DIV style="margin-top: 12pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>repurchasing those that constitute less than one unit upon the request of their holder,</TD>
</TR>

<TR>
    <TD style="font-size: 12pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>repurchasing those from our subsidiary company,</TD>
</TR>

<TR>
    <TD style="font-size: 12pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>redeeming redeemable shares (<I>shutoku jyo-kou-tsuki kabusiki</I>) or shares with
redemption right (<I>shutoku seikyu-ken-tsuki kabushiki</I>), or</TD>
</TR>

<TR>
    <TD style="font-size: 12pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>a business transfer, merger or spin-off.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Stock Splits</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We may at any time split our issued shares by resolution of our board of directors. When our
board of directors approves a stock split, we may amend our articles of incorporation without
shareholder approval to increase the total number of shares issuable in proportion to the stock
split if we have only one class of outstanding shares.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Generally, shareholders do not need to exchange share certificates for new ones following a
stock split, but certificates representing the additional shares resulting from the stock split
will be issued to shareholders. Before a stock split, we must give public notice of the stock
split, specifying the record date for the stock split, not less than two weeks prior to the record
date.
</DIV>


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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 1%"><B><I>Voting Rights</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A shareholder is generally entitled to one vote per one unit of our shares. In general, under
the Japanese Corporate Law, a general meeting of shareholders may adopt a resolution by a majority
of voting rights held by shareholders with exercisable voting rights at the meeting. The
Japanese Corporate Law and our articles of incorporation require a quorum for the election of
directors and statutory auditors of no less than one-third of the total number of voting rights
held by shareholders with exercisable voting rights. Our shareholders are not entitled to
cumulative voting in the election of directors. A corporate shareholder, having no less than
one-quarter of its voting rights directly or indirectly held by us, does not have voting rights.
We have no voting rights with respect to our own common stock. Shareholders may exercise their
voting rights through proxies, provided that those proxies are also shareholders who have voting
rights. Our shareholders also may cast their votes in writing. Our board of directors may entitle
our shareholders to cast their votes by electronic devices.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Corporate Law provides that certain important matters shall be approved by a &#147;special
resolution&#148; of general meeting of shareholders. Our articles of incorporation provide for a quorum
of one-third of voting rights and approval of two-thirds of the voting rights held by shareholders
with exercisable voting rights presented at the meeting of any material corporate actions such as:
</DIV>

<DIV style="margin-top: 12pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>a reduction of the stated capital,</TD>
</TR>

<TR>
    <TD style="font-size: 12pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>amendment of the articles of incorporation (except amendments that the board of
directors are authorized to make under the Corporate Law as described in &#147;&#151; <I>Rights with
Respect to Distribution of Surplus, Stock Repurchases and Stock Splits</I>&#148; above and
&#147;Limitations Affecting Security Holders &#151; <I>Japanese Unit Share System</I>&#148; below),</TD>
</TR>

<TR>
    <TD style="font-size: 12pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the removal of a statutory auditor,</TD>
</TR>

<TR>
    <TD style="font-size: 12pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>establishment of a 100% parent-subsidiary relationship through a share exchange or
share transfer requiring shareholders&#146; approval,</TD>
</TR>

<TR>
    <TD style="font-size: 12pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>a dissolution, merger or consolidation requiring shareholders&#146; approval,</TD>
</TR>

<TR>
    <TD style="font-size: 12pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>a company spin-off requiring shareholders&#146; approval,</TD>
</TR>

<TR>
    <TD style="font-size: 12pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>a transfer of the whole or an important part of our business,</TD>
</TR>

<TR>
    <TD style="font-size: 12pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the taking over of the whole of the business of any other corporation requiring
shareholders&#146; approval,</TD>
</TR>

<TR>
    <TD style="font-size: 12pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>any issuance of new shares or transfer of existing shares as treasury stock to
persons other than the shareholders at a &#147;specifically favorable&#148; price; and</TD>
</TR>

<TR>
    <TD style="font-size: 12pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>any issuance of stock acquisition rights (as defined in &#147;<I>Stock Acquisition Rights</I>&#148;
below) (including those incorporated in bonds with stock acquisition rights) to persons
other than the shareholders under &#147;specifically favorable&#148; conditions.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The depositary will endeavor to vote deposited shares based in accordance with instructions
from ADR holders. With respect to voting by holders of ADRs, see Exhibit&nbsp;2.2 to this annual report
on Form 20-F for a form of our deposit agreement.
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 1%"><B><I>New Share Subscription Rights</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Holders of our shares have no preemptive rights under our articles of incorporation. Under
the Corporate Law, the board of directors may determine that shareholders receive new share
subscription rights in connection with a particular issue of new shares. In this case, we must
give the rights on uniform terms to all of our shareholders as of a specified record date by at
least two weeks&#146; prior public notice to shareholders of the record date. Each of these
shareholders must receive an individual notice at least two weeks prior to the date of expiration
of the new share subscription rights.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The board of directors may make rights to subscribe for new shares at or substantially below
the market price of shares. Accordingly, rights offerings can result in substantial dilution or
prevent rights holders from realizing the economic value of those rights.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 1%"><B><I>Liquidation Rights</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In the event of liquidation, our assets remaining after payment of all debts, liquidation
expenses and taxes will be distributed among our shareholders in proportion to the number of shares
they own.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 1%"><B><I>Liability to Further Calls or Assessments</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;All of our currently outstanding shares are fully paid and nonassessable.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 1%"><B><I>Shareholders&#146; Rights to Bring Actions Against Directors</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Japanese Corporate Law contains clauses that allow shareholders who have held our shares
for six months to claim proposals for pursuing directors&#146; management responsibilities. Derivative
actions may be brought in situations including where the company lends money to directors, engages
in self-interested transactions or violates any law, ordinance or the articles of incorporation.
If our board of directors has not instituted an action within sixty days of the shareholder&#146;s
demand, the shareholder may initiate a lawsuit as a derivative action. The Corporate Law also
provides an exception to the sixty day waiting period, when a wait of sixty days might cause the
company irreparable damage. In these cases, the shareholder may institute the action immediately,
but must notify the company without delay. For example, if we could suffer irreparable damage from
an illegal act of our director, a shareholder who has owned a share continuously for the previous
six months may seek a provisional injunction prohibiting the director from performing the illegal
act. In addition, pursuant to the Corporate Law, shareholders have a right to institute a direct
lawsuit for recovery of monetary damages against directors, statutory auditors, accounting
auditors, and others if any such officer causes damage to a third party, such as shareholders, by
their gross negligence or willful conduct.
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Limitations Affecting Security Holders</B>
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 1%"><B><I>Japanese Unit Share System</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our articles of incorporation provide that 100 shares constitute one &#147;unit&#148;. The Corporate
Law permits our board of directors by itself to reduce, but not to increase, the number of new unit
or abolish the new unit share system entirely by a board resolution. An increase in the number of
shares that constitute a unit requires an amendment of the articles of incorporation by a special
resolution at the shareholders&#146; meeting. In any case, the number of shares constituting a new unit
may not exceed 1,000 shares.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under the Corporate Law, shareholders have one voting right for each unit of shares they hold.
Any number of shares less than a full unit will carry no voting rights and be excluded for the
purposes of calculating the quorum for voting purposes. Moreover, in accordance with the Corporate
Law, our articles of incorporation provide that a holder of shares constituting less than one unit
does not have any other rights of a shareholder in respect of those shares, other than those
provided by our articles of incorporation including the following rights:
</DIV>

<DIV style="margin-top: 12pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>to receive distributions of Surplus,</TD>
</TR>

<TR>
    <TD style="font-size: 12pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>to receive cash or other assets in case of consolidation or split of
shares, exchange or transfer of shares or corporate merger,</TD>
</TR>

<TR>
    <TD style="font-size: 12pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>to be allotted rights to subscribe for free for new shares and stock
acquisition rights when such rights are granted to shareholders, and</TD>
</TR>

<TR>
    <TD style="font-size: 12pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>to participate in any distribution of surplus assets upon liquidation.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our articles of incorporation provide that no share certificates will be issued with respect
to any number of shares constituting less than one unit. As the transfer of shares normally
requires delivery of share certificates, any fraction of a unit for which no share certificates are
issued is non-transferable.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%"><I>Right of a Holder of Shares Representing Less Than One Unit to Require Us to Purchase Its
Shares</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A holder of our shares representing less than one unit may at any time require us (through a
participating institution in the case of a beneficial shareholder under the central clearing
system) to purchase them at the last selling price as reported by the Tokyo Stock Exchange on the
day of the request. Alternatively, if the stock exchange does not report any sale of our shares on
the day of the request, the holder of these shares may require us to purchase them at their first
subsequent trading price on the stock exchange, less any applicable brokerage commission. Because
holders of our ADRs representing less than one unit cannot withdraw the underlying shares from
depositary institution, however, these holders will not be able to exercise this right as a
practical matter.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Voting Rights of a Holder of Shares Representing Less Than One Unit</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A holder of our shares representing less than one unit cannot exercise any voting rights
pertaining to those shares. For calculation of the quorum for various voting purposes, we will
exclude the aggregate number of shares representing less than one unit from the number of voting
rights. A holder of shares representing one or more units will have one vote for each one unit of
shares except as stated in &#147;Rights of Our Shareholders &#151; Voting Rights&#148; above.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 1%"><B><I>Rights of Foreign Investors</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other than the Japanese unit share system described above, the laws of Japan, our articles of
incorporation and our other constituent documents do not limit the rights of non-residents or
foreign shareholders to hold or exercise voting rights on our shares.
</DIV>


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<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Reporting Requirements of Shareholders</B>
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 1%"><B><I>Report of Substantial Shareholdings</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Securities and Exchange Law of Japan requires any holder of shares, including in the form
of ADRs, who has become a holder of more than 5% of the total issued shares of a company listed on
any Japanese stock exchange to file with the relevant local finance bureau of the Ministry of
Finance, within five business days, a report concerning those shareholdings. A holder must file a
similar report to reflect any change of 1% or more in any shareholding. Copies of any reports must
also be furnished to us and to all Japanese stock exchanges on which our shares are listed. For
this purpose, shares issuable upon exercise of share subscription options are taken into account in
determining both the number of shares held by that holder and our total issued share capital. As a
result, the above reporting requirements will apply to holders of more than 5% of our total issued
shares including such subscription options and bonds with share subscription options.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 1%"><B><I>Acquisition or Disposition of Shares or ADSs</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In general, non-residents of Japan and corporations whose principal offices are located
outside Japan may acquire shares of stock of a Japanese company listed on any Japanese stock
exchange from resident of Japan without any restriction but subject to the requirement under the
foreign exchange regulations and securities law as described below. Under the Foreign Exchange and
Foreign Trade Law, foreign exchange and foreign trade transactions are, with minor exceptions
relating to inward direct investments generally inapplicable to our shares, only subject to post
transaction reporting requirements. Non-residents of Japan, including foreign corporations not
resident in Japan, who acquire or dispose of shares of common stock or ADSs, are generally not
required to submit post transaction reports. The Minister of Finance, however, has the power to
impose a licensing requirement for transactions in limited circumstances.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If a foreign investor:
</DIV>

<DIV style="margin-top: 12pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>acquires shares of a Japanese company listed on a Japanese stock exchange; and</TD>
</TR>

<TR>
    <TD style="font-size: 12pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>as a result of this acquisition, directly or indirectly holds, aggregated with
existing holdings, 10% or more of the issued shares of the company,</TD>
</TR>

</TABLE>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 12pt">the foreign investor is, in general, required to report the acquisition to the Minister of Finance
and any other competent ministers via the Bank of Japan within 15&nbsp;days from and including the date
of acquisition. In exceptional cases, a prior notification is required in respect of the
acquisition.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Ordinary General Meeting of Shareholders</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We normally hold our ordinary general meeting of shareholders in June of each year in
Matsuyama, or in a neighboring area, or Shinjuku, Tokyo. In addition, we may hold an extraordinary
general meeting of shareholders whenever necessary by giving at least two weeks&#146; advance notice
stating the place, time, and purpose of the meeting. Under the Corporate Law, notice of any
shareholders&#146; meeting must be given to each shareholder having voting rights or, in the case of a
non-resident shareholder, to its resident proxy or mailing address in Japan in accordance with our
share handling regulations, at least two weeks prior to the date of the meeting.
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Clearing System for Our Shares</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A holder of our shares may choose to participate, directly or indirectly, in the central
clearing system for share certificates under the Law Concerning Central Clearing of Share
Certificates and Other Securities of Japan. Participating shareholders must deposit certificates
representing all of their shares with the Japan Securities Depository Center, or JASDEC, the
depositary under the clearing system. If a holder is not a participating institution such as a
securities company or bank having a clearing account with the clearing system, it must participate
through a participating institution. All shares deposited with the clearing system will be
registered in the name of the clearing system on our register of shareholders. Each participating
shareholder will in turn be registered on our register of beneficial shareholders and be treated in
the same way as shareholders registered on our register of shareholders. Delivery of share
certificates is not necessary for transfer of deposited shares. Entry of the share transfer in the
books maintained by the clearing system for participating institutions, or in the book maintained
by a participating institution for its customers, has the same effect as delivery of share
certificates. The registered beneficial owners may exercise the rights attached to their shares,
such as voting rights, and will receive dividends (if any) and notices to shareholders directly
from us. The shares held by a person as a registered shareholder and those held by the same person
as a registered beneficial owner are aggregated for these purposes. Beneficial owners may at any
time withdraw their deposited shares and receive share certificates.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Settlement for Our Shares</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Settlement of a transaction concerning shares listed on any of the stock exchanges in Japan
will normally occur on the fourth dealing day after the transaction. Settlement in Japan is made
by physical delivery of share certificates or through JASDEC as described above.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As described above, shareholders not resident in Japan are required to provide a mailing
address within Japan or to appoint a standing proxy in Japan. A local standing proxy can usually
handle the transfer of shares and registration of purchases and the application for reduced
withholding tax. See &#147;Japanese Tax Considerations&#148; in Item&nbsp;10.E of this annual report on Form
20-F.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Share Registrar for Our Shares</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Chuo Mitsui Trust and Banking Co., Ltd. replace The Mitsubishi Trust and Banking
Corporation as the share registrar for our shares from June&nbsp;23, 2005. Its office is located at
33-1, Shiba 3-chome, Minato-ku, Tokyo 168-0063, Japan. The Chuo Mitsui Trust and Banking Co., Ltd.
maintains our register of shareholders and records transfers of record ownership upon presentation
of share certificates.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Record Date for Our Shares</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;March&nbsp;31 is the record date for our year-end dividends, if paid, and September&nbsp;30 is the
record date for our half-year dividends, if paid. We set March&nbsp;31 as the record date for
determining shareholders entitled to vote at the ordinary general meeting of shareholders. In
addition, we may set a record date for determining the shareholders entitled to other rights and
for other purposes by giving at least two weeks&#146; prior public notice.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our shares are generally traded ex-dividend or ex-rights in the Japanese stock exchanges on
the third business day before a record date (or if the record date is not a business day, the
fourth business day prior thereto), for the purpose of dividends or rights offerings.
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>C. Material Contracts.</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have not been a party to any material contract, other than contracts entered into in the
ordinary course of business, during the period beginning April&nbsp;1, 2004 through the date of this
annual report on Form 20-F.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>D. Exchange Controls.</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;There are no laws, decrees, regulations or other legislation that affect our ability to import
or export capital for our use or our ability to pay dividends to nonresident holders of our shares.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>E. Taxation.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>United States Tax Considerations</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This section, &#147;United States Tax Considerations,&#148; describes the material U.S. federal income
tax consequences of owning shares or ADSs. This section applies to you only if you hold your
shares or ADSs as capital assets for tax purposes. This section does not apply to you if you are a
member of a special class of holders subject to special rules, including:
</DIV>

<DIV style="margin-top: 12pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>a dealer in securities,</TD>
</TR>

<TR>
    <TD style="font-size: 12pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>a trader in securities that elects to use a mark-to-market method of accounting for
your securities holdings,</TD>
</TR>

<TR>
    <TD style="font-size: 12pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>a tax-exempt organization,</TD>
</TR>

<TR>
    <TD style="font-size: 12pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>a life insurance company,</TD>
</TR>

<TR>
    <TD style="font-size: 12pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>a person liable for alternative minimum tax,</TD>
</TR>

<TR>
    <TD style="font-size: 12pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>a person that actually or constructively owns 10% or more of our voting stock,</TD>
</TR>

<TR>
    <TD style="font-size: 12pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>a person that holds shares or ADSs as part of a straddle or a hedging or conversion
transaction, or</TD>
</TR>

<TR>
    <TD style="font-size: 12pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>a person whose functional currency is not the dollar.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This section is based on the U.S. Internal Revenue Code of 1986, as amended, its legislative
history, existing and proposed regulations, published rulings and court decisions, all as currently
in effect, as well as on the Convention Between the Government of the United States of America and
the Government of Japan for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion
with Respect to Taxes on Income (the &#147;Treaty&#148;). These laws are subject to change, possibly on a
retroactive basis. In addition, this section is based in part upon the representations of the
depositary and the assumption that each obligation in the deposit agreement and any related
agreement will be performed in accordance with its terms.
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;You are a U.S. holder if you are a beneficial owner of shares or ADSs and you are:
</DIV>

<DIV style="margin-top: 12pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>a citizen or resident of the United States,</TD>
</TR>

</TABLE>
</DIV>
<DIV style="margin-top: 12pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>a corporation created or organized under the laws of the United States or any of its
political subdivisions,</TD>
</TR>

<TR>
    <TD style="font-size: 12pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>an estate whose income is subject to U.S. federal income tax regardless of its
source, or</TD>
</TR>

<TR>
    <TD style="font-size: 12pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>a trust if a U.S. court can exercise primary supervision over the trust&#146;s
administration and one or more U.S. persons are authorized to control all substantial
decisions of the trust.</TD>
</TR>

</TABLE>
</DIV>
<P>
<DIV style="width: 100%; border: 1px solid black; padding: 11px;">




<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%"><I>You should consult your own tax advisor regarding the United States federal, state and local
and other tax consequences of owning and disposing of shares and ADSs in your particular
circumstances.</I>
</DIV>
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In general, and taking into account the earlier assumptions, for U.S. federal income tax
purposes, if you hold ADRs evidencing ADSs, you will be treated as the owner of the shares
represented by those ADRs. Exchanges of shares for ADRs, and ADRs for shares, generally will not
be subject to U.S. federal income tax.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 1%"><B><I>Passive Foreign Investment Company Rules</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As we expect 50% or more of our gross asset value will constitute passive assets, generally
meaning assets not constituting part of a trade or business, as determined for passive foreign
investment company purposes, we expect that our shares and ADSs will be treated as stock of a
passive foreign investment company, or PFIC, for U.S. federal income tax purposes, and except as
otherwise stated, the remainder of this discussion so assumes. This conclusion is a factual
determination made annually, which we will update in our future reports on Form 20-F. In addition,
we expect that our subsidiaries will be treated as PFICs for U.S. federal income tax purposes. You
will be treated as an indirect shareholder of your proportionate interest in the shares of such
subsidiaries.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;U.S. holders of shares or ADSs of a PFIC must file U.S. Internal Revenue Service Form&nbsp;8621
every year in which they continue to hold such shares.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If you are a U.S. holder you will be subject to the special PFIC tax rules or, if you make a
mark-to-market election, the mark-to-market rules.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Special PFIC Tax Rules</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This subsection applies to you if you are a U.S. holder and do not make a mark-to-market
election. You will be subject to special PFIC tax rules with respect to:
</DIV>

<DIV style="margin-top: 12pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>any gain you realize on the sale or other disposition of your shares or ADSs
(including the pledging of your shares or ADSs as security for a loan) and</TD>
</TR>

<TR>
    <TD style="font-size: 12pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>any excess distribution that we make to you (generally, any distributions to you
during a single taxable year that are greater than 125% of the average annual
distributions received by you in respect of the shares or ADSs during the three
preceding taxable years or, if shorter, your holding period for the shares or ADSs).</TD>
</TR>

</TABLE>
</DIV>


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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition, if any of our subsidiaries are deemed a PFIC, a distribution from that subsidiary
to us, a disposition of that subsidiary by us, or a transaction through which your indirect
ownership of such subsidiary is decreased (including additional offerings of our shares or ADSs)
will be treated as a distribution or disposition subject to the special PFIC tax rules. You will be entitled,
however, to increase your basis in the shares or ADSs you directly own to reflect the gain realized
upon such distributions, or dispositions. Moreover, you will not be taxed when we distribute to
you the income that you already included in income for tax purposes.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under these special PFIC tax rules:
</DIV>

<DIV style="margin-top: 12pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the gain or excess distribution will be allocated ratably over your holding period
for the shares or ADSs,</TD>
</TR>

<TR>
    <TD style="font-size: 12pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the amount allocated to the taxable year in which you realized the gain or excess
distribution will be taxed as ordinary income,</TD>
</TR>

<TR>
    <TD style="font-size: 12pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the amount allocated to each prior year, with certain exceptions, will be taxed at
the highest tax rate in effect for that year, and</TD>
</TR>

<TR>
    <TD style="font-size: 12pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the interest charge generally applicable to underpayments of tax will be imposed in
respect of the tax attributable to each such prior year.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Amounts subject to these special PFIC tax rules will not be eligible for the
dividends-received deduction generally allowed to U.S. corporations in respect of dividends
received from other U.S. corporations. In addition, dividends that you receive from us will not
constitute qualified dividend income to you if we are a PFIC either in the taxable year of the
distribution or the preceding taxable year. Dividends that you receive that do not constitute
qualified dividend income are not eligible for taxation at the 15% maximum rate applicable to
qualified dividend income even if the dividend does not constitute an excess distribution.
Instead, you must include the gross amount of any such dividend paid by us out of our accumulated
earnings and profits (as determined for United States federal income tax purposes) in your gross
income, and it will be subject to tax at rates applicable to ordinary income.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If you receive distributions that are not subject to the special PFIC tax rules, you must
include in your gross income the gross amount of any dividend paid by us out of our current or
accumulated earnings and profits (as determined for U.S. federal income tax purposes). You must
include any Japanese tax withheld from the dividend payment in this gross amount even though you do
not in fact receive it. The dividend is ordinary income that you must include in income at the
ordinary income tax rate when you, in the case of shares, or the depositary, in the case of ADSs,
receive the dividend, actually or constructively. The dividend will not be eligible for the
dividends-received deduction generally allowed to U.S. corporations in respect of dividends
received from other U.S. corporations. The amount of any distribution that you must include in your
income as a U.S. holder will be the dollar value of the yen payments made, determined at the spot
yen/dollar rate on the date the distribution is includible in your income, regardless of whether
the payment is in fact converted into dollars. Generally, any gain or loss resulting from currency
exchange fluctuations during the period from the date you include the dividend payment in income to
the date you convert the payment into dollars will be treated as ordinary income or loss and will
not be eligible for the special tax rate applicable to qualified dividend income. The gain or loss
generally will be income or loss from sources within the United States for foreign tax credit
limitation purposes. If you receive distributions that are not subject to the special PFIC tax
rules and that are in excess of current and accumulated earnings and profits, as determined for
U.S. federal income tax purposes, you will be treated as having received a non-taxable return of
capital to the extent of your basis in the shares or ADSs and thereafter you will recognize capital
gain, which will be taxed in accordance with the special PFIC tax rules described above.
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Mark-to-market Rules</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The special PFIC tax rules described above will not apply to you if you make an effective
mark-to-market election, that is, you elect to mark-to-market annually the gains and losses in our
shares or ADSs and our shares or ADSs are treated as &#147;marketable stock.&#148; We believe that our
common stock is and will continue to be &#147;marketable stock&#148; as long as it continues to be traded on
the New York Stock Exchange, other than in de minimis quantities, on at least 15&nbsp;days during each
calendar quarter. Under the mark-to-market rules, you will include as ordinary income each year
the excess, if any, of the fair market value of your shares or ADSs at the end of the taxable year
over your adjusted basis in your shares or ADSs. These amounts of ordinary income will not be
eligible for the favorable tax rates applicable to qualified dividend income or long-term capital
gains. You may also take an ordinary loss in respect of the excess, if any, of the adjusted basis
of your shares or ADSs over their fair market value at the end of the taxable year (but only to the
extent of the net amount of previously included income as a result of the mark-to-market election).
Your basis in the shares or ADSs will be adjusted to reflect any such income or loss amounts. In
addition, notwithstanding any election you make with regard to the shares or ADSs, dividends that
you receive from us will not constitute qualified dividend income to you if we are a PFIC either in
the taxable year of the distribution or the preceding taxable year and such dividends will
therefore not be eligible for taxation at the 15% maximum rate applicable to qualified dividend
income. It is unclear how the mark-to-market rules apply to a PFIC whose shares are &#147;marketable
stock,&#148; but owns subsidiary PFICs whose shares are not &#147;marketable stock.&#148;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Please consult your tax advisor as to the availability and tax consequences of a
mark-to-market election.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 1%"><B><I>Foreign Tax Credit</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Subject to the general limitations that apply to the creditability of foreign income taxes,
the Japanese tax withheld in accordance with the Treaty and paid over to Japan will be creditable
against your U.S. federal income tax liability. To the extent a refund of the tax withheld is
available to you under Japanese law or under the Treaty, the amount of tax withheld that is
refundable will not be eligible for credit against your U.S. federal income tax liability.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Special rules apply for calculating the amount of the foreign tax credit with respect to
excess distributions if you are governed by the special PFIC tax rules described above. For
example, if you did not make a mark-to-market election, the section 904 tax credit limitation would
be applied separately with respect to the amount of excess distribution allocable to each such
taxable year and carryovers, if any, are not allowed.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Dividends that are not excess distributions will generally be &#147;passive income&#148; which is
treated separately from other types of income for purposes of computing the foreign tax credit
allowable to you. Such dividends will be income from sources outside the United States.
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Japanese Tax Considerations</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This section, &#147;Japanese Tax Considerations,&#148; is a summary of the principal Japanese tax
consequences to owners of our shares or ADSs who are non-resident individuals or non-Japanese
corporations without a permanent establishment in Japan to which the relevant income is
attributable. As tax laws are frequently revised, the statements regarding Japanese tax laws below
are subject to changes in the applicable Japanese laws or tax treaties, conventions or agreements,
or in their interpretation, occurring after the date of this prospectus. This summary is not
exhaustive of all possible tax considerations that may apply to specific investors under particular circumstances. Potential
investors should satisfy themselves as to:
</DIV>

<DIV style="margin-top: 12pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the overall tax consequences of the acquisition, ownership and disposition of our
shares or ADSs, including specifically the tax consequences under Japanese law,</TD>
</TR>

<TR>
    <TD style="font-size: 12pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the laws of the jurisdiction of which they are resident, and</TD>
</TR>

<TR>
    <TD style="font-size: 12pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>any tax treaty between Japan and their country of residence, by consulting with
their own tax advisers.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Generally, a non-resident shareholder is subject to Japanese withholding tax on dividends paid
on our shares. Stock splits are generally not subject to Japanese income or corporation tax, as it
is characterized merely as an increase of number of shares, as opposed to an increase of value of
shares, from Japanese tax perspectives. Due to the 2001 Japanese tax legislation effective from
April&nbsp;1, 2001, a conversion of retained earnings or legal reserve (but, in general, other than
additional paid-in capital) into stated capital on a non-consolidated basis is not characterized as
a deemed dividend for Japanese tax purposes, and therefore such a conversion does not trigger
Japanese withholding taxation (Article&nbsp;2 (16)&nbsp;of the Japanese Corporation Tax Law and Article&nbsp;8 (1)
(xv)&nbsp;of the Japanese Corporation Tax Law Enforcement Order).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under the 2001 tax legislation, if we purchase our listed shares (i)&nbsp;by a tender offer or (ii)
from a specific shareholder other than through a market purchase for the purpose of cancellation
with retained earnings, the selling shareholders, whether individuals or corporations, are in
general required to recognize:
</DIV>

<DIV style="margin-top: 12pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the deemed dividend corresponding to a distribution of retained earnings
proportionally computed by a statutory formula on a pro rata basis allocating the
selling price into the repayment of share capital portion, including additional paid-in
capital, and retained earnings portion on a non-consolidated basis under Article&nbsp;24
(1) (v) of the Japanese Corporation Tax Law, and</TD>
</TR>

<TR>
    <TD style="font-size: 12pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>capital gain or loss computed as a difference between the basis of shares subject to
the tender offer at the shareholders level and the amount of the consideration for the
tender offer, deducting the amount corresponding to the deemed dividend computed as (i)
above under Article&nbsp;61-2 (1)&nbsp;of the same law.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On the other hand, no deemed dividend is required to recognize if we purchase our shares
at/through the stock market due to the difficulty to identify each shareholder sold our shares
(Articles 24 (1) (iv)&nbsp;and 61-2 (xi)&nbsp;of the Japanese Corporation Tax Law and Article&nbsp;23 (3)&nbsp;of the
Japanese Corporation Tax Law Enforcement Order). In addition, in the case of individual
shareholders, no deemed dividend is required to be recognized until March&nbsp;31, 2007 due to the
operation of a temporary measurement (Article&nbsp;9-6 of the Japanese Special Tax Measurement Law).
Therefore, they are only required to recognize capital gain or loss of the shares subject to the
tender offer. In the meantime, when shares are acquired by us, whether by way of a tender offer or
otherwise, for the purpose of cancellation with retained earnings, the shareholders, whether
individuals or corporations, whose shares are not acquired by us were previously deemed to have
received a dividend corresponding to the notional increase of share value by the share cancellation
under the old tax law before the 2001 tax legislation. However, under the 2001 tax legislation, no
deemed dividend taxation occurs for the remaining shareholders, whether individuals or
corporations, whose shares are not cancelled.
</DIV>

<P align="center" style="font-size: 10pt">-112-
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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Unless a tax treaty, convention or agreement reduces the maximum rate of withholding tax, the
rate of Japanese withholding tax applicable to dividends on the listed shares paid by us to
non-resident shareholders is:
</DIV>

<DIV style="margin-top: 12pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>7% for dividends to be paid between January&nbsp;1, 2004 and March&nbsp;31, 2008 as a
temporary measurement; and</TD>
</TR>

<TR>
    <TD style="font-size: 12pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>15% thereafter, except for dividends paid to any individual shareholder who holds 5%
or more of our issued shares, in which case the applicable rate is 20%.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Japan has income tax treaties, conventions or agreements that generally reduce the
above-mentioned withholding tax rate to 15% for portfolio investors with, among others, Australia,
Belgium, Canada, Denmark, Finland, France, Germany, Ireland, Italy, Luxembourg, The Netherlands,
New Zealand, Norway, Singapore, Spain, Sweden, Switzerland, and the United Kingdom. Under the new
tax treaty between United States and Japan, of which withholding tax treatment is applicable
effective from July&nbsp;1, 2004 to dividends declared thereafter, the withholding tax rate on dividends
is 10% for portfolio investors, if they do not have a permanent establishment in Japan and the
shares with respect to which such dividends are paid are not related in-fact to such permanent
establishment, and if they are qualified U.S. residents eligible to enjoy treaty benefits. Note
that, under the new tax treaty between US and Japan, withholding tax on dividends declared after
July&nbsp;1, 2004 is exempt from Japanese taxation by way of withholding or otherwise for pension funds
which are qualified US residents eligible to enjoy treaty benefits unless such dividends are
derived from the carrying on of a business, directly or indirectly, by such pension funds. By
virtue of the operation of the preservation doctrine under each tax treaty, if the Japanese
statutory rate is lower than the maximum rate applicable under the Tax Treaty, the Japanese
statutory rate shall apply. In the case where the treaty rare applies, Non-resident shareholders
entitled to a reduced Japanese withholding tax rate on our dividends are required to submit an
Application Form for Income Tax Convention regarding Relief from Japanese Income Tax on Dividends
through us to the relevant tax authority before payment of dividends. A standing proxy for
non-resident shareholders may provide this application service. See &#147;Settlement for Our the
Shares&#148; in Item&nbsp;10.B of this annual report on Form 20-F. With respect to ADSs, this reduced rate
is applicable if the depositary or its agent submits two Application Forms for Income Tax
Convention&#151;one before payment of dividends and the other within eight months of our fiscal year
end. To claim this reduced rate, a non-resident holder of ADSs will be required to file proof of
taxpayer status, residence and beneficial ownership, as applicable, and to provide other
information or documents as may be required by the depositary. Non-resident holders who do not
submit an application in advance will be entitled to claim the refund of taxes withheld in excess
of the rate of an applicable tax treaty from the relevant Japanese tax authority.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Gains derived from the sale of our shares or ADSs outside Japan, or from the sale of our
shares within Japan by a non-resident shareholder as a portfolio investor, are generally not
subject to Japanese income or corporation taxes.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Japanese inheritance and gift taxes may be assessed against an individual who has acquired our
shares or ADSs as a legatee, heir or donee, even if the individual is not a Japanese resident.
</DIV>

<P align="center" style="font-size: 10pt">-113-
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>F. Dividends and Paying Agents.</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Not required.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>G. Statement by Experts.</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Not required.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>H. Documents on Display.</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We file periodic reports and other information with the Securities and Exchange Commission.
The Securities and Exchange Commission maintains an Internet site at www.sec.gov that contains
reports and other information regarding issuers that file electronically with the SEC. You may
read and copy any document that we file with the Securities and Exchange Commission at the
Securities and Exchange Commission&#146;s public reference room at
100 F Street, N.E., Washington, D.C. 20549. Please call the Securities and Exchange Commission at 1-800-SEC-0330 for further
information on the operation of its public reference room. You may also inspect our reports filed
with the Securities and Exchange Commission and other information at the New York Stock Exchange,
Inc., 20 Broad Street, New York, New York 10005. Some of this information may also be found on our
website at www.nisgroup.jp/english. This information is not incorporated by reference into this
annual report on Form 20-F. Also, as a foreign private issuer, we are exempt from the rules under
the Securities Act of 1934 prescribing the furnishing and content of proxy statements to
shareholders.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>I. Subsidiary Information.</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Not applicable.
</DIV>

<P align="center" style="font-size: 10pt">-114-
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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left">
<A name="113"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Item&nbsp;11. Quantitative and Qualitative Disclosures About Market Risk</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We are exposed to the market risks of interest rate changes and changes in the market values
of our investments. We do not have any significant exposures to fluctuations in foreign exchange
rates since we conduct substantially all of our business activities in Japanese yen.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 1%"><B><I>Interest Rate Risk</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Liability&#150;side Risk</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our exposure to changes in interest rates arises primarily from our long-term borrowings that
bear interest at variable rates and our cash and cash equivalents. As discussed in &#147;Capital
Requirements&#148; in Item&nbsp;5.B of this annual report on Form 20-F, we require a significant amount of
borrowings to fund our lending activities.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table shows the repayment schedule for our outstanding bonds and other long-term
borrowings and the average interest rates on these borrowings.
</DIV>



<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="20%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>As of</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>March 31,</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="23" style="border-bottom: 1px solid #000000"><B>Year ending March 31,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2006</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2007</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2008</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2009</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2010</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2011</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Thereafter</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Total</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Fair value</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="31"><B>(in millions except percentage)</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Bonds</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">2,682</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">8,360</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">17,930</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">28,972</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">30,395</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Average interest rate</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">1.23</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">1.15</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">1.12</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">1.14</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Variable<SUP style="font-size: 85%; vertical-align: text-top"> (1)</SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">38,049</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">28,973</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,927</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,460</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,385</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">84,794</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">84,794</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Average interest rate</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">1.39</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">1.31</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">1.12</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">0.60</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">1.22</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">1.31</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Fixed</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">33,144</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">32,415</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14,099</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,849</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,651</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">85,158</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">85,298</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Average interest rate</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">1.65</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">1.57</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">1.38</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">2.21</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">2.47</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">1.62</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">(1)</TD>
    <TD>&nbsp;</TD>
    <TD>Variable interest rate borrowings include asset-backed securities.</TD>
</TR>

</TABLE>



<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our debt obligations mature at various times through March&nbsp;2011 and carry interest rates
ranging between 0.3% and 5.1%. Our borrowings bear either a fixed rate or a variable rate indexed
to the Tokyo Inter-Bank Offered Rate (TIBOR), or the London Inter-Bank Offered Rate (LIBOR), or the
short-term or long-term prime rates in Japan. In order to reduce our exposure to fluctuations in
interest rates on variable rate borrowings, we utilize derivative instruments such as interest rate
swap contracts. As of March&nbsp;31, 2006, we had one outstanding interest rate swap agreement with
notional principal amount of &#165;97&nbsp;million, which matures in August&nbsp;2006. Under this agreement, we
receive payments at TIBOR plus 1.25% and make payments at an interest rate of 2.19%.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The weighted average interest rate on our short-term borrowings was 1.3% at March&nbsp;31, 2004
1.2% at March&nbsp;31, 2005, and 1.0% at March&nbsp;31, 2006, and our weighted average long-term borrowing
rate on variable-rate borrowings was 2.2% at March&nbsp;31, 2004, 1.9% at March&nbsp;31, 2005 and 1.3% at
March&nbsp;31, 2006.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table illustrates the after tax impact of a hypothetical increase in our average
borrowing rates on our short-term borrowings and variable-rate long-term borrowings:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="11" style="border-bottom: 1px solid #000000"><B>Assumed weighted average interest rate</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2%</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>3%</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>4%</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="11"><B>(in millions)</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net income as reported</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">8,455</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">8,455</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">8,455</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net income as adjusted for hypothetical increase in interest rates</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,126</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,640</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,154</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We believe that the likelihood of hypothetical increases in our average borrowing rates
is significantly greater than that of hypothetical decreases, as the weighted average interest rate
on our own borrowings have been extremely low in recent years. In addition, in July&nbsp;2006, the Bank
of Japan has changed the interest rate policy, and the official discount rate offered by the Bank
of Japan, which has remained at 0.1% since September&nbsp;2001, was increased to 0.4%.
</DIV>


<P align="center" style="font-size: 10pt">-115-
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 1%"><B><I>Asset-side Risk</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Integrated Financial Services</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As we lend at fixed rates, interest rates on our currently outstanding balances are not
typically subject to fluctuation other than for regulatory reasons. However, the interest rates we
charge to new customers or existing customers who pay off their outstanding loans and enter into new
contracts with us are subject to any downward pressure caused by competitive, regulatory or other
reasons.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table indicates the weighted-average contractual maturity of each of our loan
categories at the end of each of the years indicated:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="10" style="border-bottom: 1px solid #000000"><B>As of March 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2006</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="10"><B>(years)</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Small business owner loans</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center">4.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center">4.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center">3.9</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Business Timely loans<SUP style="font-size: 85%; vertical-align: text-top"> (1)</SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center">3.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center">3.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center">3.0</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Secured loans</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center">5.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center">1.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center">1.5</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Wide loans</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center">4.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center">5.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center">5.1</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Consumer loans<SUP style="font-size: 85%; vertical-align: text-top"> (1)</SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center">3.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center">3.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center">3.0</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other loans</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="center" nowrap>&nbsp;&nbsp;&nbsp;&nbsp;&#151;<SUP style="font-size: 85%; vertical-align: text-top"> (2)</SUP></TD>
    <TD nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center">3.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center">4.3</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">(1)</TD>
    <TD>&nbsp;</TD>
    <TD>The average maturity of 3.0&nbsp;years for Business Timely loans and consumer loans is based on
the three-year term of the loan contract, which is automatically renewable.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(2)</TD>
    <TD>&nbsp;</TD>
    <TD>The average maturity for other loans as of March&nbsp;31, 2004 was inapplicable.</TD>
</TR>

</TABLE>



<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table indicates the average actual interest rate of each of our loan
categories for each of the years indicated:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="11" style="border-bottom: 1px solid #000000"><B>Year ended March 31,</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2006</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Small business owner loans</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">20.4</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">19.5</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">17.7</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Business Timely loans</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">25.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">25.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">24.2</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Secured loans</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7.3</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Wide loans</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">19.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">19.4</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Consumer loans</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">25.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">37.1</TD>
    <TD nowrap><SUP style="font-size: 85%; vertical-align: text-top">(1)</SUP></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">24.7</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other loans</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10.7</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">(1)</TD>
    <TD>&nbsp;</TD>
    <TD>Reflecting the sale of most of the outstanding balance of our consumer loans to Orient Credit
in June&nbsp;2004.</TD>
</TR>

</TABLE>



<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our average actual lending rate per year on loans receivable was 22.0% for the year ended
March&nbsp;31, 2004, 20.1% for the year ended March&nbsp;31, 2005 and 16.4% for the year ended March&nbsp;31,
2006. The following table illustrates the after tax impact of a hypothetical decrease in our
average lending rates on our loans receivable:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="11" style="border-bottom: 1px solid #000000"><B>Assumed average actual interest rate per year</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>16.0%</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>15.5%</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>15.0%</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="11"><B>(in millions)</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net income as reported</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">8,455</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">8,455</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">8,455</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net income as adjusted for hypothetical decrease in interest rates</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,966</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,418</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,871</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Based on the average actual lending rate of 16.4% per year for the year ended March&nbsp;31,
2006 and rate of change in our average actual lending rate on loans receivable in the past few
years, we believe the above range of 16.0% to 15.0% per year reasonably captures the likely changes
in the weighted average lending rate on loans receivable during the fiscal year ending March&nbsp;31,
2007.
</DIV>

<P align="center" style="font-size: 10pt">-116-
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have been focusing our efforts on acquisition of prime customers with low credit risk
responding to diversification of customers&#146; need, especially small and medium-sized businesses, by
promoting alliance businesses with various companies. We have been strategically shifting our
resources away from our consumer loan business, and in line with this strategic shift, we sold most
of the outstanding balance of our consumer loans to a third party in June&nbsp;2004, and concentrated on
extending loans to small and medium-sized business owners, centering on real estate financing.
These movements have caused our lending rates on loans receivable to decrease as our consumer loans
have a typically higher average lending rate than our small business owner loans and secured loans.
Since our consumer loans also have a higher charge-off ratio than all of our other loan products,
particularly our small business owner loans and secured loans, we expected an improvement in our
profit margin as the decreased net provision for loan losses would have been mitigated the negative
impact from our reduced average actual lending rate. However, due to a recognition of reserves for
estimated losses on excess interest payments to provide for the increasing borrowers&#146; demand for
refund of excess interest reflecting recent Supreme Court decisions concerning excess interest, our
net interest income after provision for loan losses as a percentage of our total interest income
fell to 62.9% for the year ended March&nbsp;31, 2006 compared to 64.0% for the previous fiscal year.
Although we expect our average lending rate on loans receivable to continue declining in the short
to medium term, we believe that our ongoing efforts to shift our resources to our non-consumer loan
businesses and acquisition of high profile receivables will have a positive effect on our net
income growth by offsetting to a certain extent the downward pressure on our net income created by
the reduced lending rate.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Loan Servicing</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The interest rates we charge on our purchased loans are heavily negotiated and vary
significantly, depending primarily on the quality of the loan. To the extent that the Japanese
economy continues to improve and the amount of non-performing loans in Japan declines, the interest
rates we charge on our purchased loans may decline as a result of improvement in the quality of the
loans we purchase.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 1%"><B><I>Investment Price Risk</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We invest in marketable and non-marketable equity securities for business and strategic
purposes. The book carrying value of these equity securities, including warrants, was &#165;21,444
million as of March&nbsp;31, 2005, of which &#165;2,800&nbsp;million were non-marketable, and &#165;28,143&nbsp;million as
of March&nbsp;31, 2006, of which &#165;4,747&nbsp;million were non-marketable. We also have non-equity
investments amounted to &#165;6,999&nbsp;million as of March&nbsp;31, 2005, of which &#165;6,812&nbsp;million were
investment funds, &#165;155&nbsp;million were debt securities and &#165;32&nbsp;million were other, and &#165;13,928&nbsp;million
as of March&nbsp;31, 2006, of which &#165;13,734&nbsp;million were investment funds, &#165;114&nbsp;million were debt
securities and &#165;80&nbsp;million were other.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We are exposed to changes in the market value of our investments. We have realized gains and
losses from both sales of investments, as well as from impairment as a result of other than
temporary declines in market value. With respect to our sales of investments, our gross realized
gains were, &#165;645&nbsp;million for the year ended March&nbsp;31, 2004, &#165;939&nbsp;million for the year ended March
31, 2005 and &#165;4,185&nbsp;million for the year ended March&nbsp;31, 2006, and our gross realized losses were,
&#165;46&nbsp;million for the year ended March&nbsp;31 2004, &#165;5&nbsp;million for the year ended March&nbsp;31, 2005 and &#165;2
million for the year ended March&nbsp;31, 2006. We experienced realized losses of &#165;867&nbsp;million on
impairment of investment securities, for the year ended March&nbsp;31, 2004, &#165;1,447&nbsp;million for the year
ended March&nbsp;31, 2005 and &#165;475&nbsp;million for the year ended March&nbsp;31, 2006.
</DIV>
<DIV align="left">
<A name="114"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Item&nbsp;12. Description of Securities Other than Equity Securities.</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Not required.
</DIV>



<P align="center" style="font-size: 10pt">-117-
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<DIV align="left">
<A name="115"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>PART II</B>
</DIV>

<DIV align="left">
<A name="116"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Item&nbsp;13. Defaults, Dividend Arrearages and Delinquencies.</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;None.
</DIV>
<DIV align="left">
<A name="117"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Item&nbsp;14. Material Modifications to the Rights of Security Holders and Use of Proceeds.</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;None.
</DIV>
<DIV align="left">
<A name="118"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Item&nbsp;15. Controls and Procedures.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Disclosure Controls and Procedures</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of the end of the year ended March&nbsp;31, 2006, our management, with the participation of
Kunihiko Sakioka, our president, representative director and principal executive officer (currently
our chairman, representative director and co-chief executive officer), and Akihiro Nojiri, our
executive director and principal financial officer, performed an evaluation of our disclosure
controls and procedures.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under Rules&nbsp;13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, disclosure
controls and procedures means controls and other procedures that are designed to ensure that
information required to be disclosed by us in the reports that we file or submit under the
Securities Exchange Act of 1934 is recorded, processed, summarized and reported, within the time
periods specified in the Securities and Exchange Commission&#146;s rules and forms. Disclosure controls
and procedures include, without limitation, controls and procedures designed to ensure that
information required to be disclosed by us in the reports that we file or submit under the
Securities Exchange Act of 1934 is accumulated and communicated to our management, including our
principal executive officer and principal financial officer, as appropriate to allow timely
decisions regarding required disclosure.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Based on that evaluation, our principal executive officer and principal financial officer
concluded that our disclosure controls and procedures were effective as of the date of the
evaluation.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Changes in Internal Control Over Financial Reporting</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;With the participation of our principal executive officer and principal financial officer, we
also evaluated any change in our internal control over financial reporting that occurred during the
year ended March&nbsp;31, 2006.
</DIV>


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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under Rules&nbsp;13a-15(f) and 15d-15(f) of the Securities Exchange Act of 1934, internal control
over financial reporting means a process designed by, or under the supervision of, our principal
executive officer and principal financial officer and effected by our board of directors,
management and other personnel, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external purposes in accordance
with generally accepted accounting principles and includes those policies and procedures that:
</DIV>



<DIV style="margin-top: 12pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>pertain to the maintenance of records that in reasonable detail accurately and
fairly reflect the transactions and dispositions of our assets;</TD>
</TR>

<TR>
    <TD style="font-size: 12pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>provide reasonable assurance that transactions are recorded as necessary to permit
preparation of our financial statements in accordance with generally accepted
accounting principles, and that our receipts and expenditures are being made only in
accordance with authorizations of our management and directors; and</TD>
</TR>

<TR>
    <TD style="font-size: 12pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>provide reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use or disposition of our assets that could have a material
effect on our financial statements.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Based on that evaluation, our principal executive officer and principal financial officer
concluded that no changes were made in our internal control over financial reporting that occurred
during the year ended March&nbsp;31, 2006 that has materially affected, or is reasonably likely to
materially affect, our internal control over financial reporting.
</DIV>
<DIV align="left">
<A name="119"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Item&nbsp;16A. Audit Committee Financial Expert.</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our board of statutory auditors has determined that we do not have an &#147;audit committee
financial expert&#148; as defined in Item&nbsp;16A of Form 20-F serving on the board of statutory auditors.
We believe that the combined knowledge, skills and experience of our statutory auditors enable
them, as a group, to act effectively in the fulfillment of their tasks and responsibilities,
including those under the Sarbanes-Oxley Act of 2002, as amended. In addition, our statutory
auditors have the power and authority to engage outside experts as they deem appropriate to provide
them with advice on matters related to their responsibilities.
</DIV>
<DIV align="left">
<A name="120"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Item&nbsp;16B. Code of Ethics.</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We currently do not have a code of ethics that meets the requirements of this Item&nbsp;16.B,
because we believe that the combination of our various internal regulations and guidelines are
effective in guiding our directors, statutory auditors and employees toward good business conduct.
However, we are currently considering whether or not to establish a code of ethics that meets the
requirements of the Item&nbsp;16B.
</DIV>


<P align="center" style="font-size: 10pt">-119-
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<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="left">
<A name="121"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Item&nbsp;16C. Principal Accountant Fees and Services.</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table shows information about fees paid by us to BDO Sanyu &#038; Co., our principal
accountants. All services performed by BDO Sanyu &#038; Co were approved by our board of statutory
auditors:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="11" style="border-bottom: 1px solid #000000"><B>Year ended March 31,</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2006</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="11"><B>(millions)</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Audit fees<SUP style="font-size: 85%; vertical-align: text-top"> (1)</SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">47</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">45</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">54</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Audit-related fees<SUP style="font-size: 85%; vertical-align: text-top"> (2)</SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Tax fees<SUP style="font-size: 85%; vertical-align: text-top"> (3)</SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">All other fees<SUP style="font-size: 85%; vertical-align: text-top"> (4)</SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>




<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">(1)</TD>
    <TD>&nbsp;</TD>
    <TD>These are the aggregate fees billed for the fiscal year for professional services rendered by
our principal accountants for the audit of our annual financial statements and services that
are normally provided in connection with statutory and regulatory filings or engagements for
those years.</TD>
</TR>
 <TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(2)</TD>
    <TD>&nbsp;</TD>
    <TD>These are the aggregate fees billed for the fiscal year for assurance and related services by
our principal accountants that are reasonably related to the performance of the audit of our
financial statements other than those reported under &#147;Audit Fees&#148; above. These services
include due diligence and preparation of comfort letters in connection with bond offerings.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(3)</TD>
    <TD>&nbsp;</TD>
    <TD>These are the aggregate fees billed for the fiscal year for professional services rendered
by our principle accountants for tax compliance, tax advice and tax planning.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(4)</TD>
    <TD>&nbsp;</TD>
    <TD>These are the aggregate fees billed for the fiscal year for products and services provided
by our principle accountants other than those included above.</TD>
</TR>

</TABLE>



<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our board of statutory auditors currently approves every engagement by us of BDO Sanyu &#038;
Co. or any of its affiliates for audit or non-audit services prior to the provision of these
services. We are considering whether or not to establish pre-approval policies and procedures to
facilitate the responsibility of our board of statutory auditors to monitor the independence of BDO
Sanyu &#038; Co.
</DIV>
<DIV align="left">
<A name="122"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Item&nbsp;16D. Exemptions from the Listing Standards for Audit Committees.</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;With respect to the requirements of Rule&nbsp;10A-3 under the Securities Exchange Act of 1934
relating to listed company audit committees, which apply to us through Section&nbsp;303A.06 of the New
York Stock Exchange&#146;s Listed Company Manual, we rely on an exemption provided by paragraph (c)(3)
of that Rule available to foreign private issuers with boards of corporate auditors meeting certain
requirements. For a New York Stock Exchange-listed Japanese company with a board of corporate
auditors, the requirements for relying on paragraph (c)(3) of Rule&nbsp;10A-3 are as follows:
</DIV>

<DIV style="margin-top: 12pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The board of corporate auditors must be established, and its members must be
selected, pursuant to Japanese law expressly requiring such a board for Japanese
companies that elect to have a corporate governance system with corporate auditors.</TD>
</TR>

<TR>
    <TD style="font-size: 12pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Japanese law must and does require the board of corporate auditors to be separate
from the board of directors.</TD>
</TR>

<TR>
    <TD style="font-size: 12pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>None of the members of the board of corporate auditors may be elected by management,
and none of the listed company&#146;s executive officers may be a member of the board of
corporate auditors.</TD>
</TR>

<TR>
    <TD style="font-size: 12pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Japanese law must and does set forth standards for the independence of the members
of the board of corporate auditors from the listed company or its management.</TD>
</TR>

<TR>
    <TD style="font-size: 12pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The board of corporate auditors, in accordance with Japanese law or the registrant&#146;s
governing documents, must be responsible, to the extent permitted by Japanese law, for
the appointment, retention and oversight of the work of any registered public
accounting firm engaged (including, to the extent permitted by Japanese law, the
resolution of disagreements between management and the auditor regarding financial
reporting) for the purpose of preparing or issuing an audit report or performing other
audit, review or attest services for the listed company, including its principal
accountant which audits its consolidated financial statements included in its annual
reports on Form 20-F.</TD>
</TR>


</TABLE>
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV style="margin-top: 12pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>To the extent permitted by Japanese law:</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 12pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="9%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the board of corporate auditors must establish procedures for (i)&nbsp;the
receipt, retention and treatment of complaints received by us regarding
accounting, internal accounting controls, or auditing matters, and (ii)&nbsp;the
confidential, anonymous submission by our employees of concerns regarding questionable
accounting or auditing matters;
</TD>
</TR>
</TABLE>
</DIV>


<DIV style="margin-top: 12pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="9%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the board of corporate auditors must have the authority to engage
independent counsel and other advisers, as it determines necessary to carry
out its duties; and</TD>
</TR>

<TR>
    <TD style="font-size: 12pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="9%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the listed company must provide for appropriate funding, as determined by
its board of corporate auditors, for payment of (i)&nbsp;compensation to any
registered public accounting firm engaged for the purpose of preparing or
issuing an audit report or performing other audit, review or attest services
for us, (ii)&nbsp;compensation to any advisers employed by the board of corporate
auditors, and (iii)&nbsp;ordinary administrative expenses of the board of
corporate auditors that are necessary or appropriate in carrying out its
duties.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In our assessment, our Board of Corporate Auditors, which meets the requirements for reliance
on the exemption in paragraph (c)(3) of Rule&nbsp;10A-3 described above, is not materially less
effective than an audit committee meeting all the requirements of paragraph (b)&nbsp;of Rule&nbsp;10A-3
(without relying on any exemption provided by that Rule) at acting independently of management and
performing the functions of an audit committee as contemplated therein.
</DIV>
<DIV align="left">
<A name="123"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Item&nbsp;16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers.</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table shows the purchases made by us of our shares during the year ended March
31, 2006:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="52%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Total Number of</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Maximum Number</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Shares Purchased as</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>of Shares that May</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Part of Publicly</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Yet Be purchased</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Total Number of</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Average Price Paid</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Announced Plans or</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Under the Plans or</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Period</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Shares Purchased</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>per Share</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Program</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Programs</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">April&nbsp;2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">960</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">63</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">N/A</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">N/A</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">May&nbsp;2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,956</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">53</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">N/A</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">N/A</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">June&nbsp;2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,316</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">52</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">N/A</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">N/A</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">July&nbsp;2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,532</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">56</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">N/A</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">N/A</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">August&nbsp;2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,232</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">60</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">N/A</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">N/A</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">September&nbsp;2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,552</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">66</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">N/A</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">N/A</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">October&nbsp;2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,442</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">72</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">N/A</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">N/A</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">November&nbsp;2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">828</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">92</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">N/A</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">N/A</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">December&nbsp;2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,172</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">108</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">N/A</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">N/A</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">January&nbsp;2006</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">808</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">139</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">N/A</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">N/A</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">February&nbsp;2006</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">580</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">125</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">N/A</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">N/A</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">March&nbsp;2006</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,124</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">113</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">N/A</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">N/A</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">37,502</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">67</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">N/A</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">N/A</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under the Corporate Law of Japan, a holder of shares constituting less than one full unit
may require us to purchase such shares at their market value (See &#147;Item&nbsp;10B&#151;Rights of Our
Shareholders&#151;Rights with Respect to Distribution of Surplus, Stock Repurchases and Stock Splits&#148;).
During the year ended March&nbsp;31, 2006, we purchased 37,502 shares for a total purchase price of &#165;2
million upon such requests from holders of shares constituting less than one full unit.
</DIV>

<P align="center" style="font-size: 10pt">-121-
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left">
<A name="124"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>PART III</B>
</DIV>

<DIV align="left">
<A name="125"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Item&nbsp;17. Financial Statements.</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Not applicable.
</DIV>
<DIV align="left">
<A name="126"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Item&nbsp;18. Financial Statements.</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The information required by this item begins on page F-1 of this annual report on Form 20-F.
</DIV>
<DIV align="left">
<A name="127"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Item&nbsp;19. Exhibits.</B>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="10%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="87%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left"><B>Exhibit</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000"><B>Number</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Description</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">1.1
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&#151;
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Our Articles of Incorporation (English Translation)</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">1.2
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&#151;
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Our Share Handling Regulations (English Translation)</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">1.3
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&#151;
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Our Regulations of the Board of Directors (English Translation)</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">1.4
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&#151;
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Our Regulations of the Board of Statutory Auditors (English Translation)</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">2.1
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&#151;
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Our Specimen Common Stock Certificate (English Translation) (incorporated by
reference to the corresponding exhibit to our Registration Statement Form&nbsp;F-1 (File
No.&nbsp;333-97229) declared effective on August&nbsp;1, 2002)</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">2.2
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&#151;
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Form of Deposit Agreement Among Nissin Co., Ltd., The Bank of New York as Depositary
and All Owners and Holders from Time to Time of American Depositary Receipts,
Including the Form of American Depositary Receipt (incorporated by reference to the
Registration Statement on Form&nbsp;F-6 (File No.&nbsp;333-97133) filed on July&nbsp;24, 2002)</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">8.1
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&#151;
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">List of Our Subsidiaries</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">12.1
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&#151;
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Certification of principal executive officer required by 17 C.F.R. 240. 13a-14(a)</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">12.2
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&#151;
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Certification of principal executive officer required by 17 C.F.R. 240. 13a-14(a)</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">12.3
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&#151;
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Certification of principal financial officer required by 17 C.F.R. 240. 13a-14(a)</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">13.1
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&#151;
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Certification of chief executive officer required by 18 U.S.C. Section&nbsp;1350</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">13.2
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&#151;
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Certification of chief executive officer required by 18 U.S.C. Section&nbsp;1350</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">13.3
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&#151;
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Certification of chief financial officer required by 18 U.S.C. Section&nbsp;1350</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have not included as exhibits certain instruments with respect to our long-term debt, the
amount of debt authorized under each of which does not exceed 10% of our total assets, and we agree
to furnish a copy of any such instrument to the Commission upon request.
</DIV>


<P align="center" style="font-size: 10pt">-122-
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left">
<A name="128"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>SIGNATURES</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F
and that it has duly caused and authorized the undersigned to sign this annual report on its
behalf.
</DIV>

<TABLE width="100%" border="0" cellspacing="0" cellpadding="0" style="font-size: 10pt">
<TR>
    <TD width="48%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
</TR>
<TR>
    <TD valign="top" align="left">&nbsp;</TD>
    <TD colspan="3" align="left">NISSIN CO., LTD.<BR>
&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD valign="top">By&nbsp;&nbsp;</TD>
    <TD colspan="2" style="border-bottom: 1px solid #000000" align="left">/s/ Shinsuke Amiya
&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top">Name:&nbsp;&nbsp;</TD>
    <TD align="left">Shinsuke Amiya&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top">Title:&nbsp;&nbsp;</TD>
    <TD align="left">President,
Representative Director and
<BR>Co-Chief Executive Officer&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">September
27, 2006
</DIV>



<P align="center" style="font-size: 10pt">S-1
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>
<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left">
<!-- TOC -->
</DIV>
<DIV align="left">
<A name="tocpage"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>NISSIN CO., LTD.</B>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 12pt"><B>INDEX TO FINANCIAL STATEMENTS</B>

</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="90%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000">Page</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD colspan="3" align="left"><B>Annual Financial Statements</B></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><A href="#301">Report of Independent Registered Public Accounting Firm </A></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">F-2</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><A href="#302">Consolidated Balance Sheets as of March 31, 2005 and 2006</A></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">F-3</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><A href="#303">Consolidated Statements of Income for the Years Ended March 31, 2004, 2005 and 2006</A></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">F-4</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><A href="#304">Consolidated
Statements of Shareholders&#146; Equity for the Years Ended March 31, 2004, 2005 and 2006</A></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">F-6</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><A href="#305">Consolidated Statements of Cash Flows for the Years Ended March 31, 2004, 2005 and 2006</A></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">F-8</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><A href="#306">Notes to the Consolidated Financial Statements </A></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">F-10</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left">
<!-- /TOC -->
</DIV>

<P align="center" style="font-size: 10pt">F-1
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left">
<A name="301"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">To the Board of Directors and Shareholders of<BR>
NISSIN CO., LTD.:

</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 12pt">We have audited the accompanying consolidated balance sheets of NISSIN CO., LTD. and its
subsidiaries as of March&nbsp;31, 2005 and 2006, and the related consolidated statements of income,
shareholders&#146; equity, and cash flows for each of the three years in the period ended March&nbsp;31,
2006. These financial statements are the responsibility of the Company&#146;s management. Our
responsibility is to express an opinion on these financial statements based on our audits.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">We conducted our audits in accordance with the standards of the Public Company Accounting Oversight
Board (United States). Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material misstatement. The
Company is not required to have, nor were we engaged to perform, an audit of its internal control
over financial reporting. Our audits included consideration of internal control over financial
reporting as a basis for designing audit procedures that are appropriate in the circumstances, but
not for the purpose of expressing an opinion on the effectiveness of the Company&#146;s internal control
over financial reporting. Accordingly, we express no such opinion. An audit also includes
examining, on a test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates made by management,
as well as evaluating the overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">In our opinion, the accompanying consolidated financial statements referred to above present
fairly, in all material respects, the financial position of the Company as of March&nbsp;31, 2005 and
2006, and the results of its operations and its cash flows for each of the three years in the
period ended March&nbsp;31, 2006, in conformity with accounting principles generally accepted in the
United States of America.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">Also, in our opinion, the U.S. dollar amounts in the accompanying consolidated financial statements
have been translated from Japanese yen on the basis set forth in Note 1 to the consolidated
financial statements.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">BDO Sanyu &#038; Co.<BR>
Osaka, Japan<BR>
June&nbsp;24, 2006

</DIV>

<P align="center" style="font-size: 10pt">F-2
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left">
<A name="302"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>CONSOLIDATED BALANCE SHEETS</B>

</DIV>

<DIV align="left" style="font-size: 10pt"><B>NISSIN CO., LTD. AND SUBSIDIARIES<br>
March&nbsp;31, 2005 and 2006</B></DIV>


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="71%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Thousands of</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000">Millions of Yen</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">U.S. Dollars (Note 1)</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2005</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2006</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="3" align="center" style="border-bottom: 1px solid #000000">2006</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Assets</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cash and cash equivalents</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">25,709</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">22,860</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
    <TD align="right">$&nbsp;&nbsp;&nbsp;194,603</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Restricted cash</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">846</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,417</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">29,088</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Loans receivable, net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">146,119</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">225,947</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,923,444</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Purchased loans receivable, net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13,581</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">24,155</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">205,627</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Interest receivable</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">831</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,021</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,692</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Investment securities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">28,443</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">42,071</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">358,143</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Real estate for sale</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,136</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20,792</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">176,998</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Property and equipment, net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,285</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11,169</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">95,078</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Investment in affiliates</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">514</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">617</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,252</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Deferred income taxes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">333</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">721</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,138</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,604</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,173</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">61,064</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">228,401</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">359,943</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
    <TD align="right">$3,064,127</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Liabilities and Shareholders&#146; Equity</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Short-term borrowings</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">12,600</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">60,411</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
    <TD align="right">$&nbsp;&nbsp;&nbsp;514,267</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Accrued income taxes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">716</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,089</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">51,835</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Accrued expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">497</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">702</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,976</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Long-term borrowings</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">136,844</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">198,924</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,693,403</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Capital lease obligations</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,683</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,337</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11,382</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Accrued retirement benefits</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">330</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">647</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,508</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Deferred income taxes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,439</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,382</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11,765</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other liabilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,175</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,514</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">63,964</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total liabilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">160,284</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">277,006</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,358,100</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Minority interests</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,146</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,433</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20,712</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Commitments and contingencies (Notes 12, 13 and 16)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Shareholders&#146; equity (Note 17):</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Common stock &#151; designated value</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Authorized
&#151; 1,920,000,000 and 7,680,000,000 shares at<br>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;March&nbsp;31, 2005 and 2006, respectively</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">

<TD><DIV style="margin-left:45px; text-indent:-15px">Issued&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &#151; 2,614,408,468 and 2,812,941,288 shares at<br>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;March&nbsp;31, 2005 and 2006, respectively</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,779</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11,849</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">100,868</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Additional paid-in capital</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,836</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14,808</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">126,058</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Retained earnings</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">44,313</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">50,197</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">427,318</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Cumulative other comprehensive income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,086</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,485</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">46,693</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Less treasury stock, at cost:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">132,898,332 shares and 80,102,074 shares at March&nbsp;31,
2005 and 2006, respectively</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(3,043</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,835</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(15,622</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total shareholders&#146; equity</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">66,971</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">80,504</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">685,315</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total liabilities and shareholders&#146; equity</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">228,401</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">359,943</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
    <TD align="right">$3,064,127</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">See accompanying summary of significant accounting policies and other notes to consolidated
financial statements.
</DIV>


<P align="center" style="font-size: 10pt">F-3
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left">
<A name="303"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>CONSOLIDATED STATEMENTS OF INCOME</B>

</DIV>

<DIV align="left" style="font-size: 10pt"><B>NISSIN CO., LTD. AND SUBSIDIARIES<br>
For the Years Ended March&nbsp;31, 2004, 2005 and 2006</B></DIV>


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="52%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Thousands of</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="10" style="border-bottom: 1px solid #000000">Millions of Yen</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">U.S. Dollars (Note 1)</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2004</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2005</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2006</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2006</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Interest income:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Loans</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">38,036</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">29,298</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">28,849</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
    <TD align="right">$245,586</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Purchased loans</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,069</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,255</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,960</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">42,224</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Other</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">92</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">783</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Total interest income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">40,107</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">32,555</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">33,901</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">288,593</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Interest expense:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Borrowings</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,611</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,972</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,608</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">22,201</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Other</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">113</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">187</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">497</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,231</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Total interest expense</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,724</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,159</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,105</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">26,432</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Net interest income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">36,383</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">29,396</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">30,796</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">262,161</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Provision for loan losses, net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13,461</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,576</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,463</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">80,557</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Net interest income after provision for loan
losses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">22,922</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20,820</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">21,333</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">181,604</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Non-interest income:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Gain on sale of loans receivable</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,327</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">(Losses) gain on sale and impairment of investment
securities, net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(268</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(513</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,708</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">31,566</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Gain (losses)&nbsp;on sale of subsidiaries and affiliates, net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">670</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,339</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(43</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(366</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Guarantee fees received, net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">113</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">317</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">508</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,325</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Equity losses in affiliates, net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(183</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(92</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(61</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(519</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Rents, dividends and other</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">398</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,606</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,822</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">49,561</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Total non-interest income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">730</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,984</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,934</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">84,567</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Non-interest expense:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Salaries and employee benefits</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,735</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,521</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,181</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">61,131</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Occupancy, furniture and equipment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,060</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,395</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,654</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">22,593</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Advertising</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">218</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">332</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">629</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,355</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Other general and administrative expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,349</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,869</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,060</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">43,075</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Losses on sale, disposal and impairment of long-lived
assets, net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">530</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">94</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">136</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Other</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">97</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">493</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">456</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,881</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Minority interests</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">192</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">602</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,125</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Total non-interest expense</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12,993</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14,896</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16,598</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">141,296</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Income before income taxes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,659</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11,908</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14,669</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">124,875</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Income taxes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,582</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,646</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,214</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">52,899</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">6,077</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">7,262</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">8,455</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
    <TD align="right">$&nbsp;71,976</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">F-4
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>CONSOLIDATED STATEMENTS OF INCOME</B><br>
<B>NISSIN CO., LTD. AND SUBSIDIARIES</B><br>
<B>For the Years Ended March&nbsp;31, 2004, 2005 and 2006</B><br>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="52%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">U.S. Dollars</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="10" style="border-bottom: 1px solid #000000">Yen</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">(Note 1)</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="font-size: 10pt"><U>Per share data:</U></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2004</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2005</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2006</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2006</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net income &#151; basic</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
    <TD align="right">&#165;2.54</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
    <TD align="right">&#165;2.98</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
    <TD align="right">&#165;3.27</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
    <TD align="right">$0.028</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:81px; text-indent:-15px">&#151; diluted</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.34</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.70</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3.08</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.026</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cash dividends paid</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.42</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.53</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.02</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.009</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><u>Weighted average shares outstanding</u>:
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="53%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="11%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="10" style="border-bottom: 1px solid #000000">Thousands of Shares</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2004</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2005</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2006</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Basic</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,393,856</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,441,656</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,584,935</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Diluted</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,640,788</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,703,868</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,758,832</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">See accompanying summary of significant accounting policies and other notes to consolidated
financial statements.
</DIV>


<P align="center" style="font-size: 10pt">F-5
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left">
<A name="304"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>CONSOLIDATED STATEMENTS OF SHAREHOLDERS&#146; EQUITY</B>
</DIV>


<DIV align="left" style="font-size: 10pt"><B>NISSIN CO., LTD. AND SUBSIDIARIES<br>
For the Years Ended March&nbsp;31, 2004, 2005 and 2006</B></DIV>


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="30%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Number of Shares</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="22" style="border-bottom: 1px solid #000000">Millions of Yen</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">of Common Stock</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Cumulative Other</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Total</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Issued</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Common</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Additional</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Retained</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Comprehensive</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Treasury Stock,</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Shareholders&#146;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">(Thousands)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Stock</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Paid-in Capital</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Earnings</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Income</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">at Cost</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Equity</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Balance as of March&nbsp;31, 2003</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,546,380</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
    <TD align="right">&#165;6,611</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
    <TD align="right">&#165;8,462</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
    <TD align="right">&#165;33,275</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
    <TD align="right">&#165;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;70</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">&#165;(2,821</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
    <TD align="right">&#165;45,597</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Exercise of stock warrants</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">40,364</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">607</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">607</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,214</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Stock issuance costs</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(13</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(13</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Comprehensive income:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Net income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,077</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,077</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Other comprehensive
income, net of tax</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Change in net
unrealized gains on
investment securities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,304</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,304</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Change in net
unrealized losses on
derivative instruments</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(3</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(3</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Total comprehensive income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,378</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Cash dividends paid</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,001</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,001</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Repurchases of warrants</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(7</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(7</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Purchases of treasury stock</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,209</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,209</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Sales of treasury stock</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">43</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">295</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">338</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Balance as of March&nbsp;31, 2004</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,586,744</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,218</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,092</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">38,351</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,371</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(3,735</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">54,297</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Exercise of stock warrants
and convertible bonds</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">27,664</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">561</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">551</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,112</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Stock issuance costs</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(23</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(23</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Comprehensive income:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Net income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,262</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,262</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Other comprehensive
income, net of tax</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Change in net
unrealized gains on
investment securities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,725</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,725</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Change in net
unrealized losses on
derivative instruments</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Change in foreign
currency adjustments</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(9</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(9</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD colspan="3"><DIV style="margin-left:30px; text-indent:-15px">Total comprehensive income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11,977</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Cash dividends paid</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,300</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,300</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Purchases of treasury stock</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Sales of treasury stock</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">216</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">693</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">909</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Balance as of March&nbsp;31, 2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,614,408</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,779</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,836</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">44,313</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,086</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(3,043</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">66,971</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="right" style="font-size: 10pt; margin-top: 12pt"><B>(Continued)</B>
</DIV>



<P align="center" style="font-size: 10pt">F-6
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>
<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>CONSOLIDATED STATEMENTS OF SHAREHOLDERS&#146; EQUITY<BR>
NISSIN CO., LTD. AND SUBSIDIARIES<BR>
For the Years Ended March&nbsp;31, 2004, 2005 and 2006</B>

</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="23%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Number of Shares</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="22" style="border-bottom: 1px solid #000000">Millions of Yen</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">of Common Stock</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Cumulative Other</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Total</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Issued</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Common</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Additional</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Retained</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Comprehensive</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Treasury Stock,</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Shareholders&#146;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">(Thousands)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Stock</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Paid-in Capital</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Earnings</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Income</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">at Cost</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Equity</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>(Continued)</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Balance as of March&nbsp;31, 2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,614,408</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,779</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,836</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">44,313</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,086</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(3,043</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">66,971</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Conversion
of convertible bonds</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">198,533</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,070</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,050</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,120</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Stock issuance costs</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(77</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(77</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Comprehensive income:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Net income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,455</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,455</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Other comprehensive
income, net of tax</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Change in net
unrealized gains on&nbsp;investment securities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,765</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,765</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Change in net
unrealized losses on&nbsp;derivative instruments</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Change in foreign
currency adjustments</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">160</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">160</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Total comprehensive income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,854</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Cash dividends paid</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,571</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,571</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Purchases of treasury stock</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Sales of treasury stock</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">999</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,210</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,209</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Balance as of March&nbsp;31, 2006</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,812,941</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">11,849</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
    <TD align="right">&#165;14,808</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">50,197</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
    <TD align="right">&#165;5,485</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">&#165;(1,835</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
    <TD align="right">&#165;80,504</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="23%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Number of Shares</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="22" style="border-bottom: 1px solid #000000">Thousands of U.S. Dollars (Note 1)</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">of Common Stock</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Cumulative Other</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Total</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Issued</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Common</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Additional</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Retained</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Comprehensive</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Treasury Stock,</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Shareholders&#146;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">(Thousands)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Stock</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Paid-in Capital</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Earnings</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Income</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">at Cost</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Equity</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Balance as of March&nbsp;31, 2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,614,408</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">66,221</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
    <TD align="right">$&nbsp;&nbsp;83,732</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">377,228</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
    <TD align="right">$&nbsp;68,835</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">$(25,904</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
    <TD align="right">$570,112</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Conversion
of convertible bonds</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">198,533</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">34,647</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">34,477</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">69,124</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Stock issuance costs</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(655</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(655</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Comprehensive income:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Net income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">71,976</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">71,976</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Other comprehensive
income, net of tax</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Change in net
unrealized gains on&nbsp;investment securities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(23,538</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(23,538</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Change in net
unrealized losses on&nbsp;derivative instruments</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">34</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">34</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Change in foreign
currency adjustments</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,362</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,362</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD colspan="3"><DIV style="margin-left:30px; text-indent:-15px">Total comprehensive income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">49,834</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Cash dividends paid</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(21,886</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(21,886</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Purchases of treasury stock</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(18</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(18</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Sales of treasury stock</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,504</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,300</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">18,804</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Balance as of March&nbsp;31, 2006</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,812,941</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">100,868</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
    <TD align="right">$126,058</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">427,318</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
    <TD align="right">$&nbsp;46,693</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">$(15,622</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
    <TD align="right">$685,315</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">See accompanying summary of significant accounting policies and other notes to consolidated financial statements.
</DIV>


<P align="center" style="font-size: 10pt">F-7
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="left">
<A name="305"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>CONSOLIDATED STATEMENTS OF CASH FLOWS<BR>
NISSIN CO., LTD. AND SUBSIDIARIES<BR>
For the Years Ended March&nbsp;31, 2004, 2005 and 2006</B>

</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="52%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Thousands of</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="10" style="border-bottom: 1px solid #000000">Millions of Yen</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">U.S. Dollars (Note 1)</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2004</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2005</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2006</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2006</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Operating Activities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Net income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
    <TD align="right">&#165;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6,077</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
    <TD align="right">&#165;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7,262</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
    <TD align="right">&#165;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8,455</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
    <TD align="right">$&nbsp;&nbsp;&nbsp;&nbsp;71,976</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Adjustments to reconcile net income to net cash provided
by operating activities:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Provision for loan losses, net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13,461</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,576</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,463</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">80,557</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Depreciation and amortization</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">884</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,175</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,333</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11,348</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Amortization of debt issuance costs</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">221</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">239</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">184</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,566</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Amortization of loan origination costs</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">751</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">540</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">431</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,669</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Gain on sale of loans receivable</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(3,327</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Losses (gain)&nbsp;on sale and impairment of investment
securities, net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">268</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">513</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(3,708</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(31,566</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Losses on sale, disposal and impairment of long-lived
assets, net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">530</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">94</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">136</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">(Gain) losses on sale of subsidiaries and affiliates, net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(670</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,339</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">43</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">366</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Equity losses in affiliates, net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">183</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">92</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">61</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">519</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Deferred income taxes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(633</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,427</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,460</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(12,429</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Minority interests</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">192</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">602</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,125</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Changes in assets and liabilities:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Interest receivable</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">117</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">229</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(166</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,413</TD>
    <TD nowrap>)</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Accrued income taxes and expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(58</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,181</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,521</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">46,999</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Other liabilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">807</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,194</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,495</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">29,753</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net cash provided by operating activities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">21,942</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14,686</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">24,270</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">206,606</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Investing Activities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Proceeds from sales of loans receivable</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">32,697</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Loans receivable, net of principal collections</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(13,764</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(17,615</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(82,347</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(701,005</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Purchases of distressed loans</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(4,502</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(16,896</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(19,779</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(168,375</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Proceeds from principal collections of distressed loans</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,469</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,840</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,956</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">59,215</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Proceeds from sales of distressed loans</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">711</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,053</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Purchases of investment securities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(3,605</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(16,508</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(26,794</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(228,092</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Proceeds from sales of investment securities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,173</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,125</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12,707</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">108,172</TD>
    <TD>&nbsp;</TD>
</TR>


<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Purchases of
real estate for sale</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,958</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(24,699</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(210,258</TD>
    <TD nowrap>)</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Proceeds
from sales of real estate</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">20</TD>
    <TD nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">974</TD>
    <TD nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">5,395</TD>
    <TD nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">45,927</TD>
    <TD nowrap>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Purchases of property and equipment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(880</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,754</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(6,368</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(54,210</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Proceeds from sales of property and equipment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">382</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">26</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Investment in affiliates</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(450</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(160</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(46</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(392</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Proceeds from sales of affiliates</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">504</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Acquisition of a new subsidiary, net of cash acquired</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(764</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(554</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(4,716</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Proceeds from sales of subsidiaries, net of cash decreased</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">78</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Other changes in other assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(726</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,543</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,161</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(9,883</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net cash used in investing activities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(18,301</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(12,546</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(135,976</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,157,538</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="right" style="font-size: 10pt; margin-top: 12pt"><B>(Continued)</B>
</DIV>


<P align="center" style="font-size: 10pt">F-8
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>CONSOLIDATED STATEMENTS OF CASH FLOWS<BR>
NISSIN CO., LTD. AND SUBSIDIARIES<BR>
For the Years Ended March&nbsp;31, 2004, 2005 and 2006</B>

</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="52%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Thousands of</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="10" style="border-bottom: 1px solid #000000">Millions of Yen</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">U.S. Dollars (Note 1)</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2004</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2005</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2006</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2006</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>(Continued)</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Financing Activities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Deposit of restricted cash</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(212</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(411</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,571</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(21,886</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Issuance of commercial paper</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15,100</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">65,900</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">560,994</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Repayments of commercial paper</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(12,200</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(14,800</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(39,400</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(335,405</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Proceeds from short-term borrowings</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,539</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20,851</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">107,472</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">914,889</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Repayments of short-term borrowings</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(4,100</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(13,483</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(87,144</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(741,840</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Proceeds from long-term borrowings</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">56,564</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">83,685</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">141,918</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,208,121</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Repayments of long-term borrowings</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(62,686</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(88,555</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(76,425</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(650,592</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Payments of capital lease obligations</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(762</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(823</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(614</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(5,227</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Repurchases of stock warrants</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(7</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Proceeds from exercise of stock warrants</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,214</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">54</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Stock issuance costs</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(13</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(23</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(77</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(655</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Purchases of treasury stock</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,209</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(18</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Proceeds from sales of treasury stock</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">338</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">909</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,209</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">18,805</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Dividends paid</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,001</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,300</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,571</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(21,886</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Dividends
paid to minority interests</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(99</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(843</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Proceeds from issuance of new shares by subsidiaries</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">525</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,132</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">79</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">673</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net cash (used in) provided by financing activities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(7,010</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,335</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">108,675</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">925,130</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Effect of exchange rate changes on cash and cash equivalents</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(9</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">182</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,549</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net (decrease)&nbsp;increase in cash and cash equivalents</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(3,369</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,466</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,849</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(24,253</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cash and cash equivalents at beginning of year</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">23,612</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20,243</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">25,709</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">218,856</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cash and cash equivalents at end of year</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
    <TD align="right">&#165;&nbsp;20,243</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
    <TD align="right">&#165;&nbsp;25,709</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
    <TD align="right">&#165;&nbsp;&nbsp;&nbsp;22,860</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
    <TD align="right">$&nbsp;&nbsp;&nbsp;194,603</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">See accompanying summary of significant accounting policies and other notes to consolidated financial statements.
</DIV>


<P align="center" style="font-size: 10pt">F-9
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left">
<A name="306"></A>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>1. Business Organization and Basis of Presentation</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><I>(a)&nbsp;Description of Business</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">NISSIN
CO., LTD. (hereinafter referred to as the &#147;Company&#148;) was incorporated in May&nbsp;1960 in Ehime Prefecture in western Japan, and
has expanded nationwide. The Company and its subsidiaries operate
mainly in Japan. The Company currently
maintains head offices in Tokyo and in the City of Matsuyama, Ehime Prefecture, Japan. Because of
its concentration on lending and funding in Japan, the Company is exposed to negative changes in the
Japanese economy and in the stability of its borrowing base in Japan.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">The
Company is a non-bank financial institution providing integrated financial services as its main
business, specializing in providing loan products to owners of small to medium-sized enterprises,
sole proprietors, and consumers. The Company and certain subsidiaries provide the following products by
using a variety of channels:
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 3%"><I>Small business owner loans</I>: Loans designed for small business owners. The small business
owner loan is an unsecured loan that, in the Company&#146;s case, requires one or more guarantees from
third-party individuals with an income source separate from the customer. It can be used
without any restrictions to repay existing loans or to obtain working capital. These loans
are payable monthly in arrears at fixed interest rates.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 3%"><I>Business Timely loans</I>: Unsecured revolving loans designed for small business owners.
Business Timely loans are marketed to more creditworthy owners of businesses and sole
proprietors and do not require a guarantor. These loans are payable monthly in arrears at
fixed interest rates.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 3%"><I>Secured loans</I>: Primarily loans secured by real property designed for property developers.
The interest rates for these loans are determined on an individual basis. These loans turn
to cash quickly as they typically mature in one month to two years.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 3%"><I>Wide loans</I>: Debt-consolidation loans for consumers who already have a high level of
outstanding debt with several consumer finance lenders. The borrower must supply one or
more guarantors with a separate income source. These loans are payable monthly in arrears
at fixed interest rates.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 3%"><I>Consumer loans</I>: Unsecured revolving loans to consumers at fixed interest rates, payable
monthly in arrears.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 3%"><I>Other loans</I>: Collateralized lease financing, installment credits, notes discounting, and
other lending services.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 3%"><I>Other products</I>: Credit enhancements through guarantees, investments in real estate
properties, securities and other businesses.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 12pt">On
June&nbsp;1, 2004, the Company sold most of its consumer loans receivable to Orient Credit Co., Ltd. for
&#165;32,697&nbsp;million. The decision to make this sale was made pursuant to the basic strategy of
concentrating on the markets for small to medium-sized businesses owners.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">Nissin Servicer Co., Ltd. (&#147;SVC&#148;), a 74.6% owned subsidiary, was incorporated in July&nbsp;2001, and
started its loan servicing business in October&nbsp;2001. SVC mainly purchases distressed loans from
financial institutions and services these loans for its own portfolio. In September&nbsp;2004, SVC
listed its stock on the Mothers market of the Tokyo Stock Exchange and became Japan&#146;s first loan
servicing company to go public.
</DIV>


<P align="center" style="font-size: 10pt">F-10
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><I>(b)</I>  <I>Basis of Presentation</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">The
Company and its domestic subsidiaries maintain their books and records in accordance with accounting
principles generally accepted in Japan (&#147;Japanese GAAP&#148;), and its foreign subsidiaries in
conformity with those of the country of their domicile. Certain adjustments and reclassifications
have been made in the accompanying consolidated financial statements to conform with accounting
principles generally accepted in the United States of America (&#147;U.S. GAAP&#148;). These adjustments
were not recorded in the statutory Japanese GAAP books of account.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><I>(c)&nbsp;Principles of Consolidation</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">The
consolidated financial statements include the accounts of the Company and its majority-owned
subsidiaries and those variable interest entities (hereinafter
collectively referred to as the &#147;Group&#148;) in which the
Group is deemed to be the primary
beneficiary in accordance with the Financial Accounting Standards Board (&#147;FASB&#148;) Interpretation
(&#147;FIN&#148;) No.&nbsp;46(R), &#147;Consolidation of Variable
Interest Entities&#148;. All significant inter-company accounts, transactions and profits and losses have been eliminated in
the consolidated financial statements.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><I>(d)&nbsp;Use of Estimates</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">The preparation of the consolidated financial statements in conformity with U.S. GAAP requires
management to make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the reporting period.
Significant estimates are made regarding the Group&#146;s allowance for loan losses and guarantees,
collections for purchased loans and valuation of collateral assets. Actual results could differ
from those estimates, resulting in material charges to income.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><I>(e)&nbsp;Reclassification</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">Certain reclassifications have been made to conform to the current fiscal year presentation. These
reclassifications have no effects on previously reported net income and shareholders&#146; equity.
Principal reclassifications include interest income from purchased loans, real estate for sale and
cash flow changes of real estate for sale.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><I>(f)&nbsp;Financial Statements Presentation in U.S. Dollars</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">The consolidated financial statements are stated in Japanese yen. The translations of the Japanese
yen amounts into U.S. dollars are included solely for the convenience of the readers, using the
prevailing exchange rate on March&nbsp;31, 2006, which was &#165;117.47 to $1.00. The convenience
translations should not be construed as representations that the Japanese yen amounts have been,
could have been, or could in the future be, converted into U.S. dollars at this or any other rate
of exchange.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>2. Summary of Significant Accounting Policies</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><I>(a)&nbsp;Cash and Cash Equivalents</I>

</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 12pt">The Group considers all highly liquid investments, including time deposits, with an original
maturity of three months or less at the time of purchase to be cash equivalents. These investments
are recorded at cost, which approximates market value.
</DIV>


<P align="center" style="font-size: 10pt">F-11
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><I>(b)&nbsp;Foreign Currencies Translation</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">The Group
operates principally in Japan but also has subsidiaries in China. The
Company and its
subsidiaries maintain their accounting records in their functional currency. Foreign currency
transactions are translated into the functional currency using the prevailing exchange rates at the
dates of the transactions.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">Assets and liabilities of foreign subsidiaries with functional currencies other than Japanese yen
are translated into Japanese yen at exchange rates in effect at the balance sheet date. Income and
expense items are translated at average rates for the period. Resulting exchange differences are
accumulated as a component of &#147;Cumulative other comprehensive income (losses)&#148; in the accompanying
consolidated balance sheets.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><I>(c)&nbsp;Interest Income from Loans Receivable and Loan Origination Costs</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">Interest income from loans except for purchased loans is recognized on an accrual basis based on
the principal amount outstanding. In Japan, the maximum interest rates are set by law at two
general levels: an absolute maximum rate (legal limit) and a lower interest rate based on the
principal amount of the loan (restricted rate). The Group&#146;s contractual loan interest rates do
not exceed the legal limit but may exceed the restricted rate. The
Group may charge interest
rates in excess of the restricted rate as long as it meets specified requirements. Borrowers have
a right to refuse to pay interest in excess of the restricted rate,
and the Group cannot legally
require borrowers to pay the excess interest. However, once a borrower has paid interest in excess
of the restricted rate, and provided the Group has complied with specified legal documentation
and notification procedures, the Group has no legal or contractual obligation to refund or
otherwise reimburse the excess interest payments.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">The Group recognizes accrued interest income on loans receivable outstanding as of the balance
sheet date at the lower of the restricted rate or the contractual interest rate. Contractual
interest in excess of the restricted rate is recognized as interest income when collected, provided
there are no remaining legal obligations to refund this excess portion. Accrual of interest income
is suspended when loan principal is charged off or is wholly or partially reserved. The accrued
interest portion of a charged-off loan balance is deducted from the current period interest income
and the principal amount is charged off against the allowance for loan losses.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">The Group maintains reserves for estimated losses from the above-mentioned excess interest
repayments at a level that, in management&#146;s judgment, is adequate to provide for estimated probable
refund claims of excess interest previously paid by borrowers. Provisions to the reserve are
deducted from interest income. In evaluating the adequacy of the reserve, management considers
various factors, including recent conditions on repayments of excess interest and historical loss
experience.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">The Group capitalizes direct origination costs and defers fees on successful loan originations.
Loan origination costs, net of loan origination fees, are deferred and amortized over the
contractual life of loans, which averages approximately 49&nbsp;months as of March&nbsp;31, 2006.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><I>(d)&nbsp;Loans Receivable and Allowance for Loan Losses</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">Loans receivable are reported at the principal amount less an allowance for loan losses. The
allowance for loan losses is maintained at a level that, in management&#146;s judgment, is adequate to
provide for estimated probable uncollectible loan losses from known and inherent risks in the
Group&#146;s loan portfolios. Increases to the allowance are made by charges to the provision for
loan losses. Recoveries of previously charged-off amounts are deducted from the provision for loan
losses. Allowances are reviewed both on an individual loan and portfolio basis. In evaluating the
adequacy of the allowance, management considers various factors, including current economic
conditions, such as unemployment rates, corporate insolvencies and personal bankruptcy cases, and
historical loss experience.
</DIV>


<P align="center" style="font-size: 10pt">F-12
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">Restructured loans include any loans for which interest, principal or term is restructured.
Allowances for restructured loans are based on the collection history or legal classification of
the borrowers.
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 2%">The
Group&#146;s policy is generally to charge off loan balances and cease accrual of interest as
follows:
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 2%"><I>Small business owner loans and Wide loans: </I>Loan balances are charged off when the Group
believes the likelihood of any future collection is minimal. Events triggering charge-offs
include bankruptcy of both the borrower and guarantor. In the case that loans are restructured,
the Group charges off the amount of the recorded loan balance less the restructured loan
balance. Interest accrual is terminated at the earlier of the date when contractual payments are
97&nbsp;days delinquent or the date when all or a part of loan principal is deemed uncollectible.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 2%"><I>Business Timely loans and Consumer loans: </I>Loan balances are charged off and interest accrual is
terminated when a loan&#146;s contractual payment becomes 67&nbsp;days delinquent or upon the occurrence of
other events such as the bankruptcy of the borrower.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 2%"><I>Secured loans: </I>Loan balances are charged off when the Group believes the likelihood of any
future collection is minimal. The Group considers the availability and value of collateral in
determining the level of charge-off. Interest accrual is terminated at the earlier of the date
when contractual payments are 97&nbsp;days delinquent or the date when all or a part of loan principal
is deemed uncollectible.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><I>(e)&nbsp;Investment in Leases and Revenue Recognition</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">Investment in direct financing leases consists of leases for various equipment types, including
office equipment, industrial machinery and transportation equipment (aircraft, vessels and
automobiles). The net investment in the leases, included in &#148;Loans receivable, net&#148; on the
consolidated balance sheets, is the gross investment in the leases plus any unamortized initial
direct costs less unearned lease income. Gross investment in the leases is the sum of lease
payments and estimated unguaranteed residual values. The estimated residual values represent
estimated proceeds from the disposition of equipment at the time the lease is terminated. Initial
direct costs are certain direct lease origination costs, which are being deferred and amortized
over the lease term as a yield adjustment. Unearned lease income is the difference between gross
investment in the leases and cost or carrying amount of the leased equipment. These are being
deferred and taken into income over the lease term. Amortization of unearned lease income is
computed using the interest method. For the year ended March&nbsp;31,
2005 and 2006, the amount of initial
direct costs is insignificant. As of March&nbsp;31, 2005 and 2006,
the Group recorded &#165;2,168&nbsp;million and &#165;2,979&nbsp;million ($25,360
thousand), respectively, in book value for its investment in direct financing leases, which are recorded in &#147;Loans
receivable, net&#148; in the accompanying consolidated balance sheets.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">Investment in operating leases represent the underlying tangible and intangible assets and are
carried at cost and depreciated over their estimated useful lives on a straight-line basis.
Revenues from operating leases are recognized over the lease term as it becomes receivable
according to the provisions of the lease. Revenues from re-leases are recognized when received.
As of March&nbsp;31, 2005 and 2006, the Group had
&#165;287&nbsp;million and &#165;1,552&nbsp;million ($13,212
thousand), respectively, in net investment in
operating leases, which are recorded in &#147;Property and equipment&#148; in the accompanying consolidated
balance sheets.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><I>(f)&nbsp;Purchased Loans Receivable and Revenue Recognition</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">Purchased loans represent loans purchased from third party originators and are reported at
purchased cost. The Group then establishes an allowance for estimated loan losses on reduced
credit quality subsequent to acquisition. Due to the non-performing status of these loans when
initially purchased and lack of history with the borrowers, subsequent to acquisition, the Group
initially recognizes revenue from these loans using the cost recovery method. Under this method,
payments from a borrower are first applied to loan principal.
</DIV>


<P align="center" style="font-size: 10pt">F-13
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">Once the purchased cost is fully recovered, subsequent receipts are recognized as interest income. If
the Group determines that it cannot recover its cost, an allowance for the expected uncollectible
portion is established. The loan is written off once the Group deems the loan uncollectible. As
of March&nbsp;31, 2005 and 2006, &#165;12,745&nbsp;million and &#165;23,228&nbsp;million ($197,736 thousand) in carrying
value of loans was accounted for under the cost recovery method, respectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">However, for those purchased loans for which the Group can reasonably estimate the expected
timing and amount of cash flows, the Group uses those expected future cash flows to record the
loans receivable and amortize the implied interest into revenue using the level yield method. The
Group will adjust the future yield rate for expected changes in interest rates or collections.
However, if the carrying amounts of those loans are greater than the present value of expected
future cash flows from those loans due to delinquency in payment or use of legal means by the
borrower, the difference is recorded as an allowance for the uncollectible portion. As of March
31, 2005 and 2006, &#165;836&nbsp;million and &#165;927&nbsp;million ($7,891 thousand) in carrying value of loans was
accounted for under the level yield method, respectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><I>(g)&nbsp;Investment Securities</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">The
Group&#146;s investment securities consist of marketable securities
and other investments.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">All
marketable securities are classified as
&#147;available-for-sale&#148; in accordance with Statement of
Financial Accounting Standards (&#147;SFAS&#148;) No.&nbsp;115, &#147;Accounting for Certain Investments in Debt and Equity Securities&#148;, and consist of
marketable equity securities and debt securities.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">Marketable equity securities are carried at fair value with unrealized gains and losses, net of
tax, reported as cumulative other comprehensive income in the shareholders&#146; equity. Fair value is
determined by the market price at end of year. In accordance with SFAS No.&nbsp;115, an &#147;other than
temporary&#148; decline in fair value below the amortized cost basis is recorded as a loss in the
statement of income in the period the decline was determined to be other than temporary. The
Group reviews investment securities that have declined in market value by approximately 10% or
more from their cost bases each period to determine whether an impairment has occurred. For these
securities, an &#147;other than temporary&#148; decline in market value is presumed to have occurred unless
there is sufficient evidence indicating that the decline is temporary. Such evidence is considered
only when there has been a subsequent recovery in market value and the evidence includes a recent
improvement in financial condition, a positive prevailing business and industry outlook, and other
factors that are deemed to be relevant indicators.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">Debt securities are accounted for on an amortized cost basis and adjusted only for
other-than-temporary declines in fair value resulting from company-specific events, industry
developments, general economic conditions or other reasons.</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">Non-marketable
equity securities, which is included in other investments, consist of investments in which the Group has a less than
20% interest and for which the Group does not have the ability to exercise significant influence,
are accounted for on a cost basis and adjusted only for other-than-temporary declines in fair value
resulting from company-specific events, industry developments, general economic conditions or other
reasons.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">Costs of securities sold are determined using the weighted average cost method.</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><I>(h)&nbsp;Real Estate for Sale</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">Real estate for sale, including real estate acquired upon foreclosure, is carried at the lower of
cost or fair value less estimated costs to sell. If an asset&#146;s fair value less cost to sell, based
on discounted cash flows or market comparisons, is less than its
carrying amount, an impairment is
recorded against the asset. Determining an asset&#146;s fair value
and the related impairment to record
requires the Group to utilize judgment and estimates.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">When
acquiring real estate assets, the Group capitalizes costs in accordance with  SFAS No.&nbsp;67, &#147;Accounting for Costs and the Initial Rental
Operations of Real Estate Properties&#148;. Costs capitalized under SFAS No.&nbsp;67 include pursuit costs,
or pre-acquisition costs, taxes and insurance, development and construction costs and costs of
incidental operations on successful acquisitions.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">As of
March&nbsp;31, 2006, real estate for sale amounted to
&#165;20,792&nbsp;million ($176,998&nbsp;thousand), of which
&#165;14,950&nbsp;million ($127,267&nbsp;thousand) were acquired
through general market, &#165;283&nbsp;million ($2,408&nbsp;thousand)
were acquired through foreclosure due to borrower&#146;s delinquency
and &#165;5,559&nbsp;million ($47,323&nbsp;thousand) were acquired
through entities which are consolidated by the Group in accordance
with the FIN No.&nbsp;46(R).
</DIV>





<P align="center" style="font-size: 10pt">F-14
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><I>(i)&nbsp;Long-lived Assets</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">Property
and equipment, including investment in operating leases, are stated at cost, except for land, and are depreciated on a straight-line
basis over their estimated useful lives, approximately 22 to 50&nbsp;years (weighted average life of 37
years) for buildings, 3 to 18&nbsp;years (weighted average life of 14&nbsp;years) for building improvements,
10 to 43&nbsp;years (weighted average life of 20&nbsp;years) for structures and 2 to 20&nbsp;years (weighted
average life of 8&nbsp;years) for equipment. Software is amortized on a straight-line basis over 5
years.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">Leased property and equipment under capital leases as lessee including software is amortized over
the period of the lease or the life of the property and equipment, whichever is shorter. Repairs
and maintenance are charged to expense when incurred.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">The Group applies SFAS No.&nbsp;144, &#147;Accounting for the Impairment or Disposal of Long-Lived Assets&#148;,
to recognize and measure impairment of property and equipment owned or under capital lease. The
Group reviews its long-lived assets for impairment whenever events or circumstances indicate that
the carrying amount of an asset group may not be recoverable. Long-lived assets under certain
circumstances are reported at the lower of carrying amount or fair value. Assets to be disposed of
and assets not expected to provide any future service potential to the Group are recorded at the
lower of carrying amount or fair value less costs to sell. During the year ended March&nbsp;31, 2004,
the Group wrote down investments in rental real property to its fair value, recording &#165;591
million in losses for the year. These losses are included in &#147;Losses on sale, disposal and
impairment of long-lived assets, net&#148; in the accompanying consolidated statements of income. The
Group did not recognize any impairment of long-lived assets during the years ended March&nbsp;31, 2005
and 2006.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><I>(j)&nbsp;Investments in Affiliates</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">Investments
in 20% to 50% owned affiliates in which the Company has the ability to exercise significant
influence over operating and financial policies are accounted for under the equity method. Under
the equity method, the Group will recognize its annual share of income or losses in the current
period statement of income and as an adjustment to investment.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><I>(k)&nbsp;Goodwill and Other Intangible Assets</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">Goodwill reflects the excess of purchase price and related costs over the fair value of
specifically identified net assets purchased. In accordance with SFAS No.&nbsp;142, &#147;Goodwill and Other
Intangible Assets&#148;, goodwill and intangible assets deemed to have indefinite lives are not
amortized but are subject to impairment tests annually, on March&nbsp;31, or whenever events or changes
in business circumstances indicate the carrying value of the assets may not be recoverable. These
impairment tests are based on the comparison of the fair value of each of the Group&#146;s reporting
units to the carrying value of such unit. If the fair value of the reporting unit falls below its
carrying value, goodwill and intangible assets is deemed to be impaired and a writedown of goodwill
is recognized. During the years March&nbsp;31, 2005 and 2006, the Group has performed the required
impairment tests under SFAS No.&nbsp;142 to determine the recoverability of its goodwill and intangible
assets, and concluded that there were no impairments in the carrying value of its goodwill and
intangible assets.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">See Note 11 for detail of goodwill and other intangible assets.
</DIV>


<P align="center" style="font-size: 10pt">F-15
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><I>(l)&nbsp;Derivative Financial Instruments</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">The Group accounts for derivatives instruments in accordance with SFAS No.&nbsp;133, &#147;Accounting for
Derivative Instruments and Hedging Activities&#148;, SFAS No.&nbsp;138, &#147;Accounting for Certain Derivative
Instruments and Certain Hedging Activities &#151; an amendment of FASB Statement No.&nbsp;133&#148; and SFAS No.
149, &#147;Amendment of Statement 133 on Derivative Instruments and Hedging Activities&#148; which requires
that all derivative instruments be recorded on the balance sheet at fair value. Changes in the
fair value of derivatives are recorded each period either in current results of operations or other
comprehensive income (loss). For a derivative designated as part of a hedge transaction, where it
is recorded is dependent on whether it is a fair value hedge or a cash flow hedge. For a
derivative designated as a fair value hedge, the gains or losses of the derivative in the period of
change and the offsetting losses or gains of the hedged item attributed to the hedged risk are
recognized in results of operations. For a derivative designated as a cash flow hedge, the
effective portion of the derivative&#146;s gains or losses is initially reported as a component of other
comprehensive income (loss)&nbsp;and subsequently reclassified into results of operations when the
hedged exposure affects results of operations. The ineffective portion of the gains or losses of a
cash flow hedge is recognized currently in results of operations. For a derivative not designated
as a hedging instrument, the gains or losses is recognized currently in results of operations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">The Group uses both variable and fixed rate debts to finance its operations. The variable rate
debt obligations expose the Group to variability in interest payments due to changes in interest
rates. The Group continuously monitors changes in interest rate exposures and evaluates hedging
opportunities.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">The Group&#146;s objective is to limit the impact of interest rate changes on earnings and cash flows.
The Group achieves this by entering into interest rate swap agreements to convert a portion of
its debt from variable to fixed rates, and interest rate cap agreements, which limit the impact of
increases in interest rates. Under the interest rate swap contracts, the Group agrees to pay an
amount equal to a specified fixed-rate of interest times a notional principal amount, and to
receive in return an amount equal to a specified variable-rate of interest times a notional amount.
The notional amounts are not exchanged. No other cash payments are made unless the contract is
terminated prior to maturity, in which case the amount paid or received in settlement is
established by agreement at the time of the termination and usually represents the net present
value, at current rates of interest, of the remaining obligations to exchange payments under the
term of the contract. The Group accounts for its interest rate swap and cap agreements as cash
flow hedges. Interest rate swap and cap agreements are entered into with major international
financial institutions with favorable credit ratings. The Group is exposed to credit losses in
the event of counter-party non-performance to these interest rate swap agreements. The Group
believes counter-party credit risk is minimal. The Group does not issue or hold derivative
contracts for speculative purposes.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">The Group formally documents all relationships between hedging instruments and hedged items, as
well as its risk-management objective and strategy for undertaking various hedge transactions prior
to consummating the hedge. This process includes linking all derivatives that are designated as
cash flow hedges to
</DIV>


<DIV style="margin-top: 12pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(1)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>specific assets and liabilities on the balance sheet, or</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(2)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>specific firm commitments or forecasted transactions.</TD>
</TR>

</TABLE>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 12pt">The Group also formally assesses (both at the hedge&#146;s inception and on an ongoing basis) whether
the derivatives that are used in hedging transactions have been highly effective in offsetting
changes in the cash flows of hedged items and whether those derivatives may be expected to remain
highly effective in the future periods. When it is determined that a derivative is not (or has
ceased to be) highly effective as a hedge, the Group discontinues hedge accounting prospectively,
as discussed below.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">The underlying debt instruments being hedged bear interest based on the Long-term Prime Rate in
Japan (&#147;LTPR&#148;), while the hedge instruments are based on the Tokyo Inter-bank Offer Rate (&#147;TIBOR&#148;).
When the hedge instrument is based on TIBOR, ineffectiveness results from differences in the
movements of these interest rates. The Group records the ineffective portion as a component of
interest expense in current earnings.
</DIV>



<P align="center" style="font-size: 10pt">F-16
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">The Group discontinues hedge accounting prospectively when
</DIV>

<DIV style="margin-top: 12pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(1)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>it determines that the derivative is no longer effective in offsetting changes in the
cash flows of a hedged item;</TD>
</TR>

<TR>
    <TD style="font-size: 12pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(2)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the derivative expires or is sold, terminated, or exercised;</TD>
</TR>

<TR>
    <TD style="font-size: 12pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(3)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>it is no longer probable that the forecasted transaction will occur; or</TD>
</TR>

<TR>
    <TD style="font-size: 12pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(4)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>management determines that designating the derivative as a hedging instrument is no
longer appropriate.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">In the
event hedge accounting is discontinued and the derivative remains outstanding, the Group
will carry the derivative at its fair value on the balance sheet, recognizing changes in the fair
value in current-period earnings.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">For purposes of the cash flow statement, cash flows from derivative instruments are classified with
the cash flows from the hedged item.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">See Note 15 for detail of the derivative instruments.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><I>(m)&nbsp;Guarantees</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">The Group accounts for guarantees in accordance with the Financial Accounting Standards Board
(&#147;FASB&#148;) Interpretation (&#147;FIN&#148;) No.&nbsp;45, &#147;Guarantor&#146;s Accounting and Disclosure Requirements for
Guarantees, Including Indirect Guarantees of Indebtedness of Others.&#148; The Group provides
guarantees to several affiliated and non-affiliated companies for a fee, which is recognized on an
accrual basis based on the amount of underlying loans outstanding.
The Group maintains reserves for estimated losses from these
guarantee transactions at a level that, in management's judgment, is
adequate to provide for estimated probable losses from known and
inherent risks in these transactions. Provisions to the reserve are
deducted from guarantee fees received. In evaluating the adequacy of
the reserve, management considers various factors, including current
economic conditions and historical loss experience for similar
products. The Group recognized reserves for guarantee losses of &#165;371&nbsp;million and &#165;629
million ($5,355 thousand) at March&nbsp;31, 2005 and 2006, respectively, which are included in &#147;Other
liabilities&#148; on the accompanying consolidated balance sheets. Generally, the underlying loan which
is guaranteed by the Group has a term or normal contractual life up to 5&nbsp;years except for
revolving loan which are indefinite. These loans under guarantee have an average actual
outstanding period of approximately 12&nbsp;months.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">Moreover, in the event of borrower&#146;s delinquency, the Group is required to pay out on its
guarantees for the outstanding balance of the specified borrowings. Upon payment of any
guarantees, the Group will record a corresponding receivable from the counterparty company,
offset by an allowance for deemed uncollectible amounts which
generally approximates 100% of the amount outstanding. The Group protects against risk for
guarantees through its underwriting and monthly evaluation process. The Group is able to agree
to take or decline the guarantee at the time of the loan underwriting process. Payments on
guarantees are approximately 2.5%, 3.5% and 4.7% of total contractual guarantees for the years
ended March&nbsp;31, 2004, 2005 and 2006, respectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">Additionally, in the normal course of its business, the Group may guarantee or indemnify
directors and service providers against litigation or claims. These claims are expected to be
fully covered by company insurance policies.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><I>(n)&nbsp;Treasury Stock</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">Treasury
stock is recorded at the Group&#146;s cost basis. Pursuant to its Articles of Incorporation,
the Group may purchase treasury stock with the Board of Directors&#146; approval and can retire
treasury stock by reducing retained earnings or additional paid-in capital.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><I>(o)&nbsp;Advertising Costs</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">Advertising costs are expensed as incurred, except for costs for advertising requiring upfront
payment for a series of advertisements, which are deferred and expensed as the individual
communications occur. Advertising expenses recognized for the years ended March&nbsp;31, 2004, 2005 and
2006 were &#165;218&nbsp;million, &#165;332&nbsp;million and &#165;629&nbsp;million ($5,355 thousand), respectively.
</DIV>

<P align="center" style="font-size: 10pt">F-17
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><I>(p)&nbsp;Income Taxes</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">The Group uses the asset and liability method to account for income taxes. Deferred tax assets
and liabilities are recognized for the future tax consequences attributable to differences between
the financial statement carrying amounts of existing assets and liabilities and their respective
tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are
measured using enacted tax rates expected to apply to taxable income in the years in which those
temporary differences are expected to be recovered or settled. The effect on deferred tax assets
and liabilities from a change in tax rates is recognized in income in the period the change is
enacted. A valuation allowance is established when it is determined that deferred tax assets are
no longer more likely than not to be realized.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><I>(q)&nbsp;Net Income Per Share (&#147;EPS&#148;)</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">Basic EPS is computed based on the average number of shares of common stock outstanding during each
period. Diluted EPS further includes the dilution that could occur if securities or other
contracts to issue common stock were exercised or converted into common stock or resulted in the
issuance of common stock.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">The
Company completed a 2-for-1 stock split on each of May&nbsp;20, 2003, May&nbsp;20, 2004, November&nbsp;19, 2004,
November&nbsp;18, 2005, and April&nbsp;1, 2006, respectively, and completed a 1.2-for-1 stock split on May
20, 2005. All share information disclosed has been retroactively adjusted to reflect such stock
splits.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><I>(r)&nbsp;Stock-based Compensation</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">As permitted by SFAS No.&nbsp;123 &#147;Accounting for Stock-based Compensation&#148;, the Group has reflected
to account for its stock-based compensation arrangements in accordance with Accounting Principles
Board Opinion (&#147;APB&#148;) No.&nbsp;25, &#147;Accounting for Stock Issued to Employees&#148;. Under this method, the
excess, if any, of the quoted market price of the stock at the grant date of the award or other
measurement date over the stated exercise price of the award is recognized as deferred stock-based
compensation cost which is amortized over the period in which the employee performs the service.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">The following table reflects stock-based employee compensation cost for the years ended
March&nbsp;31, 2004, 2005 and 2006. In addition, the following table also reflects on a pro forma basis
the Group&#146;s net income and net income per common share with and without dilution, as if
compensation costs for stock options had been recorded based on the fair value at the date of grant
under the Group&#146;s stock-based compensation plans, consistent with the provisions of SFAS No.&nbsp;123.
The pro forma compensation expense reflects compensation expense over the vesting period of the
grant, which is generally three years. The stock-based compensation plan disclosure requirements
required by SFAS No.&nbsp;123 are provided in Note 23 to the Consolidated Financial Statements.
</DIV>

<P align="center" style="font-size: 10pt">F-18
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">
<!-- link1 "NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS" -->

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS</B>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="52%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Thousands of</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="10" style="border-bottom: 1px solid #000000">Millions of Yen</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">U.S. Dollars</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2004</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2005</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2006</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2006</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net income, as reported</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
    <TD align="right">&#165;6,077</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
    <TD align="right">&#165;7,262</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
    <TD align="right">&#165;8,455</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
    <TD align="right">$71,976</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Add back: Stock-based
compensation expense
determined under intrinsic
value method, net of tax</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Deduct: Pro forma
stock-based compensation
expense determined under
fair value method, net of
tax</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">121</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">129</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">346</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,946</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Pro forma net income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
    <TD align="right">&#165;5,956</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
    <TD align="right">&#165;7,133</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
    <TD align="right">&#165;8,109</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
    <TD align="right">$69,030</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="52%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="11" style="border-bottom: 1px solid #000000">Yen</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">U.S. Dollars</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2004</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2005</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2006</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2006</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net income per common share:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">As reported &#151; basic</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">&nbsp;</TD>
    <TD align="right">&#165;2.54</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&nbsp;</TD>
    <TD align="right">&#165;2.98</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&nbsp;</TD>
    <TD align="right">&#165;3.27</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&nbsp;</TD>
    <TD align="right">$0.028</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">As reported &#151; diluted</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.34</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.70</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3.08</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.026</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="52%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="11" style="border-bottom: 1px solid #000000">Yen</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">U.S. Dollars</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2004</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2005</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2006</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2006</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net income per common share:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Pro forma &#151; basic</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">&nbsp;</TD>
    <TD align="right">&#165;2.49</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&nbsp;</TD>
    <TD align="right">&#165;2.92</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&nbsp;</TD>
    <TD align="right">&#165;3.14</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&nbsp;</TD>
    <TD align="right">$0.027</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Pro forma &#151; diluted</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.30</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.64</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.94</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.025</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">The fair value of stock options and warrants granted is estimated using the Black-Scholes
option-pricing model with the following weighted-average assumptions:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2004</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2005</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2006</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Weighted-average assumptions:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Risk-free interest rate</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">0.3</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">0.3</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">1.5</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Expected lives</DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" nowrap align="center">3.0 years</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" nowrap align="center">3.0 years</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" nowrap align="center">3.2 years</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Expected volatility</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">38</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">33</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">31</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Dividend yield</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">1.7</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">1.1</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">1.3</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Weighted-average fair value of grant per share</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">&nbsp;</TD>
    <TD align="right">&#165;3.30</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&nbsp;</TD>
    <TD align="right">&#165;6.47</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&nbsp;</TD>
    <TD align="right">&#165;7.79</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><I>(s)&nbsp;Issuance of Stock by Subsidiaries or Affiliates</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">The
change in the Group&#146;s proportionate interest in a subsidiary or an affiliate resulting from
issuance of stock by the subsidiary or affiliate is recognized as earnings.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><I>(t)&nbsp;Comprehensive Income</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">The Group accounts for comprehensive income in accordance with SFAS No.&nbsp;130 &#147;Reporting
Comprehensive Income&#148;. SFAS No.&nbsp;130 establishes standards for the reporting and presentation of
comprehensive income and its components (revenues, expenses, gains, and losses) in the financial
statements. The Group presents comprehensive income in its consolidated statement of
shareholders&#146; equity, net of related income taxes.
</DIV>

<P align="center" style="font-size: 10pt">F-19
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>3. Recently Issued Accounting Pronouncements</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">In December&nbsp;2004, the FASB issued SFAS No.&nbsp;123-R (revised 2004) &#147;Share-Based Payment,&#148; a revision
of SFAS No.&nbsp;123 &#147;Accounting for Stock-Based Compensation.&#148; SFAS No.&nbsp;123-R requires a public entity
to measure the cost of employee services received in exchange for an award of equity instruments
based on the grant-date fair value of the award. In April&nbsp;2005, the Securities and Exchange
Commission (&#147;SEC&#148;) delayed the effective date of FASB Statement No.&nbsp;123-R to the annual reporting
period that began after June&nbsp;15, 2005, and for the Group, this date is April&nbsp;1, 2006. The
Group expects the adoption of this statement will reduce the
Group&#146;s reported net income and earnings per share. The effect
of adopting this statement on the Group&#146;s historical
consolidated financial statements is reflected on the Group&#146;s
proforma in Note 2(r) to the consolidated financial statements.

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>4. Loans Receivable and Allowance for Loan Losses</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">The following is a summary of loans outstanding as of March&nbsp;31, 2005 and 2006:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Thousands of</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000">Millions of Yen</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">U.S. Dollars</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2005</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2006</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2006</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Small business owner loans</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">58,961</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">65,447</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">557,138</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Business Timely loans</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20,862</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">25,282</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">215,221</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Secured loans</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">18,812</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">91,610</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">779,859</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Wide loans</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">47,604</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">41,163</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">350,413</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Consumer loans</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,827</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,995</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">25,496</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other loans</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,296</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,681</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">90,924</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total loans outstanding</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">155,362</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">237,178</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,019,051</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Allowance for loan losses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(10,034</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(11,003</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(93,666</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Deferred origination costs (fee income)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">791</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(228</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,941</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Loans receivable, net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">146,119</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">225,947</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,923,444</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">The following is a summary of changes in the allowance for loan losses for the years ended
March&nbsp;31, 2004, 2005 and 2006:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="52%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Thousands of</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="10" style="border-bottom: 1px solid #000000">Millions of Yen</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">U.S. Dollars</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2004</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2005</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2006</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2006</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Balance at beginning of year</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">11,827</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">13,528</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">10,034</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">85,418</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Provision for loans receivable on sold loans</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(3,327</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Provision for loan losses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12,824</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,759</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,277</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">70,461</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Charge-offs, net of recoveries, and other</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(11,123</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(7,926</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(7,308</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(62,213</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Balance at end of year</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">13,528</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">10,034</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">11,003</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">93,666</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">F-20
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">The components of the allowance for loan losses as of March&nbsp;31, 2005 and 2006 are as follows:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="23%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="26" style="border-bottom: 1px solid #000000">Millions of Yen</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="26" style="border-bottom: 1px solid #000000">2005</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Small</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Business</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Business</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Owner</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Timely</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Secured</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Consumer</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Loans</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Loans</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Loans</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Wide Loans</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Loans</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Other Loans</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Total</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Historical Loss Components</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">- Current</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Current</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">50,825</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">20,295</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">18,405</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">39,542</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">2,719</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">6,149</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">137,935</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Restructured</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,371</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">567</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">71</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,758</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">108</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13,875</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:60px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Loans outstanding</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">57,196</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20,862</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">18,476</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">46,300</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,827</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,149</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">151,810</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Allowance</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,993</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,231</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">582</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,698</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">308</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">120</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,932</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">- 67 to 96&nbsp;days</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Loans outstanding</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">206</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">103</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">97</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">420</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Allowance</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">144</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">72</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">61</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">287</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">- 97 to 120&nbsp;days</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Loans outstanding</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">113</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">82</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">220</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Allowance</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">113</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">82</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">220</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">- Over 120&nbsp;days</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Loans outstanding</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">841</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">585</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">18</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,453</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Allowance</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">841</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">585</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">18</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,453</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:60px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Loans outstanding</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">58,356</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20,862</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">18,504</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">47,070</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,827</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,284</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">153,903</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Allowance</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,091</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,231</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">606</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,437</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">308</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">219</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,892</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other Components:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">- Bankrupt loans</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Loans outstanding</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">441</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">404</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">861</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Allowance</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">431</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">394</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">840</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">- Loans under legal process</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Loans outstanding</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">164</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">304</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">130</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">598</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Allowance</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">84</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">152</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">66</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">302</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:60px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Loans outstanding</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">605</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">308</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">534</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,459</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Allowance</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">515</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">155</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">460</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,142</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:60px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Total loans outstanding</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">58,961</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">20,862</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">18,812</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">47,604</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">2,827</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">6,296</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">155,362</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Total allowance</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,606</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,231</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">761</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,897</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">308</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">231</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,034</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:60px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">F-21
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS</B>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="23%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="26" style="border-bottom: 1px solid #000000">Millions of Yen</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="26" style="border-bottom: 1px solid #000000">2006</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Small</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Business</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Business</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Owner</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Timely</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Secured</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Consumer</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Loans</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Loans</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Loans</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Wide Loans</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Loans</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Other Loans</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Total</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Historical Loss Components</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">- Current</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Current</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">55,604</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">24,503</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">90,905</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">34,259</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">2,892</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">10,375</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">218,538</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Restructured</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,917</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">779</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">665</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,934</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">103</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14,410</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:60px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Loans outstanding</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">62,521</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">25,282</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">91,570</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">40,193</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,995</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,387</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">232,948</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Allowance</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,049</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,694</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">532</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,481</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">213</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">197</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,166</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">- 67 to 96&nbsp;days</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Loans outstanding</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">339</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">83</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">87</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">511</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Allowance</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">238</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">58</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">61</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">359</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">- 97 to 120&nbsp;days</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Loans outstanding</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">73</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">32</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">141</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">246</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Allowance</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">73</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">32</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">141</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">246</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">- Over 120&nbsp;days</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Loans outstanding</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,452</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">499</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,982</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Allowance</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,452</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">499</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,982</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:60px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Loans outstanding</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">64,385</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">25,282</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">91,587</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">40,807</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,995</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,631</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">235,687</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Allowance</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,812</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,694</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">549</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,070</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">213</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">415</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,753</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other Components:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">- Bankrupt loans</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Loans outstanding</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">833</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">19</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">264</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">40</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,156</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Allowance</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">785</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">256</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">36</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,084</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">- Loans under legal process</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Loans outstanding</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">229</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">92</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">335</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Allowance</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">114</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">46</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">166</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:60px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Loans outstanding</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,062</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">23</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">356</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">50</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,491</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Allowance</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">899</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">302</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">40</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,250</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:60px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Total loans outstanding</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">65,447</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">25,282</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">91,610</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">41,163</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">2,995</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">10,681</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">237,178</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Total allowance</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,711</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,694</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">558</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,372</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">213</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">455</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11,003</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:60px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">F-22
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS</B>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="23%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="26" style="border-bottom: 1px solid #000000">Thousands of U.S. Dollars</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="26" style="border-bottom: 1px solid #000000">2006</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Small</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Business</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Business</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Owner</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Timely</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Secured</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Consumer</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Loans</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Loans</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Loans</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Wide Loans</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Loans</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Other Loans</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Total</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Historical Loss Components:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">- Current</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Current</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">473,346</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">208,589</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">773,857</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">291,640</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">24,619</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">88,320</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,860,371</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Restructured</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">58,883</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,632</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,661</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">50,515</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">877</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">102</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">122,670</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:60px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Loans outstanding</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">532,229</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">215,221</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">779,518</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">342,155</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">25,496</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">88,422</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,983,041</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Allowance</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17,443</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">22,934</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,529</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12,607</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,813</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,677</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">61,003</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">- 67 to 96&nbsp;days</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Loans outstanding</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,886</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">707</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">740</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,350</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Allowance</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,026</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">494</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">520</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,057</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">- 97 to 120&nbsp;days</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Loans outstanding</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">621</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">272</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,200</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,093</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Allowance</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">621</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">272</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,200</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,093</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">- Over 120&nbsp;days</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Loans outstanding</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12,361</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">128</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,248</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">136</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16,873</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Allowance</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12,361</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">128</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,248</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">136</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16,873</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:60px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Loans outstanding</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">548,097</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">215,221</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">779,663</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">347,382</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">25,496</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">90,498</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,006,357</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Allowance</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">32,451</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">22,934</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,674</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17,621</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,813</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,533</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">83,026</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other Components:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">- Bankrupt loans</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Loans outstanding</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,091</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">162</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,247</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">341</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,841</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Allowance</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,683</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">60</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,179</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">306</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,228</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">- Loans under legal process</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Loans outstanding</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,950</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">34</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">784</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">85</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,853</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Allowance</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">969</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">392</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">34</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,412</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:60px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Loans outstanding</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,041</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">196</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,031</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">426</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12,694</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Allowance</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,652</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">77</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,571</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">340</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,640</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:60px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Total loans outstanding</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">557,138</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">215,221</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">779,859</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">350,413</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">25,496</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">90,924</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">2,019,051</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Total allowance</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">40,103</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">22,934</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,751</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20,192</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,813</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,873</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">93,666</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:60px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">The Group&#146;s allowance for loan losses is the sum of specific reserves under SFAS No.114,
&#147;Accounting by Creditors for Impairment of a Loan&#148;, and a general reserve of groups of loans with
similar risk characteristics under SFAS No.&nbsp;5, &#147;Accounting for Contingencies&#148;. The components used
in determining the allowance level include:
</DIV>

<DIV style="margin-top: 12pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(1)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>a component estimated based on historical loss by payment status;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(2)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>components based on legal status including bankruptcy or death; and</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(3)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>other components based on loan attributes.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">Historical loss experience is adjusted for observable data on bankruptcies and unemployment.
</DIV>


<P align="center" style="font-size: 10pt">F-23
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>
<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="center" style="font-size: 10pt; margin-top: 12pt"><B>NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">The aggregate loans outstanding due in each of the next five years and thereafter are as
follows:
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Thousands of</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Millions of Yen</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">U.S. Dollars</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Year ending March&nbsp;31,
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
    <TD align="right">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
    <TD align="right">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2007</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right"> 134,936</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,148,685</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2008</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">44,032</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">374,836</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2009</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">33,737</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">287,197</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2010</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14,706</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">125,189</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2011 and thereafter</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,767</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">83,144</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total loans outstanding</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">237,178</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">2,019,051</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">In addition, NIS Lease Co., Ltd. (&#147;NISL&#148;), a 100% owned subsidiary, was incorporated on
November&nbsp;10, 2003, and started its business on February&nbsp;1, 2004. NISL acquires equipment and
related assets for lease and provides leasing operations in Japan, including direct financing
leases. Investment in direct financing leases, included in &#147;Other loans&#148; of &#147;Loans receivable,
net&#148;, at March&nbsp;31, 2005 and 2006 is as follows:
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Thousands of</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000">Millions of Yen</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">U.S. Dollars</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2005</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2006</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2006</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Aggregate lease payments receivable</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">3,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">4,002</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">34,068</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Initial direct costs</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Unearned lease income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(751</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(901</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(7,670</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Investment in direct financing leases</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,249</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,101</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">26,398</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Allowance for loan and lease losses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(81</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(122</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,038</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Investment in direct financing leases, net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">2,168</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">2,979</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">25,360</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">The presentation of initial direct costs associated with investment in direct financing leases
for the year ended March&nbsp;31, 2005 and 2006 are omitted as their respective figures are
insignificant.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">Aggregate lease payments receivable are due in periodic installments through December&nbsp;2011. At
March&nbsp;31, 2006, the amounts, which are included in the schedule above, due in each of the next five
years and thereafter are as follows:
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Thousands of</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Millions of Yen</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">U.S. Dollars</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Year ending March&nbsp;31,
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
    <TD align="right">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
    <TD align="right">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2007</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">1,098</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">9,347</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2008</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,081</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,202</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2009</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,002</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,530</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2010</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">643</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,474</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2011 and thereafter</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">178</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,515</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Aggregate lease payments receivable</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">4,002</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">34,068</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">In addition, losses from the disposition of direct financing lease assets are &#165;80&nbsp;million
($681 thousand) for the year ended March&nbsp;31, 2006.
</DIV>


<P align="center" style="font-size: 10pt">F -24
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>5. Purchased Loans Receivable</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">The Group mainly purchases distressed loans from financial institutions and services these loans
for its own portfolio. The Group&#146;s intention is to renegotiate the terms of the loan with the
borrower, carry and service the loan through maturity. These loans are normally collateralized or
carry personal guarantees. The total contracted amounts outstanding for these distressed loans were
&#165;1,097,289&nbsp;million and &#165;1,643,039&nbsp;million ($13,986,882 thousand) as of March&nbsp;31, 2005 and 2006,
respectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">The following is a summary of the carrying amount of purchased loans receivable as of March&nbsp;31,
2005 and 2006:
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Thousands of</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000">Millions of Yen</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">U.S. Dollars</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2005</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2006</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2006</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Purchased loans outstanding</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">14,863</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">25,947</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">220,882</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Allowance for loan losses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,282</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,792</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(15,255</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Purchased loans receivable, net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">13,581</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">24,155</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">205,627</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">The following is a summary of information with respect to purchased loans receivable for the
years ended March&nbsp;31, 2004, 2005 and 2006:
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="52%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Thousands of</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="10" style="border-bottom: 1px solid #000000">Millions of Yen</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">U.S. Dollars</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2004</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2005</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2006</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2006</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Purchased loans receivable:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Balance at beginning of year</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">3,078</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">5,059</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">14,863</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">126,527</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Purchases</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,502</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16,896</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">19,779</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">168,375</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Principal collections<SUP style="font-size: 85%; vertical-align: text-top"> (A)</SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,469</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(6,840</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(7,308</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(62,212</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Sales<SUP style="font-size: 85%; vertical-align: text-top"> (B)</SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(711</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(6,053</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Charge-offs</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(52</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(252</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(676</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(5,755</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Balance at end of year</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,059</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14,863</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">25,947</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">220,882</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Allowance for loan losses:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Balance at beginning of year</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">132</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">717</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,282</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,914</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Provision for loan losses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">637</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">817</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,186</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,096</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Charge-offs</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(52</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(252</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(676</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(5,755</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Balance at end of year</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">717</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,282</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,792</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15,255</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Purchased loans receivable, net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">4,342</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">13,581</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">24,155</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">205,627</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">(A)</TD>
    <TD>&nbsp;</TD>
    <TD>Including non-cash payments such as foreclosed property of &#165;352&nbsp;million ($2,997 thousand) for
the year ended March&nbsp;31, 2006.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(B)</TD>
    <TD>&nbsp;</TD>
    <TD>Sold to an equity-method affiliate at cost. The Group did not recognize any gains or
losses from this transaction.</TD>
</TR>

</TABLE>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">During the years ended March&nbsp;31, 2004, 2005 and 2006, interest income from purchased loans
receivable were &#165;2,069&nbsp;million, &#165;3,255&nbsp;million and &#165;4,960&nbsp;million ($42,224 thousand), respectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">In the event of borrower&#146;s delinquency, the Group may foreclose on borrower&#146;s loan collateral.
Collateral obtained by the Group is held for sale and included in &#147;Real estate for sale&#148; on the
accompanying consolidated balance sheets.
</DIV>


<P align="center" style="font-size: 10pt">F -25
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS</B>
</DIV>

<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>6. Investment Securities</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The Group&#146;s investment securities as of March&nbsp;31, 2005 and 2006 consist of marketable securities,
all of which are classified as &#147;available-for-sale&#148; in accordance with SFAS No.115, and other
investments, as follows:
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Thousands of</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000">Millions of Yen</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">U.S. Dollars</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2005</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2006</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2006</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Marketable securities:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Marketable equity securities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">18,644</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">23,396</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">199,166</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Debt securities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">155</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">114</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">970</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other investments</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,644</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">18,561</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">158,007</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total investment securities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">28,443</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">42,071</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">358,143</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The aggregate cost and fair value of marketable securities as of March&nbsp;31, 2005 and 2006 is as
follows:
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>2005:</B>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="20%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="14" style="border-bottom: 1px solid #000000">Millions of Yen</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Gross</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Gross</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Unrealized</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Unrealized</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Fair</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Cost</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Gains</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Losses</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Value</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Marketable equity
securities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">5,031</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">13,613</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">18,644</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>2006:</B></DIV></TD>
    <TD colspan="32">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="14" style="border-bottom: 1px solid #000000">Millions of Yen</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="14" style="border-bottom: 1px solid #000000">Thousands of U.S. Dollars</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Gross</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Gross</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Gross</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Gross</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Unrealized</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Unrealized</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Fair</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Unrealized</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Unrealized</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Fair</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Cost</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Gains</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Losses</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Value</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Cost</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Gains</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Losses</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Value</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Marketable equity
securities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">14,424</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">9,121</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">149</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">23,396</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">122,789</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">77,645</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,268</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">199,166</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">As of March&nbsp;31, 2005 and 2006, there were no marketable equity securities which were in an
unrealized loss position for 12&nbsp;months or more.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In
addition, the aggregate cost of debt securities approximates fair
value. As of March&nbsp;31, 2005 and 2006, the Group held six and five debt securities,
respectively, with maturity ranging from October&nbsp;2005 to July&nbsp;2009 and August&nbsp;2006 to March&nbsp;2010,
respectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The aggregate cost of other investments which approximates fair value as of March&nbsp;31, 2005 and 2006
is as follows:
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Thousands of</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000">Millions of Yen</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">U.S. Dollars</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2005</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2006</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2006</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Non-marketable equity securities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">2,716</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">4,594</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">39,108</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Investment funds</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,812</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13,734</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">116,915</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">116</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">233</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,984</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total other investments</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">9,644</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">18,561</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">158,007</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">During the years ended March&nbsp;31, 2004, 2005 and 2006, the proceeds from sales of investment
securities were &#165;2,173&nbsp;million, &#165;5,125&nbsp;million and &#165;12,707&nbsp;million ($108,172&nbsp;thousand), respectively. On those sales, gross
realized gains computed on the average cost basis were &#165;645&nbsp;million, &#165;939&nbsp;million and &#165;4,185&nbsp;million ($35,626&nbsp;thousand) and
gross realized losses were &#165;46&nbsp;million, &#165;5&nbsp;million and &#165;2&nbsp;million ($17&nbsp;thousand), respectively.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Management believes that there was a permanent impairment in value of the marketable securities and
other investments during the years ended March&nbsp;31, 2004, 2005 and 2006 of approximately &#165;867&nbsp;million, &#165;1,447&nbsp;million and &#165;475&nbsp;million ($4,044&nbsp;thousand),
respectively. These amounts are netted with the gains noted above in the accompanying consolidated statements of income.
</DIV>

<P align="center" style="font-size: 10pt">
</DIV>


<P align="center" style="font-size: 10pt">F-26
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>


<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>7. Property and Equipment</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">Property and equipment as of March&nbsp;31, 2005 and 2006 are summarized as follows:
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Thousands of</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000">Millions of Yen</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">U.S. Dollars</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2005</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2006</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2006</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Land</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">356</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">4,070</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">34,647</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Buildings and structures</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,264</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,043</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">34,417</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Equipment and software</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,756</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,587</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">56,074</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Sub-total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,376</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14,700</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">125,138</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Less accumulated depreciation and amortization</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,091</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(3,531</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(30,060</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Property and equipment, net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">5,285</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">11,169</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">95,078</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">As discussed in the summary of significant accounting policies, investment in operating leases
is included in the property and equipment presented above. The cost of equipment, building
improvements and related assets leased to customers under operating leases as of March&nbsp;31, 2005 and
2006 was &#165;427&nbsp;million and &#165;1,848&nbsp;million ($15,732 thousand), respectively. Accumulated
depreciation on equipment, building improvements and related assets under operating leases as of
March&nbsp;31, 2005 and 2006 was &#165;140&nbsp;million and &#165;296&nbsp;million ($2,520 thousand), respectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">In addition, the amount of property and equipment held by entities, which are consolidated by the
Group in accordance with the FIN No.&nbsp;46 (R), are &#165;4,522&nbsp;million ($38,495 thousand) as of March&nbsp;31, 2006.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>8. Acquisitions</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">On
July&nbsp;9, 2004, the Company invested $500 thousand to establish Matsuyama Nissin Investment &#038;
Consulting (Shanghai) Co., Ltd., a wholly-owned subsidiary, formerly operated as a business
consultant, in Shanghai, China to expand the Group&#146;s businesses into the Chinese market.
Subsequently, the Company increased its investments in Matsuyama Nissin Investment &#038; Consulting
(Shanghai) Co., Ltd. to $20&nbsp;million from December&nbsp;27, 2004 through January&nbsp;26, 2006. On September
14, 2005, Matsuyama Nissin Investment &#038; Consulting (Shanghai) Co., Ltd. obtained a leasing license
in China, and eventually changed its name to Matsuyama Nissin Leasing (Shanghai) Co., Ltd. In
addition, on March&nbsp;13, 2006, Matsuyama Nissin Leasing (Shanghai) Co., Ltd. changed its name to
Nissin Leasing (China) Co., Ltd. The functional currency of Nissin Leasing (China) Co., Ltd. is
Chinese Yuan Renminbi (CNY).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">On
December&nbsp;3, 2004, the Company invested &#165;3,811&nbsp;million in cash to acquire 100% of the issued shares of
Yamagen Securities Co., Ltd., a wholly-owned subsidiary of Japan Asia Holdings (Japan) Limited.
This acquisition was made for the purpose of commencing securities business operations in Japan to
enable the Group to provide a full line of financial services from procurement to investment, as
well as direct and indirect financing, to all clients and businesses related with the Group.
The Group began consolidating the results of operations of Yamagen Securities Co., Ltd. from
December&nbsp;3, 2004. The Group accounted for the acquisition as a purchase using the accounting
standards established in Statement of Financial Accounting Standards (&#147;SFAS&#148;) No.&nbsp;141 &#147;Business
Combination&#148;, and SFAS No.&nbsp;142 &#147;Goodwill and Other Intangible Assets&#148;. The amount of consideration
paid in excess of the estimated fair value of the net assets acquired was &#165;600&nbsp;million for a
brokerage license and was recorded in &#147;Other assets&#148; in the accompanying consolidated balance
sheets. This license is determined to have an indefinite useful life. On May&nbsp;1, 2005, Yamagen
Securities Co., Ltd. changed its company&#146;s name to NIS Securities Co., Ltd.
</DIV>


<P align="center" style="font-size: 10pt">F-27
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">A reconciliation of the purchase price of Yamagen Securities Co., Ltd. is as follows:
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="88%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Millions of Yen</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Fair value of assets acquired:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Current assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
    <TD align="right">&#165;3,133</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Other tangible assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Amortizable intangible assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Unamortizable assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">181</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Brokerage license</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">600</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total assets acquired</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,927</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Less: liabilities assumed</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(116</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total purchase price</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
    <TD align="right">&#165;3,811</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 12pt">As Yamagen Securities Co., Ltd. was not an operating business at the time of the acquisition,
thus, had the Group purchased Yamagen Securities Co., Ltd. at the beginning of the Group&#146;s
fiscal year, there would be no significant difference in revenues or net income of the Group.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">On
December&nbsp;2, 2005, the Company invested &#165;1,446&nbsp;million ($12,310 thousand) to acquire 69.3% of the
outstanding shares of Aprek Co., Ltd. (&#147;APREK&#148;), a JASDAQ-listed company, through a cash tender
offer. APREK provides business financing primarily to owners of small to medium-sized enterprises
and sole proprietors in the Japan&#146;s Kyushu region. Since both
the Company and APREK are targeting
mainly owners of small to medium-sized enterprises, it is anticipated this acquisition will bring
benefits of synergy to both companies, by providing real estate-related services, corporate
revitalization-related services, and venture enterprise support services, to customers of APREK in
the Kyushu region. The Group began consolidating the results of operations of APREK from
December&nbsp;2, 2005. The Group accounted for the acquisition as a purchase, using the accounting
standards established in SFAS No.&nbsp;141 and No.&nbsp;142. The excess amount between the consideration
paid and the estimated fair value of the acquired tangible and intangible assets was insignificant.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">A reconciliation of the purchase price of APREK is as follows:
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Millions of Yen</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Thousands of<BR>U.S. Dollars</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Fair value of assets acquired:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Current assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
    <TD align="right">&#165;&nbsp;&nbsp;7,896</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
    <TD align="right">$&nbsp;&nbsp;&nbsp;67,217</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Other tangible assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">619</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,269</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Amortizable intangible assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">136</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Unamortizable assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">196</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,669</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total assets acquired</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,727</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">74,291</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Less: liabilities assumed</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(6,624</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(56,389</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Less: minority interests</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(657</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(5,592</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total purchase price</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
    <TD align="right">&#165;&nbsp;&nbsp;1,446</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
    <TD align="right">$&nbsp;&nbsp;&nbsp;12,310</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 12pt">In addition, had the Group purchased APREK at the beginning of the Group&#146;s fiscal year,
there would be no significant difference in revenues or net income of the Group on either
an individual or an aggregate basis.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">
<P align="center" style="font-size: 10pt">F -28
</DIV>

</DIV>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>9. Variable Interest Entities</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">The Group invests in a number of trusts, partnerships, corporations or other vehicles that are
established for a limited business purpose. The establishment may involve the transfer of assets
and liabilities in which the transferor may or may not have continued involvement, derive continued
benefit, exhibit control or have recourse. In accordance with FIN No.&nbsp;46 (R), entities designated as a variable
interest entity (&#147;VIE&#148;), are subject to consolidation by the party deemed to be the primary
beneficiary, if any. A VIE is an entity that does not have sufficient equity at risk to finance
its activities without additional subordinated financial support or in which the equity investors
do not have the characteristics of a controlling financial interest. The primary beneficiary is
the entity that will absorb a majority of the VIE&#146;s expected losses, or if there is no such entity,
the entity that will receive a majority of the VIE&#146;s expected residual returns, if any.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">The Group evaluates its relationships with its investees who are mainly engaged in acquisition
and development of real estate for the Group&#146;s real estate-related business and acquisition of
distressed loans for the Group&#146;s loan servicing business. The Group may not have a majority or
voting interest but may be required to consolidate because it is deemed to be the primary
beneficiary of that entity in accordance with the FIN No.&nbsp;46(R). As of March&nbsp;31, 2006, the Group
determined that it was the primary beneficiary of variable interests in seven entities, since
substantially all such investee&#146;s subordinated interests are issued to the Group, and therefore
controlled by and for the benefit of the Group. These investees were consolidated by the
Group.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">With respect to such investee&#146;s assets, &#165;1,908&nbsp;million ($16,242 thousand) are included in
&#147;Purchased loans receivable&#148;, &#165;5,559&nbsp;million
($47,323 thousand) are included in &#147;Real estate for
sale&#148;, and &#165;4,522&nbsp;million ($38,495 thousand) are included in &#147;Property and equipment&#148; in the
accompanying consolidated balance sheets.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">Certain of our consolidated investees obtain non-recourse loans from financial institutions, for
which &#165;10,462&nbsp;million ($89,061 thousand) of the investee&#146;s assets are pledged as collateral for the
non-recourse loans as of March&nbsp;31, 2006. The creditors to these entities have no recourse to other
assets of the Group.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>10. Investment in Affiliates</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">As of March&nbsp;31, 2005 and 2006, the aggregate net assets of affiliates owned by the Group are &#165;514
million and &#165;617&nbsp;million ($5,252 thousand), respectively. The significant changes in investment in
affiliates for the years ended March&nbsp;31, 2005 and 2006 are as follows:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>2005:</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">On
November&nbsp;9, 2004, the Company invested &#165;150&nbsp;million for a 30% interest in Chuo Mitsui Finance
Service Co., Ltd., a private Japanese corporation established as a joint venture with The Chuo
Mitsui Trust and Banking Co., Ltd. for the purpose of providing loans to small and medium-sized
corporations in connection with real estate financing and unsecured card loans.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>2006:</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">On
January&nbsp;23, 2006, the Company invested &#165;20&nbsp;million ($170 thousand) for a 25% interest in
Nippon Real Estate Rating Services Co., Ltd., a private Japanese corporation established as a joint
venture with Funai Zaisan Consultants Co., Ltd. for the purpose of further enhancing the real
estate market through the standardization of real estate ratings.
</DIV>

<P align="center" style="font-size: 10pt">F -29
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>
<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>11. Goodwill and Other Intangible Assets</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">Goodwill and other intangible assets as of March&nbsp;31, 2005 and 2006 comprised the following:
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="70%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
     <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Thousands of</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #000000">Millions of Yen</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">U.S. Dollars</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2005</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2006</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2006</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Goodwill</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
    <TD align="right">&#165;201</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
    <TD align="right">&#165;201</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
    <TD align="right">$1,711</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">License</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">600</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">600</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,108</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">110</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total goodwill and other intangible assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
    <TD align="right">&#165;809</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
    <TD align="right">&#165;814</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
    <TD align="right">$6,929</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">Goodwill of &#165;201&nbsp;million
($1,711 thousand) resulting from the Group&#146;s investment in
Webcashing.com Co., Ltd., which, prior to September&nbsp;5, 2006 was a 38% owned-equity method investment, is included in &#147;Investment in
affiliates&#148; in the accompanying consolidated balance sheets.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">The changes in the carrying amount of goodwill and other intangible assets recognized in a business
combination for the years ended March&nbsp;31, 2004, 2005 and 2006 are as follows:
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="52%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Thousands of</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="11" style="border-bottom: 1px solid #000000">Millions of Yen</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">U.S. Dollars</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2004</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2005</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2006</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2006</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Balance at beginning of year</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
    <TD align="right">&#165;&nbsp;&nbsp;&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
    <TD align="right">&#165;201</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
    <TD align="right">&#165;801</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
    <TD align="right">$6,819</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Acquired during the year</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">201</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">600</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Impairment losses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Balance at end of year</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
    <TD align="right">&#165;201</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
    <TD align="right">&#165;801</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
    <TD align="right">&#165;801</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
    <TD align="right">$6,819</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>12. Short-Term and Long-Term Borrowings</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">Short-term borrowings as of March&nbsp;31, 2005 and 2006 are comprised of the following:
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Thousands of</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000">Millions of Yen</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">U.S. Dollars</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2005</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2006</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2006</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Bank loans</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">9,017</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">30,283</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
    <TD align="right">$257,793</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Commercial paper</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,500</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">30,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">255,384</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Rediscounted notes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">83</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">128</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,090</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total short-term borrowings</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">12,600</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">60,411</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
    <TD align="right">$514,267</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">Interest
rates on bank loans as of March&nbsp;31, 2005 and 2006 under fixed
or variable contracts range
from 0.964% to 2.200% and from 0.993% to 5.022%, with the weighted average interest rates of these
bank loans being 1.567% and 1.374%, respectively. Interest rates on commercial paper as of March
31, 2005 and 2006 ranged from 0.295% to 0.450% and from 0.300% to 1.000%, respectively. The
weighted average interest rates of the commercial paper as of March&nbsp;31, 2005 and 2006 are 0.384%
and 0.682%, respectively. Interest rates on all discounted notes as of March&nbsp;31, 2005 and 2006 are
2.375%. All short-term borrowings have terms ranging from approximately 1&nbsp;month to 12&nbsp;months and
are usually renewed at maturity subject to renegotiation of interest rates and other factors.

</DIV>



<P align="center" style="font-size: 10pt">F-30
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">Long-term borrowings as of March&nbsp;31, 2005 and 2006 are comprised of the following:
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Thousands of</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000">Millions of Yen</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">U.S. Dollars</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2005</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2006</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2006</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2.35% unsecured bonds, due November&nbsp;1, 2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">5,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">1.18% unsecured bonds, due February&nbsp;25, 2008</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,500</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,500</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">63,846</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">1.90% unsecured bonds, due July&nbsp;31, 2006</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">500</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">500</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,256</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">0.75% unsecured bonds, due September&nbsp;19, 2008</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">210</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">150</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,277</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">0.64% unsecured bonds, due March&nbsp;26, 2007</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">500</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">500</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,256</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">0.45% unsecured bonds, due September&nbsp;27, 2006</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">500</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">500</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,256</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">0.67% unsecured bonds, due September&nbsp;27, 2007</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">500</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">500</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,256</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">1.17% unsecured bonds, due June&nbsp;20, 2008</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,500</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">63,846</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">1.08% unsecured bonds, due September&nbsp;16, 2008</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">85,128</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">0.90% unsecured bonds, due March&nbsp;27, 2009</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,513</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">1.70% unsecured convertible bonds, due September&nbsp;29, 2006<SUP style="font-size: 85%; vertical-align: text-top"> (A)</SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,942</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">822</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,999</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total bonds</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">23,652</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">28,972</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">246,633</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Loans from banks and other financial institutions</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Secured:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Due 2005 to 2009 with fixed interest rates ranging from 1.595% to
2.900% per annum, weighted average actual rate is 2.134%</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11,086</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Due 2006 to 2010 with fixed interest rates ranging from 1.300% to
5.100% per annum, weighted average actual rate is 1.994%</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14,352</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">122,176</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Due 2005 to 2008 with variable interest rates principally based on
Long-term Prime Rate (&#147;LTPR&#148;) plus -0.306% to 1.475% per annum,
weighted average actual rate is 1.346%<SUP style="font-size: 85%; vertical-align: text-top"> (B)</SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14,822</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Due 2006 to 2009 with variable interest rates principally based on
LTPR plus -1.239% to 0.775% per annum, weighted average actual rate
is 0.922%<SUP style="font-size: 85%; vertical-align: text-top"> (B)</SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">39,382</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">335,251</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Unsecured:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Due 2005 to 2010 with fixed interest rates ranging from 1.275% to
2.750% per annum, weighted average actual rate is 1.975%</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">43,224</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Due 2006 to 2011 with fixed interest rates ranging from 1.050% to
2.585% per annum, weighted average actual rate is 1.540%</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">70,806</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">602,758</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Due 2005 to 2009 with variable interest rates based on LTPR plus
-0.100% to 1.425% per annum, weighted average actual rate is 2.080%</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">44,060</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Due 2006 to 2011 with variable interest rates based on LTPR plus
-1.114% to 1.472% per annum, weighted average actual rate is 1.644%</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">45,412</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">386,585</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total loans from banks and other financial institutions</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">113,192</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">169,952</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,446,770</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total long-term borrowings</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">136,844</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">198,924</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,693,403</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">F-31
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS</B>
</DIV>


<DIV style="margin-top: 12pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(A)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>On September&nbsp;13, 2001, the Company issued &#165;10&nbsp;billion of 1.7% unsecured convertible bonds issued
at par and redeemable on September&nbsp;29, 2006. The conversion price is &#165;40.90 ($0.35) per share
of common stock which was the market value plus 30% premium at the time of issuance. For the
year ended March&nbsp;31, 2005 and 2006, convertible bonds totaling
&#165;1,058&nbsp;million and &#165;8,120&nbsp;million ($69,124 thousand) were
converted to 25,871&nbsp;thousand shares of common stock and 198,533&nbsp;thousand shares of common stock, respectively.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 0pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(B)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Company entrusted certain loans outstanding to a trust bank. In order to raise funds, the Company
sold its senior beneficiary interest in these loans outstanding in trust to a third party.
These transactions constitute a legal sale under Japanese law. Since the Company reserves an
option to repurchase the senior beneficiary interest, the Company does not recognize the
extinguishment of the aforementioned interest in the financial statements herein, and the
funds are recognized as a long-term liability. As of March&nbsp;31, 2005 and 2006, entrusted loans
outstanding included in loans receivable are &#165;9,216&nbsp;million and &#165;30,907&nbsp;million ($263,105
thousand), respectively. The related long-term liability recorded in loans from banks and
other financial institutions are &#165;6,673&nbsp;million and &#165;21,670&nbsp;million ($184,473 thousand),
respectively. In addition, the Company is required to deposit certain amounts with banks as
restricted cash for the purpose of settlement of account. As of March&nbsp;31, 2005 and 2006,
deposits of restricted cash in banks related to the above borrowings are &#165;382&nbsp;million and &#165;491
million ($4,180 thousand), respectively.</TD>
</TR>

</TABLE>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 12pt">As of March&nbsp;31, 2005 and 2006, the weighted average rates of loans from banks and other
financial institutions were 1.949% and 1.462%, respectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">In
addition, other than the above, the Group has additional syndicated loans, overdraft
facilities, and loan commitments available from banks totaling &#165;5,927&nbsp;million ($50,455 thousand) as
of March&nbsp;31, 2006.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">The aggregate future annual maturities of bonds, long-term loans from banks and other financial
institutions as of March&nbsp;31, 2006 are as follows:
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Thousands of</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">Millions of Yen</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">U.S. Dollars</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Year ending March&nbsp;31,</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2007</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
    <TD align="right">&#165;&nbsp;&nbsp;&nbsp;73,875</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
    <TD align="right">$&nbsp;&nbsp;&nbsp;&nbsp;628,884</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2008</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">69,748</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">593,752</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2009</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">42,956</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">365,676</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2010</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,309</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">36,682</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2011 and thereafter</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,036</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">68,409</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total long-term borrowings:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
    <TD align="right">&#165;198,924</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
    <TD align="right">$1,693,403</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">Under some of its borrowing arrangements, the Group has pledged certain assets as
collateral. The bank may obtain this collateral in the event of financial default. Financial
default includes missed or delinquent payments as provided for in the loan agreements.
As of March&nbsp;31, 2006, the following assets were pledged for short and long-term borrowings as
collateral.
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Thousands of</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">Millions of Yen</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">U.S. Dollars</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Restricted cash</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
    <TD align="right">&#165;&nbsp;&nbsp;1,662</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
    <TD align="right">$&nbsp;&nbsp;14,148</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Loans receivable</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15,510</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">132,034</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Purchased loans receivable</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">380</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,235</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Real estate for sale</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,542</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">55,691</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total assets pledged as collateral</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
    <TD align="right">&#165;24,094</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
    <TD align="right">$205,108</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">F-32
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>


<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">Other than the above, as discussed in Note 9, certain consolidated VIEs obtained non-recourse
loans from financial institutions. For these loans, &#165;10,462&nbsp;million ($89,061 thousand) in VIEs
assets are pledged as collateral as of March&nbsp;31, 2006.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">In addition, the Group is subject to financial covenants which require the Group to meet
various operating and liquidity measures. The Group is in compliance with these covenants as of
March&nbsp;31, 2006.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>13. Lease Obligations</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">The Group leases office space under operating lease agreements. Generally, these agreements are
all cancelable by the Group with six month&#146;s advance notice. Total rent under operating lease
agreements was approximately &#165;896&nbsp;million, &#165;911&nbsp;million and &#165;965&nbsp;million ($8,215 thousand) for the
years ended March&nbsp;31, 2004, 2005 and 2006, respectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">The minimum rental assuming no cancellation on operating lease payments that have initial lease
terms in excess of one year as of March&nbsp;31, 2006 are as follows:
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Thousands of</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">Millions of Yen</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">U.S. Dollars</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Year ending March&nbsp;31,</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;&nbsp;2007</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
    <TD align="right">&#165;&nbsp;&nbsp;&nbsp;971</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
    <TD align="right">$&nbsp;&nbsp;8,266</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;&nbsp;2008</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">516</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,393</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;&nbsp;2009</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">85</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total minimum future rentals</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
    <TD align="right">&#165;1,497</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
    <TD align="right">$12,744</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">The Group leases certain equipment, software and vehicles under capital leases.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">Acquisition costs and accumulated amortization of leased assets as of March&nbsp;31, 2005 and 2006 are
as follows:
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Thousand of</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000">Millions of Yen</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">U.S. Dollars</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2005</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2006</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2006</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Acquisition costs</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">2,762</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">2,875</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
    <TD align="right">$&nbsp;24,474</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Accumulated amortization</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,101</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,563</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(13,305</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net leased property</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">1,661</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">1,312</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
    <TD align="right">$&nbsp;11,169</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<P align="center" style="font-size: 10pt">F-33
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">Future minimum lease payments for the above assets under capital leases as of March&nbsp;31, 2006
are as follows:
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Thousands of</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">Millions of Yen</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">U.S. Dollars</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Year ending March&nbsp;31,</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">2007</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
    <TD align="right">&#165;&nbsp;&nbsp;&nbsp;&nbsp;641</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
    <TD align="right">$&nbsp;&nbsp;&nbsp;5,457</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">2008</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">428</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,643</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">2009</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">211</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,796</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">2010</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">67</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">570</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">2011 and thereafter</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">25</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">213</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total minimum lease payments</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,372</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11,679</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Less: Amount representing interest</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(35</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(297</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Present value of minimum lease payments</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,337</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11,382</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Less: Current portion</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(621</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(5,287</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Long-term capital lease obligations</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
    <TD align="right">&#165;&nbsp;&nbsp;&nbsp;&nbsp;716</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
    <TD align="right">$&nbsp;&nbsp;6,095</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>14. Retirement Plans &#151; Employee, Director and Statutory Auditor</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">In past years, the Group had employee severance plan, and director and statutory auditor
retirement plan. These plans were terminated and described as follows:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><I>Directors and Statutory Auditors:</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">The
Company&#146;s retirement plan for directors and statutory auditors was terminated effective on April&nbsp;1,
1999 and the retirement liability as of March&nbsp;31, 1999 shall be
paid on retirement from the Company.
APREK, became a consolidated subsidiary through a cash tender offer on December&nbsp;2, 2005, adopted a
retirement plan for directors and statutory auditors; however, the plan was terminated effective on
June&nbsp;1, 2006 and the retirement liability as of May&nbsp;31, 2006 shall be paid on retirement from
APREK.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">Accrued retirement benefits presented in the accompanying consolidated balance sheet as of March
31, 2005 included only the Company&#146;s unpaid retirement benefits for directors and statutory auditors.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><I>Employees:</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">The
Company had no employee retirement plans or liabilities at March&nbsp;31, 2005 and 2006. APREK adopted a
defined benefit plan for employees. However, the plan was terminated effective on June&nbsp;1, 2006
with a lump-sum distribution of retirement benefits upon termination of the plan on June&nbsp;20, 2006.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">The components of funded status of the defined benefit plan as of March&nbsp;31, 2006 are as follows:
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Thousand of</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">Millions of Yen</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">U.S. Dollars</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2006</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2006</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Accrued retirement benefits</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
    <TD align="right">&#165;265</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
    <TD align="right">$2,256</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Unrecognized actuarial difference</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">77</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Retirement benefit obligation</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
    <TD align="right">&#165;274</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
    <TD align="right">$2,333</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">F-34
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">The status of benefit obligations and plan assets as of March&nbsp;31, 2005 and 2006 are as
follows:
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="39%">&nbsp;</TD>
    <TD width="30%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Thousands of</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000">Millions of Yen</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">U.S. Dollars</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000">Change in benefit obligation</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2005</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2006</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2006</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Benefit obligation at beginning of year</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
    <TD align="right">&#165;334</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
    <TD align="right">&#165;330</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
    <TD align="right">$2,809</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Increase in obligation due to
acquisition of a subsidiary</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">310</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,639</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Service cost</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">51</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Interest cost</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Benefit paid</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(4</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Benefit obligation at end of year</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
    <TD align="right">&#165;330</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
    <TD align="right">&#165;647</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
    <TD align="right">$5,508</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="39%">&nbsp;</TD>
    <TD width="30%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Thousands of</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000">Millions of Yen</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">U.S. Dollars</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000">Total recognized liabilities in the balance sheets</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2005</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2006</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2006</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Employees</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
    <TD align="right">&#165;&nbsp;&nbsp;&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
    <TD align="right">&#165;265</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
    <TD align="right">$2,256</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Directors and statutory auditors</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">330</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">382</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,252</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Obligations in excess of plan assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
    <TD align="right">&#165;330</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
    <TD align="right">&#165;647</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
    <TD align="right">$5,508</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">In addition, the Group participates in the mandatory fully-funded contributory plan under
the Japanese Welfare Pension Insurance Law. Under this plan, contributions are made by both the
Group and its employees. Amounts paid by the Group under this plan totaled &#165;310&nbsp;million, &#165;358
million and &#165;454&nbsp;million ($3,865 thousand) for the years ended March&nbsp;31, 2004, 2005 and 2006,
respectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>15. Derivative Financial Instruments and Risk Management</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">In order to reduce its exposure to fluctuations in interest rates on variable rate borrowings, the
Group utilizes derivative financial instruments such as interest rate swap contracts. The
counterparties to these instruments are major international financial institutions with favorable
credit ratings, thereby reducing credit risk exposure for non-performance.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">Derivative financial instruments outstanding as of March&nbsp;31, 2005 and 2006 are summarized as
follows:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Interest rate swap:</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>2005:</B>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="8%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 0px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Millions of Yen</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 0px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 0px solid #000000">&nbsp;</TD>

    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000">Millions of Yen</TD>
    <TD>&nbsp;</TD>
</TR>


<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 0px solid #000000">Number of</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 0px solid #000000">Notional</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #000000">Interest Rate</TD>

    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 0px solid #000000">Ultimate</TD>

    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Fair</TD>
    <td>&nbsp;</td>    <td>&nbsp;</td>
      <td align="center" colspan="2">Deferred </td>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000">Agreements</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"> Principal</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">Pay</TD>

    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">Receive</TD>

    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">Maturity</TD>

    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"> Value</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"> Amount</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">1</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
    <TD align="right">&#165;&nbsp;&nbsp;&nbsp;483</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">Fixed at 2.190%</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">TIBOR&#043;1.250%</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">August 2006</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">&#165;(2</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">&#165;(2</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">1</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">Fixed at 1.610%</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">TIBOR&#043;1.250 %</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">March 2006</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(5</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(5</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD nowrap colspan="1" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="3" align="right" style="border-top: 0px solid #000000">&nbsp;</TD>

    <TD>&nbsp;</TD>
    <TD nowrap colspan="3" align="right" style="border-top: 0px solid #000000">&nbsp;</TD>

    <TD>&nbsp;</TD>
    <TD nowrap colspan="3" align="right" style="border-top: 0px solid #000000">&nbsp;</TD>

    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">2</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
    <TD align="right">&#165;2,483</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">&#165;(7</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">&#165;(7</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD style="border-top: 3px double #000000"><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">F-35
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>2006:</B>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="8%">&nbsp;</TD>

    <TD width="3%">&nbsp;</TD>

    <TD width="12%">&nbsp;</TD>

    <TD width="3%">&nbsp;</TD>

    <TD width="15%">&nbsp;</TD>

    <TD width="3%">&nbsp;</TD>

    <TD width="22%">&nbsp;</TD>

    <TD width="3%">&nbsp;</TD>

    <TD width="13%">&nbsp;</TD>

    <TD width="3%">&nbsp;</TD>

    <TD width="4%">&nbsp;</TD>

    <TD width="7%">&nbsp;</TD>

    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000">Millions of Yen</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">Millions of Yen</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left">Number of</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center">Notional</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">Interest Rate</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center">Ultimate</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center">Fair</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center">Deferred</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000">Agreements</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000">Principal</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000">Pay</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000">Receive</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000">Maturity</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000">Value</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000">Amount</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD align="center" valign="top"><DIV style="margin-left:0px; text-indent:-0px">1
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&#165;97
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">Fixed at 2.190%
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">TIBOR&#043;1.250%
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">August&nbsp;2006
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&#165;(&#151;)
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&#165;(&#151;)</TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000">Thousands of<BR>U.S. Dollars</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">Thousands of U.S. Dollars</TD>
</TR>

<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left">Number of</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center">Notional</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">Interest Rate</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center">Ultimate</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center">Fair</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center">Deferred</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000">Agreements</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000">Principal</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000">Pay</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000">Receive</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000">Maturity</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000">Value</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000">Amount</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD align="center" valign="top"><DIV style="margin-left:0px; text-indent:-0px">1
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">$826
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">Fixed at 2.190%
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">TIBOR&#043;1.250%
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">August&nbsp;2006
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">$(&#151;)
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">$(&#151;)</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="40%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="49%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">

<TD><DIV style="margin-left:15px; text-indent:-15px"><FONT style="font-size: 8pt">Applicable
interest rate as of March&nbsp;31, 2005 is as follows:</FONT></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
<TD><DIV style="margin-left:0px; margin-right: 0px; text-indent:0px; border-top: 1px solid #000000">&nbsp;</DIV></TD>
    <TD nowrap colspan="1" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&#165;TIBOR (TIBOR Yen Rate for 3 Months)</DIV></TD>
    <TD align="right">0.093</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>


</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">

<TD><DIV style="margin-left:15px; text-indent:-15px"><FONT style="font-size: 8pt">Applicable
interest rate as of March&nbsp;31, 2006 is as follows:</FONT></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">

<TD><DIV style="margin-left:0px; margin-right: 0px; text-indent:0px; border-top: 1px solid #000000">&nbsp;</DIV></TD>

    <TD nowrap colspan="1" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&#165;TIBOR (TIBOR Yen Rate for 3 Months)</DIV></TD>
    <TD align="right">0.128</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>


</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 12pt">The notional amounts above are the underlying principal amounts used in determining the
interest swapped over the period of the swap agreements and, therefore, are not measures of the
Group&#146;s exposure to loss through its use of derivatives. The fair value is estimated based on
quotes from market makers of these instruments and represents the estimated amounts that the
Group would expect to receive and pay if the Group terminated the agreements as of March&nbsp;31,
2005 and 2006.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>16.
Commitments and Contingencies</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">Under the terms and conditions of the Group&#146;s credit line agreements, the Group may, but is not
committed to, lend funds to Business Timely loan, consumer loan and other loan customers. The
Group reviews credit lines and related funding needs based on account usage and customer
creditworthiness.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">The Group&#146;s unfunded credit lines at March&nbsp;31, 2005 and 2006 are as follows:
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Thousands of</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000">Millions of Yen</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">U.S. Dollars</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2005</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2006</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2006</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Business Timely loans:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Unfunded credit lines with loans outstanding</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">5,645</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">9,181</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">78,156</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Unfunded credit lines without loans
outstanding</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">35,075</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">42,429</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">361,190</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Consumer loans:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Unfunded credit lines with loans outstanding</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">420</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">436</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,711</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Unfunded credit lines without loans
outstanding</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,345</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,223</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">44,462</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Unfunded credit lines with loans outstanding</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">120</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">25</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">213</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Unfunded credit lines without loans
outstanding</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">385</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">385</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,278</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total unfunded credit lines</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">46,990</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">57,679</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">491,010</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">F-36
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">The Group is involved in legal proceedings and claims in the ordinary course of its
business. In the opinion of management, none of these proceedings and claims is expected to
materially impact the Group&#146;s financial position or results of operations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">As discussed in the summary of significant accounting policies, the Group may charge interest
rates in excess of the restricted rate. In most cases, where the contractual interest rate exceeds
the restricted rate, borrowers have a right to refuse to pay the excess interest. Accordingly, the
Group does not accrue unpaid excess interest. Once a borrower has paid the excess interest, the
borrower does not have legal rights to obtain a refund of the amounts paid, provided the
appropriate documentation and notification requirements have been met. Borrowers, however, still
do occasionally dispute payments of excess interest. The Group has negotiated refunds of
previously paid excess interest in certain situations primarily involving threatened customer
bankruptcy or threatened litigation. In the past year, the Supreme Court passed decisions
concerning excess interest, and the necessary requirements pertaining to excess interest were
interpreted more exactingly than before, resulting in an increase in borrower demand for refund of
excess interest. During the years ended March&nbsp;31, 2004, 2005 and 2006, &#165;134&nbsp;million, &#165;190&nbsp;million
and &#165;387&nbsp;million ($3,294 thousand) in interest income was refunded to borrowers, respectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">Consequently, for the year ended March&nbsp;31, 2006, the Group recognizes reserves for estimated
losses on excess interest payments to provide for estimated probable refund claims of excess
interest previously paid by borrowers. As of March&nbsp;31, 2006, &#165;590&nbsp;million ($5,023 thousand) was
reserved and included in &#147;Other liabilities&#148; on the accompanying consolidated balance sheets.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">Pursuant to an agreement with Sanyo Club Co., Ltd., in exchange for guaranteeing 40% of the
outstanding balance of specified borrowings, the Company receives 40% of the interest income from the
total borrowings and pays 40% of the related administration expenses and other expenses incurred by
Sanyo Club Co., Ltd. The Company is required to pay out on its guarantees for 40% of the outstanding
loan balance of specified borrowings for which contractual payments are overdue by 120&nbsp;days or more
as of the end of each month, and distressed loans due to legal processes. Under a loan agreement,
borrowers are neither required to have a guarantor nor to provide collateral.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">The Company guarantees borrowings and corresponding interest receivable from customers of Shinsei
Business Finance Co., Ltd. (&#147;SBF&#148;), an affiliate 25% owned by the Company until April&nbsp;14, 2006, and
receives guarantee fees. The Company receives guarantee fees from the following loan products that SBF
sells:
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 1%"><I>3S
loans: </I>The Company guarantees 100% of borrowings and corresponding interest receivable from
customers for 3S loans and receives a guarantee fee at the borrowing contract rate less 4%.
The Company is required to pay out on its guarantees on loans for which contractual payments are
overdue by 14&nbsp;days or more. 3S loans are unsecured loans that require one or more guarantees from
third party individuals with an income source separate from the customer, and are designed for
small or medium-sized corporations.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 1%"><I>Business loans: </I>The Company guarantees 10% of borrowings and corresponding interest receivable from
customers for Business loans and receives 10% of the interest received from the total borrowings.
The Company is required to pay out on its guarantees on loans for which contractual payments are
overdue by 90&nbsp;days or more. Business loans are unsecured loans designed for small or medium-sized
corporations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">The Company guarantees borrowings and corresponding interest receivable from customers of Chuo Mitsui
Finance Service Co., Ltd. (&#147;CMFS&#148;), an affiliate 30% owned
by the Company, and receives guarantee fees.
The Company receives guarantee fees from the following loan products that CMFS sells:
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 1%"><I>Business Card loans</I>: The Company guarantees 10% of borrowings and corresponding interest receivable
from customers for Business Card loans and receives 10% of the interest received from the total
borrowings. The Company is required to pay out on its guarantees on loans for which contractual payments are overdue by 90&nbsp;days or more. Business Card loans are
unsecured loans designed for small or medium-sized corporations.

</DIV>


<P align="center" style="font-size: 10pt">F-37
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>
<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS</B>
</DIV>






<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 1%"><I>Real Estate Finance</I>: The Company guarantees 10% of borrowings and corresponding interest receivable
from customers for Real Estate Finance and receives 10% of the interest received from the total
borrowings. The Company is required to pay out on its guarantees on loans for which contractual
payments are overdue by 30&nbsp;days or more.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 12pt">In addition, NISL guarantees accounts receivable of certain borrowers for a fee determined based on
borrower&#146;s creditworthiness and contract duration. As of March&nbsp;31, 2005 and 2006, the fee rate
ranged from 0.500% to 5.000% and from 0.375% to 21.600%, with weighted average fee rates of 1.95%
and 2.25%, respectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">The Group maintains reserves for all estimated guarantee losses and includes the amounts in
&#147;Other liabilities&#148; in the accompanying consolidated balance sheets.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">Upon payment of any guarantees, the Group records corresponding receivables from the borrower,
which are offset by allowances for deemed uncollectible amounts. As of March&nbsp;31, 2005 and 2006,
receivables from payment of guarantees were &#165;235&nbsp;million and &#165;663&nbsp;million ($5,644 thousand),
respectively. Those were offset by allowances of &#165;208&nbsp;million and &#165;588&nbsp;million ($5,006 thousand),
respectively, and the resulting amounts are recorded in &#147;Other assets&#148; on the accompanying
consolidated balance sheets.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">Also, the
Company was liable as a guarantor for bank loans borrowed by SBF and CMFS, and received
guarantee fees equivalent to an annual interest rate of 1.5% and 1.0%, respectively. However,
during the year ended March&nbsp;31, 2006, the
Company was released from its obligation as a guarantor for
bank loans borrowed by SBF.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">As of
March&nbsp;31, 2005 and 2006, the Group&#146;s guaranteed borrowings, guaranteed accounts receivable,
guarantees for borrowing of other companies and reserve for guarantee losses are as follows:
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Thousands of</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #000000">Millions of Yen</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">U.S. Dollars</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2005</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2006</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2006</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Guaranteed borrowings</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">7,343</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">11,886</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">101,183</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Guaranteed accounts receivable</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">358</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">964</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,206</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Guarantees for borrowings of other companies:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Shinsei Business Finance Co., Ltd.</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,645</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Chuo Mitsui Finance Service Co., Ltd.</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">150</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,920</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16,345</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Reserve for guarantee losses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">371</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">629</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,355</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Body -->
</TABLE>
</DIV>

<P align="center" style="font-size: 10pt">F-38
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">During
the years ended March&nbsp;31, 2004, 2005 and 2006, the Group paid the related
administrative and other expenses, as discussed above, and received guarantee fees as follows:
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="52%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Thousands of</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="10" style="border-bottom: 1px solid #000000">Millions of Yen</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">U.S. Dollars</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2004</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2005</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2006</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2006</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Guarantee fees received from:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Guaranteed borrowings and accounts receivable</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
    <TD align="right">&#165;&nbsp;362</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
    <TD align="right">&#165;&nbsp;845</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
    <TD align="right">&#165;1,386</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
    <TD align="right">$11,799</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Guarantees for borrowings of other companies</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">34</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">170</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Total guarantee fees received</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">368</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">879</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,406</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11,969</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Administrative expenses and other expenses paid</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(255</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(562</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(898</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(7,644</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Guarantee fees received, net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
    <TD align="right">&#165;&nbsp;113</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
    <TD align="right">&#165;&nbsp;317</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
    <TD align="right">&#165;&nbsp;&nbsp;508</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
    <TD align="right">$&nbsp;&nbsp;4,325</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">During the years ended March&nbsp;31, 2004, 2005 and 2006, as a result of contractual commitments,
the Group paid &#165;89&nbsp;million, &#165;270&nbsp;million and &#165;607&nbsp;million ($5,167 thousand), respectively, as a
guarantor for the borrowings.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>17. Shareholders&#146; Equity</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">Under Article&nbsp;445-2 of the Corporate Law, at least one-half of the value of assets which were paid
or provided at share issuance is required to be designated as common stock, and proceeds in excess
of the amount designated as common stock are to be credited to additional paid-in capital in
accordance with Article&nbsp;454-3 of the Corporate Law. The portion to be designated as common stock
is determined by resolution of the Board of Directors in advance of the issue. Additional paid-in
capital may be transferred to stated capital pursuant to resolution of the Shareholders&#146; Meeting,
in accordance with Article&nbsp;448-1 of the Corporate Law. In addition, additional paid-in capital may
be used to reduce a deficit or retire treasury stock by resolution of the Shareholders&#146; Meeting but
is not available for dividends payment.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">Article&nbsp;454-4 of the Corporate Law also provides that an amount equal to at least 10% of certain
cash amount which is decreased by dividend distribution of retained earnings be appropriated to
additional paid-in capital or legal reserve until the sum of the additional paid-in capital and
legal reserve equals 25% of paid-in capital. The legal reserve may be transferred to stated
capital pursuant to resolution of the Shareholders&#146; Meeting, in accordance with Article&nbsp;448-1 of
the Corporate Law. In addition, the legal reserve may be used to reduce a deficit or retire
treasury stock through resolution of the Shareholders&#146; Meeting but is not available for dividend
payment. As of March&nbsp;31, 2005 and 2006, legal reserves included
in the Company&#146;s retained earnings were
&#165;401&nbsp;million ($3,414 thousand). Also, as of March&nbsp;31, 2005 and 2006, legal reserves included in
SVC&#146;s retained earnings were &#165;2&nbsp;million ($17 thousand).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">According to Article&nbsp;446 of the Corporate Law, the maximum amount that the Company and each of its
subsidiaries can distribute as dividends at the end of fiscal year is the sum of &#147;Other additional
paid-in capital,&#148; which is the amount of additional paid-in capital excluding general additional
paid-in capital, and &#147;Other retained earnings,&#148; which is the amount of retained earnings excluding
legal reserve.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">On June&nbsp;22, 2005, at the Annual Shareholders&#146; Meeting, the shareholders authorized an increase in
authorized shares from 1,920&nbsp;million shares to 3,840&nbsp;million shares.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">On December&nbsp;20, 2005, the Board of the Directors approved a 2-for-1 split of the common stock for
shareholders of record as of March&nbsp;31, 2006. The stock split was effective on April&nbsp;1, 2006. As a
result of the split, the number of issued shares of common stock increased by 1,406,470 thousand
shares. All share and per share amounts in these financial statements have been retroactively
adjusted to reflect
post-split amounts.
</DIV>


<P align="center" style="font-size: 10pt">F-39
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">In addition, on December&nbsp;20, 2005, the Board of Directors approved an increase in authorized shares
from 3,840&nbsp;million shares to 7,680&nbsp;million shares in accordance with the stock split described
above.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>18. Issuance of Stock by Subsidiaries</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">On November&nbsp;25, 2003 and February&nbsp;9, 2004, Nissin Servicer Co., Ltd. (&#147;SVC&#148;), a previously
wholly-owned subsidiary of the Company, completed a sale of additional shares to third parties. The
number of shares newly issued was 8,000 shares and 82,400 shares, and the price per share was
&#165;1,125 and &#165;6,250, respectively. As a result, SVC became an 89.8% subsidiary of the Company. Gain on
change of interest of &#165;368&nbsp;million was included in &#147;Gain (losses)&nbsp;on sale of subsidiaries and
affiliates, net&#148; in the accompanying consolidated statements of income.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">Further, SVC listed its stock on the Mothers market of the Tokyo Stock Exchange on September&nbsp;16,
2004. The number of shares newly issued due to the initial public offering was 100,000 shares, and
the price per share was &#165;22,500. During the year ended March&nbsp;31, 2005 and 2006, SVC issued 63,200
shares and 19,200 shares, respectively, to directors and employees in connection with employee
exercises under its stock option plan, with an average price per share of &#165;625 and &#165;1,063 ($9.05),
respectively. As a result, the Company&#146;s interest in SVC has been diluted to 75.9% and 74.6% as of
March&nbsp;31, 2005 and 2006, respectively. The Group recognized
net gains of &#165;1,339&nbsp;million for the
year ended March&nbsp;31, 2005 and losses of &#165;47&nbsp;million ($400 thousand) for the year ended March&nbsp;31,
2006 in respect of its investment in SVC, which were recorded as &#147;Gain (losses)&nbsp;on sale of
subsidiaries and affiliates, net&#148; in the accompanying consolidated statements of income. The
Group continues to recognize gains or losses from dilution of its interest in SVC.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>19. Sale of Subsidiaries</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">On March&nbsp;18, 2004, the Company sold a portion of its shares of Big Apple Co., Ltd., a previously
wholly-owned subsidiary of the Company, for &#165;117&nbsp;million and recognized a gain of &#165;82&nbsp;million. As a
result, the Company owns only 10% of Big Apple Co., Ltd. and accounts for its investment under the cost
method.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>20. Related Party Transactions</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">The Group received insurance agency services from an entity 100% owned by the Company&#146;s chairman and
his relatives prior to the year ended March&nbsp;31, 2005. Further,
the Group leases office space to
the same entity.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">Since Nissin Insurance Co, Ltd., a wholly owned subsidiary, was established on April&nbsp;20, 2003, the
Group ceased all insurance transactions with the entity above, and
the Group does not intend to
engage in any insurance transaction with the above entity in the future.
</DIV>


<P align="center" style="font-size: 10pt">F-40
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>


<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">These transactions for the years ended March&nbsp;31, 2004, 2005 and 2006 are summarized as follows:
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="52%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Thousands of</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="11" style="border-bottom: 1px solid #000000">Millions of Yen</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">U.S. Dollars</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2004</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2005</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2006</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2006</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Insurance paid to related party</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Rent income from related party</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 12pt">The Group leases office and parking space to another entity 93.3% owned by the Company&#146;s chairman
and his relatives. Total rent received was &#165;2&nbsp;million, &#165;2&nbsp;million and &#165;1&nbsp;million ($9 thousand) for
the years ended March&nbsp;31, 2004, 2005 and 2006, respectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">On March&nbsp;18, 2004, the Group received &#165;117&nbsp;million from a relative of the Company&#146;s chairman in
connection with this relative&#146;s purchase of a 90% equity interest in Big Apple Co., Ltd., a
subsidiary of the Group.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">During the year ended March&nbsp;31, 2004, the Group paid commissions on business introductions of &#165;35
million to Ascot Co., Ltd., a former equity-method affiliate.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">During the years ended March&nbsp;31, 2004, 2005 and 2006, the
Group&#146;s transactions with Shinsei
Business Finance Co., Ltd., which, prior to April 14, 2006 was a 25%
owned affiliate, are as follows:
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="52%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Thousands of</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="11" style="border-bottom: 1px solid #000000">Millions of Yen</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">U.S. Dollars</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2004</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2005</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2006</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2006</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Commissions paid</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">11</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">32</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">13</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">111</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Commissions received</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">34</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Loan guarantee fees received</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">90</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">316</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">467</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,975</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Bank loan guarantee fees received</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">34</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">77</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 12pt">During the years ended March&nbsp;31, 2004, 2005 and 2006, the Group&#146;s transactions with
Webcashing.com Co., Ltd., which, prior to September&nbsp;5, 2006 was a 38% owned affiliate, are as follows:
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="52%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Thousands of</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="11" style="border-bottom: 1px solid #000000">Millions of Yen</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">U.S. Dollars</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2004</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2005</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2006</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2006</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Commissions paid</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">291</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">205</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">151</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">1,285</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Advertising expenses and other fees paid</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">175</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">518</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,410</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Proceeds from sale of equipment and software</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">22</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<P align="center" style="font-size: 10pt">F-41
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>


<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">As discussed in Note 10, on November&nbsp;9, 2004, Chuo Mitsui Finance Service Co., Ltd. became a
30% owned affiliate. During the years ended March&nbsp;31, 2005 and 2006, the Group&#146;s transactions
with Chuo Mitsui Finance Service Co., Ltd. are as follows:
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Thousands of</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #000000">Millions of Yen</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">U.S. Dollars</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2005</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2006</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2006</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Commissions paid</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&nbsp;</TD>
    <TD align="right">&#165;&nbsp;&nbsp;9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&nbsp;</TD>
    <TD align="right">$&nbsp;&nbsp;77</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Loan guarantee fees received</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">26</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">221</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Bank loan guarantee fees received</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">94</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left" style="margin-top: 12pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; background: transparent; color: #000000">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD></TD>
</TR>
<TR valign="top">
    <TD nowrap align="left">Note:</TD>
    <TD>&nbsp;</TD>
    <TD>For the year ended March&nbsp;31, 2005, the Group paid commissions of &#165;6 thousand, and
received loan guarantee fees of &#165;6 thousand and bank loan guarantee fees of &#165;29 thousand.</TD>
</TR>
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>21. Income Taxes</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">The components of income tax expense for the years ended March&nbsp;31, 2004, 2005 and 2006 are as
follows:
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="52%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Thousands of</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="10" style="border-bottom: 1px solid #000000">Millions of Yen</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">U.S. Dollars</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2004</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2005</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2006</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2006</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Current:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">National</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
    <TD align="right">&#165;3,353</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
    <TD align="right">&#165;2,132</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
    <TD align="right">&#165;&nbsp;5,211</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
    <TD align="right">$&nbsp;44,360</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Local</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,862</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,087</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,463</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20,968</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,215</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,219</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,674</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">65,328</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Deferred:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">National</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(407</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">945</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(991</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(8,436</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Local</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(226</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">482</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(469</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(3,993</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(633</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,427</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,460</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(12,429</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Income taxes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
    <TD align="right">&#165;4,582</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
    <TD align="right">&#165;4,646</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
    <TD align="right">&#165;&nbsp;6,214</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
    <TD align="right">$&nbsp;52,899</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">F-42
</DIV>


<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>


<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The significant components of deferred tax assets and liabilities as of March&nbsp;31, 2005 and
2006 are as follows:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="70%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Thousands of</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000">Millions of Yen</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">U.S. Dollars</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2005</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2006</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2006</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Deferred tax assets:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Loans receivable charge-offs</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">16</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">25</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
    <TD align="right">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;213</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Allowance for loan losses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">649</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">793</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,751</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Reserve for guarantee losses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">141</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">241</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,052</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Reserve for losses on interest repayments</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">239</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,035</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Accrued local taxes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">22</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">444</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,780</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Accrued retirement benefits</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">134</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">262</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,230</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Accrued salary expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">407</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">460</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,916</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Impairment of long-lived assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">239</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">239</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,035</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Loan origination costs</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">92</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">783</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Other</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">173</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">214</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,820</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="3" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total deferred tax assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,781</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,009</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">25,615</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Deferred tax liabilities:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Investment securities &#150; difference in basis</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,371</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,418</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">29,097</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Bond issuance costs</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">104</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">114</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">970</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Loan origination costs</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">320</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Accumulated depreciation</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">57</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">85</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">724</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Other</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">35</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">53</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">451</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="3" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total deferred tax liabilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,887</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,670</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">31,242</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="3" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Deferred tax assets (liabilities), net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&#165;</TD>
    <TD align="right">(4,106</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&#165;</TD>
    <TD align="right">(661</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(5,627</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="3" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">The Group believes that it will fully realize its total deferred tax assets as of March&nbsp;31,
2006 based on the Group&#146;s history of taxable income.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">Net deferred tax assets and liabilities as of March&nbsp;31, 2005 and 2006 are reflected in the
accompanying consolidated balance sheets under the following captions:
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="70%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Thousands of</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000">Millions of Yen</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>

<TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">U.S. Dollars</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2005</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2006</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2006</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Deferred tax assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">333</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">721</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
    <TD align="right">$&nbsp;&nbsp;6,138</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Deferred tax liabilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,439</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,382</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11,765</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="3" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Deferred tax assets (liabilities), net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&#165;</TD>
    <TD align="right">(4,106</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&#165;</TD>
    <TD align="right">(661</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">$&nbsp;(5,627</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="3" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">The Group is subject to national and local income taxes, which in the aggregate result in a
statutory tax rate of 41.8% for the year ended March&nbsp;31, 2004 and 40.5% for the years ended March
31, 2005 and 2006. This change is due to the change in Japanese tax regulations enacted on March
24, 2003, which reduced the statutory tax rate from 41.8% to 40.5% effective from the fiscal year
beginning on April&nbsp;1, 2004.
</DIV>


<P align="center" style="font-size: 10pt">F-43
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">Reconciliation of the differences between the statutory tax rate and the effective income tax rate
for the years ended March&nbsp;31, 2004, 2005 and 2006 are as follows:
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="70%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2004</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2005</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2006</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Statutory tax rate</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">41.8</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">40.5</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">40.5</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Increase (reduction)&nbsp;in taxes resulting from:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Expenses not deductible for tax purpose</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.3</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Per capita levy</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.3</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Special tax credit upon application of
IT Investment Promotion Tax Incentive</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(0.1</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(1.9</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(0.1</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Effect of tax rate change</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Other</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(0.9</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(0.3</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Effective income tax rate</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">43.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">38.4</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">40.7</TD>
    <TD nowrap>%</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>22. Reconciliation of the Differences Between Basic and Diluted Net Income Per Share</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">Basic and diluted EPS as well as the number of shares in the following table have been
retroactively adjusted to reflect 2-for-1 stock splits completed on May&nbsp;20, 2004, November&nbsp;19,
2004, November&nbsp;18, 2005 and April&nbsp;1, 2006, and a 1.2-for-1 stock split completed on May&nbsp;20, 2005,.
Reconciliation of the differences between basic and diluted EPS for the years ended March&nbsp;31, 2004,
2005 and 2006 is as follows:
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="60%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Thousands of</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="10" style="border-bottom: 1px solid #000000">Millions of Yen</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">U.S. Dollars</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2004</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2005</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2006</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2006</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">6,077</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">7,262</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">8,455</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
    <TD align="right">$71,976</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">After&#150;tax
equivalent of
interest expense on
1.7% convertible
bond</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">101</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">100</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">57</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">485</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Loss on change of
equity interest as
a result of
exercise of stock
options of a
subsidiary</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(53</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(28</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(238</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" nowrap align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Income for purpose
of computing
diluted net income
per share</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">6,178</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">7,309</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">8,484</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
    <TD align="right">$72,223</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD colspan="3" nowrap align="right" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="60%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="11" style="border-bottom: 1px solid #000000">Thousands of Shares</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2004</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2005</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2006</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Weighted-average shares outstanding&#150; basic</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,393,856</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,441,656</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,584,935</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Effect of dilutive securities:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Warrants and options</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,344</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">19,948</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">35,873</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Convertible bond</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">244,588</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">242,264</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">138,024</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Weighted-average shares outstanding for
diluted EPS computation</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,640,788</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,703,868</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,758,832</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="60%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="10" style="border-bottom: 1px solid #000000">Yen</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">U.S. Dollars</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2004</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2005</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2006</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2006</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Basic EPS</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">2.54</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">2.98</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">3.27</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
    <TD align="right">$0.028</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Diluted EPS</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.34</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.70</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3.08</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.026</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 12pt">Stock options subjected to 1,920 thousand shares were excluded from the computations of
diluted EPS for the year ended March&nbsp;31, 2006 as their exercise
price was higher than the Company&#146;s
average stock price.
</DIV>


<P align="center" style="font-size: 10pt">F-44
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>23. Stock-based Compensation</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">The Company has two types of stock-based compensation plans as incentive plans for selected directors
and employees.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><I>Warrant Plan:</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">Under the
Company&#146;s incentive warrant plans, on April&nbsp;20, 2001, the
Company issued unsecured bonds with
detachable warrants. These warrants were immediately repurchased at their fair market value and
granted as compensation to directors and selected employees in the
Company. The warrants were
exercisable into approximately 49,864 thousand shares of common stock at an exercise price of
&#165;30.10 per share. The exercise period of the warrant was from July&nbsp;2, 2001 through April&nbsp;19, 2004.
The warrants were immediately exercisable at the time of grant, but expire at the time of
termination of employment with the Group. All warrants matured by March&nbsp;31, 2005.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><I>Stock Option Plan:</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">Following
approval of the shareholders at the Company&#146;s annual meeting on
June&nbsp;22, 2002, the Company granted
share subscription rights to directors, statutory auditors, employees, corporate advisors and
temporary employees with tenure of over one year on September&nbsp;10, 2002. Under this stock option
plan, options to purchase common stock of 57,408 thousand shares were granted at the exercise price
of &#165;27.00 per share, which was priced at 110% of the closing price of the day before the approval
of grant, are exercisable from October&nbsp;1, 2002 and expire on the earlier of September&nbsp;30, 2005 or
termination of employment with the Group.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">Following
approval of the shareholders at the Company&#146;s annual meeting on
June&nbsp;24, 2003, the Company granted
share subscription rights to directors, statutory auditors, corporate advisors and employees,
including employees loaned to other companies, and wholly-owned subsidiary&#146;s directors, statutory
auditors and employees on July&nbsp;16, 2003. Under this stock option plan, options to purchase common
stock of 25,920 thousand shares were granted at the exercise price of &#165;28.00 ($0.24) per share,
which was priced at 110% of the average daily closing price of the month immediately before the
month of the issuance date of such subscription rights, are exercisable from August&nbsp;1, 2003 and
expire on the earlier of July&nbsp;31, 2006 or termination of employment with the Group.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">Following
approval of the shareholders at the Company&#146;s annual meeting on
June&nbsp;22, 2004, the Company granted
share subscription rights to the Group&#146;s directors, statutory auditors, corporate advisors and
employees, including employees loaned to other companies and employee of other companies loaned to
the Group, and temporary employees with tenure of over one year on July&nbsp;15, 2004. Under this
stock option plan, options to purchase common stock of 63,936 thousand shares were granted at the
exercise price of &#165;53.00 ($0.45) per share, which was priced at 110% of the average daily closing
price of the month immediately before the month of the issuance date of such subscription rights,
are exercisable from August&nbsp;1, 2004 and expire on the earlier of July&nbsp;31, 2007 or termination of
employment with the Group.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">Following
approval of the shareholders at the Company&#146;s annual meeting on
June&nbsp;22, 2004, the Company granted
share subscription rights to the Group&#146;s directors, statutory auditors, corporate advisors and
employees, including employees loaned to other companies and employee of other companies loaned to
the Group, and temporary employees with tenure of over one year on January&nbsp;20, 2005. Under this
stock option plan, options to purchase common stock of 768 thousand shares were granted at the
exercise price of &#165;55.00 ($0.47) per share, which was priced at 110% of the average daily closing
price of the month immediately before the month of the issuance date of such subscription rights,
are exercisable from February&nbsp;1, 2005 and expire on the earlier of January&nbsp;31, 2008 or termination
of employment with the Group.
</DIV>



<P align="center" style="font-size: 10pt">F-45
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>
<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">Following approval of the shareholders at the Company&#146;s annual meeting on June&nbsp;22, 2004, the Company
granted share subscription rights to the Group&#146;s directors, statutory auditors, corporate advisors and employees, including employees
loaned to other companies and employee of other companies loaned to the Group, and temporary
employees with tenure of over one year on April&nbsp;21, 2005. Under this stock option plan, options to
purchase common stock of 7,142 thousand shares were granted at the exercise price of &#165;67.00 ($0.57)
per share, which was priced at 110% of the average daily closing price of the month immediately
before the month of the issuance date of such subscription rights, are exercisable from May&nbsp;1, 2005
and expire on the earlier of April&nbsp;30, 2008 or termination of employment with the Group.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">Following approval of the shareholders at the Company&#146;s annual meeting on June&nbsp;22, 2005, the Company granted
share subscription rights to the Group&#146;s directors, statutory auditors, corporate advisors and
employees, including employees loaned to other companies and employee of other companies loaned to
the Group on July&nbsp;15, 2005. Under this stock option plan, options to purchase common stock of
14,400 thousand shares were granted at the exercise price of &#165;58.00 ($0.49) per share, which was
priced at 110% of the average daily closing price of the month immediately before the month of the
issuance date of such subscription rights, are exercisable from August&nbsp;1, 2005 and expire on the
earlier of July&nbsp;31, 2008 or termination of employment with the Group.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">Following approval of the shareholders at the Company&#146;s annual meeting on June&nbsp;22, 2005, the Company granted
share subscription rights to the Group&#146;s directors, statutory auditors, corporate advisors and
employees, including employees loaned to other companies and employee of other companies loaned to
the Group on March&nbsp;23, 2006. Under this stock option plan, options to purchase common stock of
1,920 thousand shares were granted at the exercise price of &#165;131.00 ($1.12) per share, which was
priced at 110% of the average daily closing price of the month immediately before the month of the
issuance date of such subscription rights, are exercisable from April&nbsp;1, 2006 and expire on the
earlier of March&nbsp;31, 2009 or termination of employment with the Group.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">Under APB 25, the Company recognized no compensation expense related to these grants as no options were
granted at a price below the market price on the day of grant. The options automatically vest and
are exercisable upon grant.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">A summary of changes in the Company&#146;s stock options and warrants during the years ended March&nbsp;31, 2004,
2005 and 2006 is as follows:
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="54%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Weighted-average</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7">Weighted-average Exercise</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Number of Shares</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Remaining Life</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #000000">Price Per Shares</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">(Thousands)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">(Years)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">Yen</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">U.S. Dollars</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Outstanding at March
31, 2003</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">97,018</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
    <TD align="right">&#165;28</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
    <TD align="right">$0.24</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Granted</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">25,920</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">28</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.24</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Exercised</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(53,232</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">30</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.26</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Expired or forfeited</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(10,880</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">28</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.24</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="3" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="3" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Outstanding at March
31, 2004</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">58,826</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">28</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.24</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Granted</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">64,704</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">53</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.45</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Exercised</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(32,020</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">31</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.26</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Expired or forfeited</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(7,441</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">46</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.39</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="3" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="3" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Outstanding at March
31, 2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">84,069</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">45</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.38</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Granted</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">23,462</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">67</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.57</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Exercised</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(52,688</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">43</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.37</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Expired or forfeited</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(5,184</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">58</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.49</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="3" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="3" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Outstanding at March
31, 2006</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">49,659</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
    <TD align="right">&#165;56</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
    <TD align="right">$0.48</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="3" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="3" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">F-46
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">In addition, shares authorized to be grant are fixed at each grant date by the Board of
Directors. Instead of an issuance of new share, the Company sold to the grantee its treasury stock
of 12,868 thousand shares, 30,292 thousand shares and 52,834 thousand shares
upon exercise of stock options for the years ended March&nbsp;31, 2004, 2005 and 2006, respectively. Consequently, additional paid-in
capital increased by &#165;43&nbsp;million, &#165;216&nbsp;million and &#165;999&nbsp;million ($8,504 thousand) for the years
ended March&nbsp;31, 2004, 2005 and 2006, respectively, as a result of gains from these transactions.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">A summary
of the Company&#146;s stock options outstanding as of March&nbsp;31, 2006 is as follows:
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="12%">&nbsp;</TD>
    <TD width="55%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Weighted-average</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Number of Shares Outstanding</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Remaining Life</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000">Exercise Prices (Yen)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">(Thousands)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">(Years)</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&#165;28</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,288</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.3</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&#165;53</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">28,790</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.3</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&#165;55</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">461</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.8</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&#165;67</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,740</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.1</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&#165;58</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,460</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.3</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&#165;131</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,920</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3.0</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" colspan="3" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" colspan="3" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">49,659</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.6</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" colspan="3" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" colspan="3" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">SVC, a
74.6% owned subsidiary of the Company, also has subsidiary stock-based compensation plans as
incentive plans for its directors and selected employees.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">Following approval of SVC&#146;s shareholders meeting on September&nbsp;9, 2002, SVC granted share
subscription rights to its directors, statutory auditors and employees on September&nbsp;26, 2002.
Under this stock option plan, options to purchase common stock of 80,000 shares were granted at the
exercise price of &#165;625 ($5.32) per share, which was priced at the initial cost of SVC&#146;s common
stock, are exercisable from October&nbsp;1, 2004 and expire on the earlier of September&nbsp;30, 2007 or
termination of employment with SVC.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">Following approval of SVC&#146;s shareholders meeting on June&nbsp;23, 2003, SVC granted share subscription
rights to its directors and employees on July&nbsp;29, 2003. Under this stock option plan, options to
purchase common stock of 23,600 shares were granted at the exercise price of &#165;1,125 ($9.58) per
share, which was priced at estimated average net assets of SVC for the six months ended September
30, 2003, are exercisable from July&nbsp;1, 2005 and expire on the earlier of June&nbsp;30, 2008 or
termination of employment with SVC.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">Following approval of SVC&#146;s shareholders meeting on March&nbsp;30, 2004, SVC granted share subscription
rights to its directors, statutory auditors and employees on March&nbsp;30, 2004. Under this stock
option plan, options to purchase common stock of 14,960 shares were granted at the exercise price
of &#165;6,250 ($53.21) per share, which was priced at the fair value of SVC as of September&nbsp;30, 2003
calculated using the discounted cash flow method, are exercisable from April&nbsp;1, 2006 and expire on
the earlier of March&nbsp;31, 2009 or termination of employment with SVC.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">Following approval of SVC&#146;s annual shareholders meeting on June&nbsp;21, 2005, SVC granted share
subscription rights to its directors and employees on August&nbsp;9, 2005. Under this stock option
plan, options to purchase common stock of 2,620 shares were granted at the exercise price of
&#165;51,549 ($438.83) per share, which was priced at 110% of the average daily closing price of the
month immediately before the month of the issuance date of such subscription rights, are
exercisable from July&nbsp;1, 2007 and expire on the earlier of June&nbsp;30, 2010 or termination of
employment with SVC.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">Under APB 25, SVC recognized no compensation expense related to these grants as no options were
granted at a price below SVC&#146;s fair value or the market price on the day of grant. The options
vest upon approximately two years of services from the day of grant.
</DIV>


<P align="center" style="font-size: 10pt">F-47
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">A summary of changes in SVC&#146;s stock options during the years ended March&nbsp;31, 2004, 2005 and 2006 is
as follows:
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="52%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Weighted-average</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6">Weighted-average Exercise</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Number of Shares</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Remaining Life</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000">Price Per Shares</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">(Shares)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">(Years)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Yen</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">U.S. Dollars</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Outstanding at March&nbsp;31, 2003</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">76,400</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
    <TD align="right">&#165;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;625</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
    <TD align="right">$&nbsp;&nbsp;&nbsp;&nbsp;5.32</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Granted</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">38,560</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,114</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">26.51</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Exercised</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Expired or forfeited</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(14,800</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">815</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6.94</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Outstanding at March&nbsp;31, 2004</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">100,160</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,555</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13.24</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Granted</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Exercised</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(63,200</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">625</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5.32</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Expired or forfeited</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,160</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,403</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">28.97</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Outstanding at March&nbsp;31, 2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">34,800</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,130</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">26.65</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Granted</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,620</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">51,549</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">438.83</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Exercised</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(19,200</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,063</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9.05</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Expired or forfeited</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(600</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">21,350</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">181.75</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Outstanding at March&nbsp;31, 2006</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17,620</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
    <TD align="right">&#165;11,961</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
    <TD align="right">$101.82</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">A summary of SVC&#146;s stock options outstanding as of March&nbsp;31, 2006 is as follows:
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="12%">&nbsp;</TD>
    <TD width="54%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="13%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Weighted-average</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Number of Shares Outstanding</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Remaining Life</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000">Exercise Prices (Yen)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">(Thousands)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">(Years)</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&#165;625</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,600</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" colspan="2">1.5</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&#165;6,250</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13,600</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" colspan="2">3.0</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&#165;51,549</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,420</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" colspan="2">4.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" colspan="3" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" colspan="4" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17,620</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" colspan="2">3.0</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" colspan="3" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" colspan="4" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">F-48
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>24. Cumulative Other Comprehensive Income</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">Cumulative other comprehensive income and related tax effects for the years ended March&nbsp;31, 2004,
2005 and 2006, are as follows:
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="10" style="border-bottom: 1px solid #000000">Millions of Yen</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Other</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Cumulative</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Comprehensive</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Other</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Income</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Tax (Expense)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Comprehensive</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Before Tax</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">or Benefit</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Income</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">March&nbsp;31, 2003</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
    <TD align="right">&#165;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;118</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">&#165;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(48</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
    <TD align="right">&#165;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;70</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Unrealized gains on investment securities:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Unrealized holding gains (losses)&nbsp;during the period</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,276</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,132</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,144</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Reclassification adjustment for realized (gains)&nbsp;losses
included in net income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">268</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(108</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">160</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Net unrealized holding gains (losses)&nbsp;during the period</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,544</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,240</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,304</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Unrealized losses on derivative instruments:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Unrealized holding gains (losses)&nbsp;during the period</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(5</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(3</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Reclassification adjustment for realized (gains)&nbsp;losses
included in net income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">March&nbsp;31, 2004</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,657</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,286</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,371</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Unrealized gains on investment securities:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Unrealized holding gains (losses)&nbsp;during the period</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,428</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(3,008</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,420</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Reclassification adjustment for realized (gains)&nbsp;losses
included in net income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">513</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(208</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">305</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Net unrealized holding gains (losses)&nbsp;during the period</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,941</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(3,216</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,725</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Unrealized losses on derivative instruments:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Unrealized holding gains (losses)&nbsp;during the period</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Reclassification adjustment for realized (gains)&nbsp;losses
included in net income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Foreign currency translation adjustments:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Unrealized gains (losses)&nbsp;arising during the period</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(9</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(9</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Reclassification adjustment for realized (gains)&nbsp;losses
included in net income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">March&nbsp;31, 2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13,587</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(5,501</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,086</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Unrealized gains on investment securities:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Unrealized holding gains (losses)&nbsp;gains during the period</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(864</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">336</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(528</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Reclassification adjustment for realized (gains)&nbsp;losses
included in net income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(3,760</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,523</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,237</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Net unrealized holding gains (losses)&nbsp;during the period</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(4,624</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,859</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,765</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Unrealized losses on derivative instruments:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Unrealized holding gains (losses)&nbsp;during the period</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(3</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Reclassification adjustment for realized (gains)&nbsp;losses
included in net income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Foreign currency translation adjustments:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Unrealized gains (losses)&nbsp;arising during the period</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">160</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">160</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Reclassification adjustment for realized (gains)&nbsp;losses
included in net income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">March&nbsp;31, 2006</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
    <TD align="right">&#165;&nbsp;&nbsp;9,130</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">&#165;(3,645</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
    <TD align="right">&#165;&nbsp;&nbsp;5,485</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">F-49
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS</B>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="10" style="border-bottom: 1px solid #000000">Thousands of U.S. Dollars</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Other</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Cumulative</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Comprehensive</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Other</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Income</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Tax (Expense)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Comprehensive</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Before Tax</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">or Benefit</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Income</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">March&nbsp;31, 2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
    <TD align="right">$115,664</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">$(46,829</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
    <TD align="right">$68,835</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Unrealized gains on investment securities:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Unrealized holding gains (losses)&nbsp;gains during the period</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(7,356</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,861</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(4,495</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Reclassification adjustment for realized (gains)&nbsp;losses
included in net income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(32,008</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12,965</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(19,043</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Net unrealized holding gains (losses)&nbsp;during the period</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(39,364</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15,826</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(23,538</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Unrealized losses on derivative instruments:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Unrealized holding gains (losses)&nbsp;during the period</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">60</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(26</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">34</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Reclassification adjustment for realized (gains)&nbsp;losses
included in net income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Foreign currency translation adjustments:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Unrealized gains (losses)&nbsp;arising during the period</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,362</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,362</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Reclassification adjustment for realized (gains)&nbsp;losses
included in net income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">March&nbsp;31, 2006</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
    <TD align="right">$&nbsp;77,722</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">$(31,029</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
    <TD align="right">$46,693</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>25. Cash Flow Information</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">Cash payments for interest and income taxes for the years ended March&nbsp;31, 2004, 2005 and 2006 are
as follows:
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="52%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Thousands of</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="10" style="border-bottom: 1px solid #000000">Millions of Yen</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">U.S. Dollars</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2004</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2005</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2006</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2006</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Interest</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
    <TD align="right">&#165;3,591</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
    <TD align="right">&#165;2,999</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
    <TD align="right">&#165;2,779</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
    <TD align="right">$23,657</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Income taxes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,378</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,266</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,302</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">19,596</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 12pt">Non-cash investing and financing activities for the years ended March&nbsp;31, 2004, 2005 and 2006
are as follows:
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="52%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Thousands of</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="10" style="border-bottom: 1px solid #000000">Millions of Yen</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">U.S. Dollars</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2004</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2005</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2006</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2006</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Property and
equipment obtained
under capital
leases</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
    <TD align="right">&#165;922</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
    <TD align="right">&#165;&nbsp;&nbsp;&nbsp;792</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
    <TD align="right">&#165;&nbsp;&nbsp;&nbsp;278</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
    <TD align="right">$&nbsp;&nbsp;2,367</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Conversion of
convertible bonds
to common stock</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,058</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,120</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">69,124</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 12pt">In addition, cash dividends paid to minority interest by SVC of &#165;99&nbsp;million ($843 thousand)
are included in &#147;Dividends paid&#148; of cash flows from financing activities for the year ended March
31, 2006.
</DIV>


<P align="center" style="font-size: 10pt">F-50
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>26. Disclosures About Fair Value of Financial Instruments</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">SFAS No.&nbsp;107, &#147;Disclosures about Fair Value of Financial Instruments&#148; requires disclosures of the
fair value of financial instruments, both assets and liabilities recognized and not recognized in
the Group&#146;s balance sheet. The estimated fair value amounts have been determined by the Group
using available market information and appropriate valuation methodologies. The use of different
market assumptions and/or estimation methodologies may have a material effect on the estimated fair
value amounts. Considerable judgment is required in estimating fair values and the estimates
presented are not necessarily indicative of the amounts the Group could realize in a current
market exchange.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">The estimated fair values of the Group&#146;s financial instruments as of March&nbsp;31, 2005 and 2006 are
as follows:
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="28%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="14" style="border-bottom: 1px solid #000000">Millions of Yen</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000">Thousands of U.S. Dollars</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000">2005</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000">2006</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000">2006</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Carrying</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Carrying</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Carrying</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Amount</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Fair Value</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Amount</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Fair Value</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Amount</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Fair Value</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Financial assets:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Cash and cash equivalents</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">25,709</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">25,709</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">22,860</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&#165;</TD>
    <TD align="right">22,860</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">194,603</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">194,603</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Loans receivable, net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">146,119</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">146,119</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">225,947</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">220,502</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,923,444</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,877,092</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Purchased loans receivable, net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13,581</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13,581</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">24,155</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">24,155</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">205,627</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">205,627</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Investment securities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">28,443</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">28,443</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">42,071</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">42,071</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">358,143</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">358,143</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Financial liabilities:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Short-term borrowings</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12,600</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12,600</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">60,411</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">60,411</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">514,267</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">514,267</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Long-term borrowings</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">136,844</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">140,752</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">198,924</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">200,487</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,693,403</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,706,708</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Off-balance-sheet financial
instruments:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Interest rate swaps</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(7</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD nowrap></TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Borrowings with guarantees</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(371</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(629</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(5,355</TD>
    <TD nowrap>)</TD>
</TR>

<!-- End Table Body -->
</TABLE>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 12pt">The following methods and assumptions were used to estimate the fair value of each class of
financial instruments for which it is practicable to estimate that value:
</DIV>


<DIV style="margin-top: 12pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">a)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Cash and Cash Equivalents: </I>Cash and cash equivalents are carried at an amount that
approximates fair value.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">b)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Loans Receivable: </I>The market rate of interest for the Group&#146;s loan products has not
changed significantly during the lapsed term of the Group&#146;s loans receivable. The fair
value of loans receivable are estimated based on discounted future cash flows. The Group&#146;s
lending interest rates were compared to changes in the benchmark, Long-term Prime Rate, over
the remaining life of loans receivable as of March&nbsp;31, 2006.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">c)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Purchased Loans Receivable: </I>The carrying value of purchased loans receivable is estimated
based on either the market value or the discounted amounts of future cash flows. The Group
believes the carrying value of its purchased loans receivable approximates fair value.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">d)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Investment Securities: </I>The fair value of marketable
equity securities is based on quoted market
prices. The Group also holds &#165;9,799&nbsp;million and &#165;18,675&nbsp;million ($158,977 thousand) in
debt securities and other investments, including non-marketable
equity securities as of March&nbsp;31, 2005 and 2006, respectively. The fair value of
these investments is assumed to estimate cost until such time as new equity or
financing or significant changes operations demonstrate a new fair value.</TD>
</TR>

</TABLE>
</DIV>

<P align="center" style="font-size: 10pt">F-51
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS</B>
</DIV>


<DIV style="margin-top: 12pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">e)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Short-Term Borrowings: </I>Short-term borrowings are carried at an amount that approximates fair
value.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">f)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Long-Term Borrowings: </I>Long-term borrowings, including current portion, are estimated based
on either the market value or the discounted amounts of future cash flows. The borrowing
interest rates which were currently available to the Group offered by financial institutions
for debt with similar terms and remaining average maturities are used as the discount rates.
The fair value of syndicated bonds is estimated using a discounted cash-flow calculation that
applies interests rates at an assumed marginal market-funding rate.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">g)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Interest Rate Swaps: </I>The fair value of interest rate swaps (used for hedging purpose)
reflects the estimated amounts that the Group would receive or pay to terminate the
contracts at the reporting date, thereby taking into account the current unrealized gains or
losses of open contracts. Discounted amounts of future cash flows using the current interest
rate and dealer quotes are available for most of the Group&#146;s derivatives.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">h)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Borrowings with Guarantees: </I>The fair value of guaranteed borrowings generally reflects the
probable and estimable amounts that the Group would pay for the delinquent payments of
borrowing under guarantee.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>27. Segment Information</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">For financial reporting purposes, the Group operates under the integrated financial services
segment and the loan servicing segment. The integrated financial services segment
comprises of the loan business, which includes small business owner, Business Timely, secured,
Wide, consumer, and other loans, as well as credit guarantees, leasing and securities business. In
the loan servicing segment, SVC mainly acquires and services non-performing debts from banks and
financial institutions in Japan. The loan servicing segment is operated as a separate segment for
financial reporting purposes. Investment in real estate properties,
insurance agency and consultancy business are insignificant  for
financial reporting  purposes and are included in the integrated
financial services segment for financial reporting purposes. The Group currently conducts its
operating activities mainly in Japan. The Group also conducts activities in China, but these
are currently insignificant for financial reporting  purposes. Selected information for the Group&#146;s
business segments for the
years ended March&nbsp;31, 2004, 2005 and 2006 is as follows:
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="10" style="border-bottom: 1px solid #000000">Millions of Yen</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Integrated Financial</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Services</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Loan Servicing</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Total</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2004:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Total interest income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
    <TD align="right">&#165;&nbsp;&nbsp;38,038</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
    <TD align="right">&#165;2,069</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
    <TD align="right">&#165;&nbsp;&nbsp;40,107</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Total interest expense</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,603</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">121</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,724</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Provision for loan losses, net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12,824</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">637</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13,461</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Net income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,671</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">406</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,077</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Total assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">203,527</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,741</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">210,268</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 6pt">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2005:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Total interest income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
    <TD align="right">&#165;&nbsp;&nbsp;29,299</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
    <TD align="right">&#165;&nbsp;&nbsp;&nbsp;3,256</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
    <TD align="right">&#165;&nbsp;&nbsp;32,555</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Total interest expense</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,006</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">153</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,159</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Provision for loan losses, net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,759</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">817</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,576</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Net income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,244</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,018</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,262</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Total assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">206,692</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">21,709</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">228,401</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<P align="center" style="font-size: 10pt">F-52
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS</B>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="10" style="border-bottom: 1px solid #000000">Millions of Yen</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Integrated Financial</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Services</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Loan Servicing</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Total</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2006:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Total interest income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
    <TD align="right">&#165;&nbsp;&nbsp;28,938</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
    <TD align="right">&#165;&nbsp;&nbsp;4,963</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
    <TD align="right">&#165;&nbsp;&nbsp;33,901</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Total interest expense</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,697</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">408</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,105</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Provision for loan losses, net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,277</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,186</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,463</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Net income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,117</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,338</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,455</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Total assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">316,943</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">43,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">359,943</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="10" style="border-bottom: 1px solid #000000">Thousands of U.S. Dollars</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Integrated Financial</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Services</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Loan Servicing</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Total</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2006:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Total interest income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
    <TD align="right">$&nbsp;&nbsp;246,344</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
    <TD align="right">$&nbsp;&nbsp;42,249</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
    <TD align="right">$&nbsp;&nbsp;288,593</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Total interest expense</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">22,959</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,473</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">26,432</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Provision for loan losses, net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">70,461</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,096</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">80,557</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Net income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">52,073</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">19,903</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">71,976</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Total assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,698,076</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">366,051</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,064,127</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>28. Subsequent Events</B>
</DIV>


<DIV style="margin-top: 12pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">1)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>On December&nbsp;20, 2005, the Board of Directors approved a 2-for-1 stock split effective on
April&nbsp;1, 2006. The Company&#146;s common shares owned by shareholders recorded in the fiscal register
of shareholders and the register of beneficiary shareholders as of March&nbsp;31, 2006 shall be
split two for each one share. The effect of this stock split has been reflected in these
consolidated financial statements.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">2)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>On June&nbsp;24, 2006, the shareholders of the Company authorized the following at the Annual
Shareholders&#146; Meeting:</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 12pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(1)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Payment of a year-end cash dividend of &#165;0.55 ($0.005) per share to shareholders of
record as of March&nbsp;31, 2006 or a total of &#165;1,503&nbsp;million ($12,795 thousand)</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(2)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Payment of bonuses to directors of &#165;74&nbsp;million ($630 thousand)</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(3)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Change of the upper limits of compensation for a director and a statutory auditor per
year from &#165;250&nbsp;million ($2,128 thousand) to &#165;500&nbsp;million ($4,256 thousand) and from &#165;60
million ($511 thousand) to &#165;150&nbsp;million ($1,277 thousand), respectively.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(4)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The upper limit of &#165;500&nbsp;million ($4,256 thousand) per year for stock options in form
of new share subscription rights to directors as compensation, separately from the revised
amount of directors&#146; compensation. The details of stock options will be determined in
accordance with a resolution of the Board of Directors on issuance.</TD>
</TR>

</TABLE>
</DIV>
<DIV style="margin-top: 12pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(5)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Partial amendments of the Article of Incorporation</TD>
</TR>
</TABLE>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&nbsp;&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The company name has been changed from &#147;Nissin Co., Ltd.&#148; to &#147;NIS Group Co., Ltd.&#148;
In addition, the change shall be effective on October&nbsp;1, 2006.</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt">F-53
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS</B>
</DIV>




<DIV style="margin-top: 12pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">3)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>On June&nbsp;24, 2006, Mr.&nbsp;Shinsuke Amiya has been appointed as President, Representative Director
and Co-CEO. In addition, Mr.&nbsp;Kunihiko Sakioka, former President, Representative Director and
Executive Officer, has been appointed as Chairman, Representative Director and Co-CEO.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">4)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>On June&nbsp;23, 2006, the shareholders of SVC authorized payment of bonuses to its directors and
statutory auditors of &#165;28&nbsp;million ($238 thousand) at its Annual Shareholders&#146; Meeting.</TD>
</TR>

</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">F-54
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>INDEX OF EXHIBITS</B>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="89%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center" colspan="3"><B>Exhibit</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Number</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Description</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">1.1
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&#151;
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Our Articles of Incorporation (English Translation)</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">1.2
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&#151;
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Our Share Handling Regulations (English Translation)</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">1.3
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&#151;
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Our Regulations of the Board of Directors (English Translation)</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">1.4
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&#151;
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Our Regulations of the Board of Statutory Auditors (English Translation)</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">2.1
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&#151;
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Our Specimen Common Stock Certificate (English Translation) (incorporated by
reference to the corresponding exhibit to our Registration Statement Form&nbsp;F-1
(File No.&nbsp;333-97229) declared effective on August&nbsp;1, 2002)</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">2.2
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&#151;
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Form of Deposit Agreement Among Nissin Co., Ltd., The Bank of New York as
Depositary and All Owners and Holders from Time to Time of American Depositary
Receipts, Including the Form of American Depositary Receipt (incorporated by
reference to the Registration Statement on Form&nbsp;F-6 (File No.&nbsp;333-97133) filed on
July&nbsp;24, 2002)</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">8.1
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&#151;
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">List of Our Subsidiaries</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">12.1
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&#151;
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Certification of principal executive officer required by 17 C.F.R. 240. 13a-14(a)</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">12.2
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&#151;
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Certification of principal executive officer required by 17 C.F.R. 240. 13a-14(a)</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">12.3
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&#151;
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Certification of principal financial officer required by 17 C.F.R. 240. 13a-14(a)</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">13.1
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&#151;
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Certification of chief executive officer required by 18 U.S.C. Section&nbsp;1350</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">13.2
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&#151;
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Certification of chief executive officer required by 18 U.S.C. Section&nbsp;1350</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">13.3
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&#151;
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Certification of chief financial officer required by 18 U.S.C. Section&nbsp;1350</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<P align="center" style="font-size: 10pt">&nbsp;
</DIV>

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NISSIN CO., LTD.
Table of Contents
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 20-F
(Mark One)
o
REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR 12(g) OF THE SECURITIES EXCHANGE ACT OF 1934
OR
þ
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended March 31, 2006
OR
o
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from
to
OR
o
SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of event requiring this shell company report
Commission file number: 1-31416
Kabushiki Kaisha Nissin
(Exact name of Registrant as specified in its charter)
NISSIN CO., LTD.
(Translation of Registrant's name into English)
Japan
Shinjuku L-Tower 15F
6-1, Nishi Shinjuku 1-chome
Shinjuku-ku, Tokyo 163-1525
Japan
(Jurisdiction of incorporation or organization)
(Address of principal executive offices)
Securities registered or to be registered pursuant to Section 12(b) of the Act:
Title of each class
Name of each exchange on which registered
Common Stock*
New York Stock Exchange
Securities registered or to be registered pursuant to Section 12(g) of the Act:
None
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:
None
Indicate the number of outstanding shares of each of the issuer's classes of capital or
common stock as of the close of the period covered by the annual report:
2,732,839,214 shares of
our common stock outstanding at March 31, 2006, including 4,799,200 shares represented by 479,920
American Depositary Shares, as adjusted for our 2-for-1 stock split in April 2006.
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule
405 of the Securities Act. Yes
þ
No
o
If this report is an annual or transition report, indicate by check mark if the registrant is
not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934. Yes
o
No
þ
Note — Checking the box above will not relieve any registrant required to file
reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 from
their obligations under those Sections.
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed
by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes
þ
No
o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated
filer, or a non-accelerated filer. See definition of "accelerated filer" in Rule 12b-2 of the
Exchange Act. (Check one):
Large accelerated filer
þ
Accelerated filer
o
Non-accelerated filer
o
Indicate by check mark which financial statement item the registrant has elected to follow. Item 17
o
Item 18
þ
If this is an annual report, indicate by check mark whether the registrant is a shell company
(as defined in Rule 12b-2 of the Exchange Act). Yes
o
No
þ
*
Not for trading, but only in connection with the listing of American Depositary Shares, each
representing ten shares of our common stock.
TABLE OF CONTENTS
Page
PART I
Item 1. Identity of Directors, Senior Management and Advisers
5
Item 2. Offer Statistics and Expected Timetable
5
Item 3. Key Information
5
Item 4. Information on the Company
17
Item 4A. Unresolved Staff Comments
43
Item 5. Operating and Financial Review and Prospects
43
Item 6. Directors, Senior Management and Employees
76
Item 7. Major Shareholders and Related Party Transactions
89
Item 8. Financial Information
92
Item 9. The Offer and Listing
94
Item 10. Additional Information
97
Item 11. Quantitative and Qualitative Disclosures About Market Risk
115
Item 12. Description of Securities Other than Equity Securities
117
PART II
Item 13. Defaults, Dividend Arrearages and Delinquencies
118
Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds
118
Item 15. Controls and Procedures
118
Item 16A. Audit Committee Financial Expert
119
Item 16B. Code of Ethics
119
Item 16C. Principal Accountant Fees and Services
120
Item 16D. Exemptions from the Listing Standards for Audit Committees
120
Item 16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers
121
PART III
Item 17.Financial Statements
122
Item 18.Financial Statements
122
Item 19.Exhibits
122
Index to Consolidated Financial Statements
F-1
EX-1.1 Articles of Incorporation
EX-1.2 Share Handling Regulations
EX-1.3 Regulations of the Board of Directors
EX-1.4 Regulations of Board of Statutory Auditors
EX-8.1 List of Subsidiaries
EX-12.1 Certification of the principal executive officer required by 17 C.F.R. 240. 13a-14(a)
EX-12.2 Certification of the principal executive officer required by 17 C.F.R. 240. 13a-14(a)
EX-12.3 Certification of the principal financial officer required by 17 C.F.R. 240. 13a-14(a)
EX-13.1 Certification of the chief executive officer required by 18 U.S.C. Section 1350
EX-13.2 Certification of the chief executive officer required by 18 U.S.C. Section 1350
EX-13.3 Certification of the chief financial officer required by 18 U.S.C. Section 1350
-2-
Table of Contents
Certain Defined Terms, Conventions and Presentation of Financial Information
As
used in this annual report on Form 20-F, unless the context otherwise
requires, the "Company"
refer to Nissin Co., Ltd. and the "Group" "we," "us," "our" and similar terms refer to Nissin
Co., Ltd. and its consolidated subsidiaries.
In this annual report on Form 20-F, "subsidiary" and "subsidiaries" refer to consolidated
subsidiaries of the Company, companies in which the Company owns more than 50%, and "affiliate" and
"affiliates" refer to all of our affiliates accounted for by the equity method, companies in which
the Company owns 20-50% and has the ability to exercise significant influence over their operations.
The consolidated financial statements of the Company have been prepared in accordance with
accounting principles generally accepted in the United States of America, or US GAAP. Unless
otherwise stated or the context otherwise requires, all amounts in such financial statements are
expressed in yen.
In this annual report on Form 20-F, "yen" or "¥" means the lawful currency of Japan, and
"dollar" or "$" means the lawful currency of the United States of America.
Certain monetary amounts and percentage data included in this annual report have been subject
to rounding adjustments for the convenience of the reader. Accordingly, figures shown as totals in
certain tables may not be equal to the arithmetic sum of the figures which precede them.
The
Group's fiscal year ends on March 31. The fiscal year ended March 31, 2006 is referred
to throughout this annual report on Form 20-F as "this fiscal year", and other fiscal years are
referred to in a corresponding manner. References to years not specified as being fiscal years are
to calendar years.
Special Note Regarding Forward-looking Statements
This annual report on Form 20-F contains forward-looking statements about our industry, our
business, our plans and objectives, our financial condition and our results of operations that are
based on our current expectations, assumptions, estimates and projections. These forward-looking
statements are subject to various risks and uncertainties. These statements discuss future
expectations, identify strategies, discuss market trends, contain projections of results of
operations or of financial condition, or state other forward-looking information. Known and
unknown risks, uncertainties and other factors could cause our actual results to differ materially
from and be worse than those contained in or suggested by any forward-looking statement. We cannot
promise that our expectations, projections, anticipated results, estimates or other information
expressed in or underlying these forward-looking statements will turn out to be correct.
Important risks and factors that could cause our actual results to differ materially from the
forward-looking statements are in Item 3.D and elsewhere in this annual report on Form 20-F and
include, without limitation:
•
the effect of weak domestic economic conditions, including changes in corporate and
personal bankruptcy and unemployment rates in Japan;
-3-
Table of Contents
•
competition by entry of major financial institutions and IT companies in the
business owners and consumer loan industries;
•
misconduct by an employee or director and our exposure to negative publicity of the
consumer or business finance industries generally or us specifically;
•
the effect of potential changes to legislation and accompanying enforcement, and
restrictions and regulations associated with Japan or U.S. law, including restrictions
on interest rates, to regulations for the moneylending business;
•
the growing variety of legal means with which debtors can seek protection from
creditors;
•
uncertain liquidity of Japan's capital markets and availability of funding from
lenders on favorable terms and potential changes to government policy, including
Japan's monetary policy;
•
the reliability of our information or technological systems and networks.
•
the influence of our chairman and his family over important decisions;
•
the failure to generate the results we desire by changes in the mix of our assets portfolio;
•
fluctuation in market environments regarding our investments;
•
our ability to pursue and maintain profitable joint ventures and strategic alliances;
•
the effect of fluctuations in the value of real estate held and potential changes to
tax legislation and amendments to regulations concerning real estate-related
businesses; and
•
increasing competition in the loan servicing market in which Nissin Servicer Co.,
Ltd., a consolidated subsidiary, operates.
-4-
Table of Contents
PART I
Item 1. Identity of Directors, Senior Management and Advisers.
Not required.
Item 2. Offer Statistics and Expected Timetable.
Not applicable.
Item 3. Key Information.
A. Selected Financial Data.
You should read the following selected consolidated financial information together with Item 5
of this annual report on Form 20-F and our consolidated financial statements and the notes to the
consolidated financial statements beginning on page F-1.
The consolidated income statement data for the years ended March 31, 2002, 2003, 2004, 2005
and 2006 and the consolidated balance sheet data as of March 31, 2002, 2003, 2004, 2005 and 2006
that are identified as being in accordance with accounting principles generally accepted in the
United States of America, or U.S. GAAP, are derived from our consolidated financial statements
prepared in accordance with U.S. GAAP, which have been audited by BDO Sanyu & Co., an independent
registered public accounting firm. We have included in this annual report on Form 20-F our
consolidated financial statements for the years ended March 31, 2004, 2005 and 2006.
-5-
Table of Contents
Selected Financial Information
Year ended/As of March 31,
2002
2003
2004
2005
(2)
2006
2006
(in millions of yen and thousands of U.S. dollars except number of shares and per share data)
Consolidated Income Statement Data:
Total interest income
¥
33,976
¥
39,234
¥
40,107
¥
32,555
¥
33,901
$
288,593
Total interest expense
3,884
3,984
3,724
3,159
3,105
26,432
Net interest income
30,092
35,250
36,383
29,396
30,796
262,161
Provision for loan losses, net
7,433
12,688
13,461
8,576
9,463
80,557
Net interest income after provision for
loan losses
22,659
22,562
22,922
20,820
21,333
181,604
Total non-interest (loss) income
(428
)
837
730
5,984
9,934
84,567
Total non-interest expense
13,629
14,299
12,993
14,896
16,598
141,296
Income before income taxes
8,602
9,100
10,659
11,908
14,669
124,875
Income taxes
3,801
3,924
4,582
4,646
6,214
52,899
Net income
¥
4,801
¥
5,176
¥
6,077
¥
7,262
¥
8,455
$
71,976
Consolidated Balance Sheet Data:
Cash and cash equivalents
¥
17,116
¥
23,612
¥
20,243
¥
25,709
¥
22,860
$
194,603
Loans receivable, net
148,235
166,977
166,890
146,119
225,947
1,923,444
Purchased loans receivable, net
380
2,946
4,342
13,581
24,155
205,627
Other
14,566
13,039
18,793
42,992
86,981
740,453
Total assets
¥
180,297
¥
206,574
¥
210,268
¥
228,401
¥
359,943
$
3,064,127
Short-term borrowings
¥
1,400
¥
5,600
¥
5,563
¥
12,600
¥
60,411
$
514,267
Long-term borrowings
128,659
148,595
142,577
136,844
198,924
1,693,403
Other
6,315
6,782
7,670
10,840
17,671
150,430
Total liabilities
136,374
160,977
155,810
160,284
277,006
2,358,100
Minority interests
148
—
161
1,146
2,433
20,712
Common stock
6,611
6,611
7,218
7,779
11,849
100,868
Additional paid-in capital
8,467
8,462
9,092
9,836
14,808
126,058
Other
28,697
30,524
37,987
49,356
53,847
458,389
Total shareholders' equity
43,775
45,597
54,297
66,971
80,504
685,315
Total liabilities and shareholders' equity
¥
180,297
¥
206,574
¥
210,268
¥
228,401
¥
359,943
$
3,064,127
Number of Shares
(1)
:
Issued at the end of fiscal year (in thousands)
2,546,380
2,546,380
2,586,744
2,614,408
2,812,941
2,812,941
Per Share Data
(1)
:
Net income
Basic
¥
1.90
¥
2.09
¥
2.54
¥
2.98
¥
3.27
$
0.028
Diluted
1.82
1.94
2.34
2.70
3.08
0.026
Cash dividends
Declared
0.33
0.39
0.45
0.81
1.05
0.009
Paid during the fiscal year
0.32
0.33
0.42
0.53
1.02
0.009
(1)
The Company completed a 2-for-1 stock split on each of May 21, 2002, May 20, 2003, May 20, 2004,
November 19, 2004, November 18, 2005, and April 1, 2006, respectively, and a 1.2-for-1 stock
split on May 20, 2005. All share information presented above has been retroactively adjusted
to reflect such stock splits.
(2)
The Company sold ¥32,697 million in consumer loans on June 1, 2004 to Orient Credit Co., Ltd.
resulting in a gain of ¥3,327 million.
-6-
Table of Contents
Exchange Rate Information
For convenience, we have translated certain yen amounts in this annual report on Form 20-F
into dollars at the rate of ¥117.47 = $1.00, the mean of the exchange rate quotations by The Bank
of Tokyo-Mitsubishi UFJ, Ltd. for buying and selling spot dollars by telegraphic transfer against
yen as of March 31, 2006, the date of our most recent balance sheet included in this annual report
on Form 20-F. However, you should not construe such translations as representations that the yen
amounts have been, could have been or could be converted into dollars at that or any other rate.
The following table presents the noon buying rates for Japanese yen per $1.00 in New York City
for cable transfers in foreign currencies as certified for customs purposes by the Federal Reserve
Bank of New York:
Year ended March 31,
High
Low
Average (1)
Period-end
2002
¥
134.77
¥
115.89
¥
125.64
¥
132.70
2003
133.40
115.71
121.10
118.07
2004
120.55
104.18
112.75
104.18
2005
114.30
102.26
107.28
107.22
2006
120.93
104.41
113.67
117.48
Calendar month
January 2006
117.55
113.96
115.48
116.88
February 2006
118.95
115.82
117.86
115.82
March 2006
119.07
115.89
117.28
117.48
April 2006
118.66
113.79
117.07
113.79
May 2006
113.46
110.07
111.73
112.26
June 2006
116.42
111.66
114.63
114.51
July 2006
117.44
113.97
115.77
114.44
August 2006
117.35
114.21
115.92
117.35
(1)
The average yen exchange rates for the fiscal year represent the average noon buying rates on
the last business day of each month during the respective period.
The
noon buying rate for yen on September 22, 2006 was ¥116.45 per $1.00.
B. Capitalization and Indebtedness.
Not applicable.
C. Reasons for the Offer and Use of Proceeds.
Not applicable.
-7-
Table of Contents
D. Risk Factors.
We may suffer larger loan losses if defaults on loans by our customers increase as a result of weak
economic conditions in Japan
Weak economic conditions in Japan may lead to increased defaults on loans, including loans
that we guarantee, which in turn would cause us to increase our charge-offs of loans and our
provisions for loan losses, thereby adversely affecting our results of operations and financial
condition. The current economic environment in Japan is showing improvements in corporate
profitability and business confidence, especially with respect to major companies, and rises in the
stock and real estate markets. These trends also led to continued improvements in employment and
personal consumption. However, the Japanese economy still faces uncertainties such as inflation in prices for raw materials
caused by the expansion of production activities, fiscal reconstruction, and potential changes to
the social security system. If the economic situation
in Japan worsens, we may be forced to charge off loans in excess of our existing provisions for
loan losses, to increase our provisions for loan losses, to pay out on loans that we guarantee
beyond our reserves for guarantee losses, or to tighten our credit screening policies, which would
limit our acquisition of new customers. Any such event could adversely affect our financial
condition or results of operations.
Increasing competition among Japan's finance companies and other financial institutions may
adversely affect our ability to increase or maintain the size of our loan portfolio, the average
credit quality of our customers or the interest rates we charge on our loans
The consumer and business owner finance industries in Japan's financial sector are becoming
increasingly competitive. Competition for customer acquisition may continue to intensify due to
movements toward entry into this industry, which has included capital investments by major
financial institutions, establishment of joint venture corporations, and acquisition of companies
by corporations including information technology companies and foreign-affiliated financial
institutions.
Many of these competitors have substantially greater financial, technical and marketing
resources, larger customer bases, longer histories, greater name recognition, more extensive
physical infrastructure and networks of loan offices and more established relationships in the
finance industry than we do. Our competitors seek to compete aggressively on the basis of interest
rates, lending terms and the coverage and scale of their network of distribution and marketing
channels. Under these competitive pressures, we have focused our efforts on acquisition of prime
customers with low credit risk, especially among small and medium-sized businesses, including
through alliances with various companies, in an effort to differentiate ourselves from competitors.
In June 2004, we sold most of the outstanding balance of our consumer loans to a third party, and
strategically shifted our loan portfolio toward provision of loans to small and medium-sized
business owners, which usually bear lower interest rates. This has resulted in a decrease in the
weighted period-end average contractual interest rate on our outstanding loans, from 24.0% at March
31, 2004, to 22.1% at March 31, 2005 and 16.1% at March 31, 2006. If we are unwilling or unable to
match our competitors' terms, we may fail to increase or maintain the number and average balance of
our customer accounts, and our results of operations or financial condition could be adversely
affected. To the extent that we reduce interest rates on our products in response to competitive
pressures, our interest margins will decline. Furthermore, the average credit quality of our
customers may decrease if we cannot sufficiently acquire prime customers, or if we lose these prime
customers to our competitors, and our financial condition or results of operations could be
adversely affected.
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Misconduct by an employee or director could harm us and is difficult to detect and deter
Our employees and directors could engage in misconduct, which includes, among other things:
•
conduct that exceeds the authority given to the employee or director, such as
approval of a transaction for which he or she does not have proper authorization;
•
concealment of such unauthorized conduct or authorized but unsuccessful activities
that cause material harm to us; and
•
improper use or disclosure of confidential information or leakage of personal
information.
Any such misconduct by an employee or director could result in regulatory sanctions, legal
liability and serious reputational or financial harm to us. We have not in the past suffered
materially from misconduct by an employee or director. However, the precautions we take to prevent
and detect such misconduct may not always deter or prevent it, even though we recognize compliance
as the most significant challenge for management. Moreover, even if we succeed in managing the
conduct of our own employees and directors, we may suffer reputationally or financially from
misconduct by other lenders in the finance industry. This could lead to introduction of additional
regulations or laws favoring borrowers that might erode our profitability, and therefore could
affect our financial position and results of operations.
Legislative or regulatory changes to the Interest Rate Restriction Law or other laws, as a result
of court decisions or other factors, could adversely affect our business
The Interest Rate Restriction Law provides that a loan with an interest rate exceeding a
prescribed rate is invalid with respect to the portion exceeding the maximum rate. Prescribed
rates are 20% per annum for loans of less than ¥100,000; 18% per annum for loans of ¥100,000 or
more but less than ¥1 million; and 15% per annum for loans
of ¥1 million or more. However, the [Contributions Law]
permits a maximum interest rate of 29.2%. Interest rates
for all of our products are set below the maximum lending rate under the Contributions Law;
however, we may charge interest rates in excess of the prescribed rate under the Interest Rate
Restriction Law (the "gray-zone interest rate"). The Moneylending Business Restriction Law
provides that a payment by a borrower or guarantor of interest in excess of the rate prescribed by
the Interest Rate Restriction Law to a registered moneylender is valid and non-refundable so long
as the excess interest is paid without coercion, mistake or threat and documentation requirements
are satisfied.
However, as a result of a Supreme Court Decision, a portion of the Enforcement Regulation of
the Moneylending Business Restriction Law was amended effective on July 1, 2006. These
amendments primarily stipulate that loan documentation should specifically provide that the
acceleration clause for non-payment of interest is valid only if the borrower fails to repay the
interest portion within the maximum rate set forth in the Interest Rate Restriction
Law. These amendments apply to all moneylenders. A strict interpretation of the Supreme Court
decision could lead to further amendments to the terms of our loan agreements, which could reduce
our effective interest rates or make it more difficult to collect on loans.
Prior amendments to relevant laws require the Japanese government, which last reduced the
statutory maximum interest rate (29.2% under the Contributions Law) in June 2000, to review the
statutory maximum interest rate again in January 2007, and the issue is currently being discussed
and considered by various advisory panels. Any such reduction or other legislative or regulatory
changes could adversely affect our business and results of operations.
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Any failure to maintain the confidentiality of personal information of our customers could
adversely affect our results of operations
We keep and manage sensitive personal information obtained from our customers. If we fail to
maintain the confidentiality of personal information for any reason, our results of operations
could be adversely affected in a number of ways. We could be subject to lawsuits for damages from
our customers if they are injured as a result of the release of their
personal information. Failure to maintain the confidentiality of personal information could subject us to penalty under
the Law on Protection of Personal Information. We could incur
additional expenses associated with changing our security systems, either voluntarily or in
response to administrative guidance or other regulatory initiatives from the government, or in
connection with public relations campaigns designed to prevent or mitigate damage to our corporate
image or reputation. Any damage to our reputation could also adversely affect our ability to
retain or acquire customers or to maintain or establish strategic alliances with third parties, or
otherwise adversely affect our financial condition or results of operations.
We may have to constrain our business activities to avoid being deemed an investment company under
the U.S. Investment Company Act of 1940
In general, a company which is or holds itself out as being engaged primarily in the business
of investing, reinvesting or trading in securities, may be deemed to be an investment company under
the U.S. Investment Company Act of 1940. We do not believe that we are an investment company as
defined under the U.S. Investment Company Act of 1940. However, if we were to be deemed an
investment company, we would be prohibited from issuing our securities in the United States and may
have to terminate our U.S. listing or other sponsorship promoting a U.S. trading market for our
issued securities. In order to avoid these prohibitions, we may be forced to forego otherwise
attractive business opportunities, potentially limiting our growth and our profitability.
Compliance with Section 404 of the Sarbanes-Oxley Act could adversely affect our results of
operations
We are subject to Section 404 of the Sarbanes-Oxley Act starting from the fiscal year ending
March 31, 2007, and our chief executive officer and chief financial officer must include the
following statements in each annual report under Section 404 of the Sarbanes-Oxley Act:
•
a statement of management's responsibility for establishing and maintaining adequate
internal control over financial reporting for the Group;
•
a statement identifying the framework used by management to conduct the required
evaluation of the effectiveness of the Group's internal control over financial
reporting;
•
management's assessment of the effectiveness of the Group's internal control over
financial reporting as of the end of the Group's most recent fiscal year, including a
statement as to whether or not the Group's internal control over financial reporting
is effective; and
•
a statement that the registered public accounting firm that audit the financial
statements included in the annual report has issued an attestation report on
management's assessment of the registrant's internal control over financial
reporting.
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We are in the midst of strengthening our corporate governance structure in order to comply
with the Sarbanes-Oxley Act while obtaining a wide range of advisory opinions from inside and
outside experts regarding the approaches to corporate governance and risk management, and examined
them from different perspectives. This has, however, required payment by us of fees to various
parties as well as internal costs. These compliance costs are significant and may be in excess of
amounts we anticipate, and as result could adversely affect our financial condition or results of
operations.
An increasing number of our customers seeking protection from creditors under the Bankruptcy Law or
related laws could require us to increase our provisions for loan losses and charge-offs
In recent years, the number of legal means with which retail borrowers can seek protection
from creditors has increased. For instance, amendments to the
Bankruptcy Law that became effective in
January 2005 are aimed to achieve prompt, efficient, effective and fair procedures for, and to
simplify the procedure for, and improve debtors' protection under, personal bankruptcy. Under
these amendments, an individual debtor can take advantage of a unified discharge procedure and a
larger scope of assets may be retained by insolvent debtors. The new law also improved the
effectiveness of the automatic stay, preference, offset and other practical provisions for fair
treatment among creditors. We generally recover almost nothing under personal bankruptcy
proceedings.
This and other laws, including the Special Conciliation Law and the Civil Rehabilitation Law,
may discourage borrowers who would otherwise make an effort to repay the entirety of their loans
from doing so, if they perceive a relative ease of availing themselves of these legal means for
discharge of their debts. As a result, the number of our customers
who seek legal
protection from enforcement of terms of payment or adjournment of payment may increase. If, as a
result, the number of delinquent loans increases, we may be required
to increase our provisions for loan losses and
our results of operations could be adversely affected. Any further amendment to the Bankruptcy Law
or related laws that increases protection of the assets of individual debtors and reduces the
burden of declaring personal bankruptcy would also have a materially adverse impact on our results
of operations.
Any future inability to obtain funds from lenders or access the debt capital markets on favorable
terms could impair our ability to extend loans to borrowers, reduce our competitiveness and the
profitability of our lending and adversely affect our financial condition
Ready access to funds on favorable terms is essential to our business. The difference between
the interest rates we charge our customers and the interest rates we pay to our financing sources
is the key factor impacting our profitability. As of March 31, 2006, our weighted period-end
average contractual interest rate on outstanding loans in our loan portfolio was 16.1%, while our
weighted period-end average contractual interest rate was 1.0% for our short-term borrowings and
1.4% for our long-term borrowings. We raise funds through loans from financial institutions and
the capital markets by issuing debt securities. As of March 31, 2006, the aggregate amount of our
borrowings was ¥259,335 million, which represented approximately 98.6% of our total loans
outstanding and purchased loans as of the same date.
As of March 31, 2006, 76.7% of our borrowings, or ¥198,924 million, are long-term borrowings,
68.9% of our borrowings, or ¥178,565 million, came from loans from banks, non-banks, insurance
companies and other financial institutions, 22.7% of our borrowings, or ¥58,972 million, came from
issuances of corporate bonds, including convertible bonds, and
commercial paper, and 8.4% of our borrowings, or
¥21,798 million, came from other sources, including
securitization of certain of our loan receivables. Based on
their evaluations of our long-term or short-term financial prospects, any of these lenders could
cease to finance our business or to offer funds on favorable terms. A downgrade in our credit
ratings or those of similar companies or Japanese companies generally, for instance, could result
in an increase in the interest rates that lenders charge us. For example, the downgrade of our
debt rating by the Japan Credit Rating Agency in April 2003, has led us to curtail our debt issuances and
increase our reliance on bank loans which typically bear higher interest rates. Negative publicity
about small business or consumer finance lenders such as that seen in 1999 about the practices of
small business lenders could also make lenders reluctant to extend credit to companies in our
industry, including us.
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Moreover, although contractual borrowing interest rates are subject to fluctuation due to
the market environment and other factors, the contractual lending interest rate in our loan
business is restricted to 29.2% as stipulated by the Contributions Law. Therefore, in order to
minimize our interest fluctuation risk, we are pursuing financing with fixed interest rates for
borrowings from financial institutions and issuances of corporate bonds. As of March 31, 2006, our
fixed rate borrowings, including those fixed through hedging from derivative transactions,
comprised 61.4%, and our variable rate borrowings comprised 38.6%, of our total borrowings.
We
do not have any difficulty in accessing funds required at present.
However, as a result of the ongoing restructuring of the Japanese financial sector, and of regional
banks in particular, our lenders may fail or adopt lending policies unfavorable to us. A number of
other factors largely beyond our control could impair our ability to borrow, including severe
disruptions of the financial markets, negative views about the prospects for the finance industry
generally or further downgrades of Japan's sovereign debt ratings. Any impact from these factors
that worsen our capital procurement environment significantly beyond our expectations could
increase our interest expenses. An inability to obtain sufficient funds from lenders or capital
markets on favorable terms or at all could impair our ability to extend loans to borrowers, reduce
our competitiveness and the profitability of our lending. Any or all of these factors could
adversely affect our financial condition and results of operations.
An increase in prevailing market interest rates would increase our interest expense and thus could
reduce the margins we receive on our loans to our borrowers
Interest rates in Japan have been extremely low for several years, reflecting government
monetary policy including the "zero interest rate" policy of the Bank of Japan, which had been in
place for most of the period since February 1999 until it was ended in July 2006. Also, the
official discount rate offered by the Bank of Japan has remained at 0.1% since September 2001 until
it was increased to 0.4% in July 2006. Partly as a result of this policy, our weighted period-end
average contractual interest rates on our own borrowings have been extremely low in recent years:
1.3% as of March 31, 2004, 1.2% as of March 31, 2005 and 1.0% as of March 31, 2006 for our
short-term borrowings and 2.3% as of March 31, 2004, 1.9% as of March 31, 2005 and 1.4% as of March
31, 2006 for our long-term borrowings.
As
a result of a recent change in policy by the Bank of Japan, short term
interest rates have recently risen in Japan and may continue to do
so. Consequently, our lenders
may increase interest rates on their loans to us and we may not be able to pass our increased
interest expenses to our customers in the form of higher rates on our loans due to competitive
considerations and to the legal limit on interest rates that we may
charge. In addition, the maximum interest rates that we may charge to
our customers may decline when the Japanese government reviews the legal limit in January 2007. See "Regulation — The Money Lending Business Restriction Law, Contributions Law and
Interest Rate Restriction Law — Restrictions on Usury" in Item 4.B of this annual report on Form
20-F for a further discussion of the legal limit. Any increase in the interest rates our lenders
charge us could thus have an adverse effect on our operating margins and profitability.
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Any disruption, outages, delays or other difficulties experienced by our information or
technological systems and networks could adversely affect our business
We increasingly rely on internal and external information and technological systems and
networks to generate new business, provide services to customers and manage our operations. In
particular, our business depends on:
•
the ability of our automated fund transfer system to handle high volumes of phone
calls and to provide customers with a convenient system which offers reliable privacy
protection;
•
the reliability and security of third-party databases from which we obtain credit
information about our customers;
•
the reliability of Sanyo Electric Credit's wire transfer service which we use to
disburse loans to accounts designated by our customers; and
•
the reliability of the financial institutions that hold our customers' accounts from
which we automatically transfer their payments to us.
In addition, we outsource the following hardware and software responsibilities, in order to
manage our operating transaction and accounting data, confidential customer information and other
back-office data operations:
•
our main computer housed in an NEC affiliate's data center, to which all data are
backed up each business day;
•
dedicated lines that connect our main computer and outsourcing center to our
application servers and e-mail servers; and
•
maintenance and support work for our main computer.
Our systems are vulnerable to damage or interruption from human error, natural disasters,
power loss, computer hackers, computer viruses and similar events or the loss of support services
from third parties such as our systems solution providers including NEC and its affiliates,
telephone carriers and Internet backbone providers. Any disruption, outages, or delays or other
difficulties experienced by any of these technological and information systems and networks could
affect our financial position and results of operations.
Our chairman and his family may exercise influence over important business decisions in a way that
conflicts with your interest
As a result of the direct and indirect ownership or control of our outstanding shares by
Sakioka family members, who collectively beneficially owned 37.4% of our outstanding shares as of
March 31, 2006, our chairman and his family members can exercise a
controlling influence over important decisions affecting our business and affairs. These decisions
may involve significant corporate transactions such as the sale of our company, corporate restructuring, investment in
other businesses or assets, or the terms of future financings. The interests of these shareholders
in these and other matters may differ from those of our public shareholders.
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A sale of our shares held by our major shareholders, including our chairman or members of their
family, may adversely affect our share price
As of March 31, 2006, our chairman, members of their immediate family and corporations
controlled by them together owned 37.4% of our outstanding shares. A disposal of any portion of
their holdings on the Tokyo Stock Exchange or otherwise will increase the supply of our shares in
the marketplace and may adversely affect the market price of our shares and American Depositary
Shares.
We may change our portfolio of products and services from time to time but fail to achieve the
intended results
While we traditionally were a finance company that specialized in unsecured lending to
individuals in Japan, we intend to review our portfolio of products and services on an ongoing
basis and change them as appropriate to remain competitive in the markets that we serve. For
example, in response to the diversified needs of small and medium-sized businesses and consumers, as
well as to maximize our corporate value, in June 2004, we sold most of the outstanding balance of
our unguaranteed consumer loans to Orient Credit, a consumer finance company, in order to
concentrate our resources on providing loans with guarantors, such as small business owner loans,
and otherwise serving small and medium-sized business owners.
With respect to financial services for small and medium-sized business owners, in addition to
extending small business owner loans and Business Timely loans, which are unguaranteed, unsecured
loans made under pre-approved revolving credit lines to small business owners, we also concentrate
on the provision of leases and installment loans, and real estate finance. With respect to the
quality of operating assets, we seek to accumulate prime assets with lower credit risks through
acquisition of prime customers through the promotion of our alliance
strategy. We have also begun investment banking, securities and
venture capital operations, which expose us to various risks.
Changes in our portfolio of products or services, including those described above, may fail to
generate the results we desire and adversely affect our results of operations or financial
condition. For example, deterioration of the quality of our operating assets due to deterioration
in the financial condition of small and medium-sized businesses caused by rapid changes in the
economic environment and other factors could adversely affect our financial position and results of
operations.
The fair value of our strategic investments could decline due to a deterioration of the economic
environment and adversely affect our financial position
We
invest in various companies which we believe will improve our
ability to provide integrated financial services and expand our business network. As of March 31,
2006, the cost of our investment securities was ¥33,099 million and the fair value of these investments was ¥42,071 million, or
11.7% of our consolidated total assets. However, in the future, if the stock prices of these
companies decline significantly, or the financial condition of our investments worsen due to
deterioration of the economic environment, we could suffer impairment losses on these securities or
our shareholders' equity ratio could decline due to fluctuation in unrealized profits in investment
securities, which could adversely affect our financial position and results of operations.
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The strategic alliances, joint ventures and strategic investments which we've entered into in order
to acquire new customers may not yield attractive returns and could produce losses
We have been pursuing various strategic alliances and joint ventures with consumer finance and
other financial companies, which include arrangements to receive customer referrals and to provide
guarantees to the borrowings of the customers of third parties. We have also in recent years
increased our investments in companies that have the potential to complement our business
strategically. The book carrying value of these strategic investments was ¥1,876 million as of
March 31, 2004, ¥20,890 million as of March 31, 2005 and ¥28,674 million as of March 31, 2006.
We expect to continue seeking strategic alliances, joint ventures and strategic investments to
build our customer base and establish a solid profit base for our group, but may not be able to
successfully grow or maintain profits. These strategic alliances, joint ventures and strategic
investments may not achieve profitability and we may incur impairment losses as a result of failing
to recover any investments or expenditures. Moreover, strategic alliances, joint ventures and
strategic investments that aim at specific markets may attract our existing customers, rather than
expand our customer base, and reduce the profitability of our core business.
The success of our real estate-related businesses are highly dependant on the health of the
Japanese economy and are susceptible to regulatory and legal changes.
Recently, our secured loans portfolio has grown significantly, reflecting our strategic shift
toward promotion of financial services to small and medium-sized business owners centering on real
estate financing, through active sales and marketing efforts by our Real Estate Finance Department,
which was established in February 2004. Proceeds from these loans are primarily used by our
customers as working capital for property development. The health of the real estate market in
Japan is closely tied to larger economic trends. Thus, the value of real estate pledged to us by
our customers could decline in connection with deteriorating Japanese
economic conditions, exposing us to significant unsecured risks.
Because our secured bans to property developers are generally used as
working capital for property development, we are also exposed to the
risk that our customers may not complete development projects in a
timely manner or at all, or that the completed property will not have
the value we anticipated, resulting in less collatral than we
expected.
Our
property development loans are generally for long terms and very
large principal amounts. This has increased our long-term funding
requirements, which we may not be successful in meeting or accurately
evaluating. This could constrain our ability to make new
loans.
Environmental
liabilities unknown at the time we made loans could also impair the
value of properties securing our loans.
In addition, in the event taxation regimes concerning our real estate-related businesses,
including land taxation, are amended, our costs at acquisition and sale of real estate may
increase, and could adversely affect our real estate businesses.
Moreover, tightening of regulations, such as the Building Standard Law, the City Planning Law,
and other real estate-related regulations, as a result of recent construction scandals in Japan,
including the falsification of earthquake-resistance data for building designs, is expected. Any
amendments to these regulation, could impose new obligations on our businesses, increase our costs,
and adversely affect our businesses.
Any or
all of the above factors could result in material diverse affects to
our business, financial condition or results of operations.
Increasing competition in the loan servicing market in which Nissin Servicer operates could reduce
our profitability.
Our subsidiary, Nissin Servicer Co., Ltd., mainly purchases specific money claims from
financial institutions by invited tender. The increase in the number of companies entering this
market, together with the contraction in liquidity in the market for bad debts due to the trend
towards economic recovery, has lead to increasingly severe competition. In response to these
factors, we have revised pricing standards through classification of specific money claims into
categories, and by improving due diligence, we seek to maintain our competitiveness in the purchase
of specific money claims. This, together with the development of new areas of business such as
liquidation of assets, securitization, and corporate revitalization, we believe has allowed us to
maintain competitiveness in the current business environment. However, if we are unable to maintain competitiveness in the purchase of specific money
claims, or if there are rapid increases in purchase prices or falls in commission fees, we may be
unable to purchase these loans at favorable prices or at all, and our loan servicing business may
have decreased profitability or losses, which could significantly affect our business strategies
and results of operations.
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Our business in China is subject to extensive Chinese government regulation that changes
frequently, and these regulations could adversely affect our business and operating results.
Our subsidiary, Nissin Leasing, operates leasing and other businesses in China. The Chinese
government has broad discretion and authority to regulate the leasing, non-bank finance and other
industries in China. The Chinese government exercises significant control over financial and other
markets, as well as China's economic growth, through the allocation of resources, controlling
payment of foreign currency-denominated obligations, setting of monetary policy and provision of
preferential treatment to particular industries or companies. Existing regulations or government
action in China may constrain our operations, and new regulations, the readjustment of previously
implemented regulations or other government action could require us to change our business
operations in China, increase our costs, prevent us from repatriating profits to Japan, or limit
our ability to finance or conduct activities in China.
In addition, China's commercial legal system is still under development, and even where
adequate law exists in China, enforcement of laws or contracts may be uncertain and sporadic. The
relative inexperience of China's judiciary creates additional uncertainty as to the outcome of any
litigation, and interpretation of statutes and regulations may be subject to government policies
reflecting domestic political changes. Our activities in China are subject to administrative
review and approval by various national and local agencies of China's government. Because of the
changes occurring in China's legal and regulatory structure, we may not be able to secure requisite
governmental approval for our activities, or approvals we have received, such as the leasing
license obtained by Nissin Leasing, may be suspended or revoked. Any of these factors could
adversely affect our business, financial condition and operating results.
Because we expect our shares and ADSs will be treated as stock of a passive foreign investment
company, or PFIC, for U.S. federal income tax purposes, you may be subject to materially adverse
tax consequences
As we expect that 50% or more of our gross asset value constitutes "passive assets," generally
meaning assets not constituting part of an active trade or business under U.S. federal tax rules,
we expect that our shares and ADSs will be treated as stock of a passive foreign investment
company, or PFIC, for U.S. federal income tax purposes. U.S. persons who hold our shares or ADSs,
either directly or indirectly, may be subject to materially adverse U.S. federal income tax
consequences upon the sale or disposition of the shares or ADSs and upon distributions with respect
to the shares or ADSs to the extent the distributions are "excess distributions," distributions in
excess of a normal rate of distribution as calculated for passive foreign investment companies.
Gain realized on the sale or other disposition of shares or ADSs would in general be taxed as
ordinary income. If you are a U.S. holder, you would be treated as if you had realized such gain
and certain "excess distributions" ratably over your holding period for the shares or ADSs and the
income allocated to such prior tax years would be taxed at the highest tax rate in effect for each
such year to which the gain was allocated, together with an interest charge in respect of the tax
attributable to each such year. In addition, dividends that you receive from us will not be
eligible for the 15% tax rate applicable to qualified dividend income if we are a PFIC either in
the taxable year of the distribution or the preceding taxable year. See "United States Tax
Considerations — Passive Foreign Investment Company Rules" in Item 10.E of this annual report on
Form 20-F.
Holders of ADSs have fewer rights than shareholders and have to act through the depositary to
exercise those rights
The rights of shareholders under Japanese law to take actions including voting their shares,
receiving dividends and distributions, bringing derivative actions, examining our accounting books
and records and exercising appraisal rights are available only to holders of record on our register
of shareholders or our register of beneficial shareholders. Because the depositary, through its
custodian agents, is the registered holder of the shares underlying the ADSs, an ADS holder cannot
take these actions except through and to the extent permitted by the depositary. If we instruct
the depository to provide ADS holders with the opportunity to vote in a timely manner, the
depositary will make efforts to vote the shares underlying your ADSs as instructed by you. ADS
holders, however, may not be provided with such rights on a timely basis or at all.
If you hold fewer than 100 shares, you do not have the right to vote the shares or transfer them
and if you have ADSs representing fewer than 100 shares, you cannot withdraw the shares underlying
the ADSs and cannot require us to purchase the underlying shares
One hundred of our shares constitute one "unit." A holder who owns fewer than 100 shares owns
less than a whole unit. The Japanese Corporate Law restricts the rights of a shareholder who holds
shares of less than a whole unit. In general, holders of shares constituting less than a unit do
not have the right to vote under the unit share system. Our articles of incorporation also provide
that no share certificates will be issued with respect to any number of shares constituting less
than one unit. As the transfer of shares normally requires delivery of share certificates, any
fraction of a unit for which no share certificates are issued is non-transferable. Furthermore,
under the unit share system, holders of shares constituting less than a unit have the right to require us to purchase their shares. However,
holders of ADSs that represent other than multiples of whole units cannot withdraw the underlying
shares representing less than one unit and, therefore, they will be unable to exercise the right to
require us to purchase the underlying shares. As a result, holders of ADSs representing shares in
lots of less than one unit will not have access to the Japanese markets to sell their shares
through the withdrawal mechanism. See "Limitations Affecting Security Holders — Japanese Unit
Share System" in Item 10.B of this annual report on Form 20-F.
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Item 4. Information on the Company.
A. History and Development of the Company.
The Company was established as a joint stock corporation under the laws of Japan in 1960 in
Matsuyama, the capital of Ehime Prefecture in the northern part of the island of Shikoku, which is
one of Japan's four major islands. Our first business was dealing in discounting commercial bills.
In 1967, we started providing real estate-secured loans. In 1972, we began offering consumer
loans and opened offices throughout Shikoku and became a registered moneylender under the
Moneylending Business Restriction Law in 1984. We started offering small business owner loans in
1981, Wide loans in 1990 and Business Timely loans in 2000. We steadily expanded beyond our
original base in Shikoku by opening offices in Hiroshima in 1988, Osaka in 1990, Kyushu in 1992,
Tokyo in 1994, Nagoya in 1995 and Sendai, Hokkaido and Shizuoka in 1996. As of March 31, 2006, we
had 50 loan offices throughout Japan. In recent years, we have also expanded our customer base
through strategic alliances with banks, consumer finance, leasing and other financial services
companies.
In 1990, we changed our name from Nissin Shoji Co., Ltd. to Nissin Co., Ltd. In 1998, we
adopted a dual head-office system, with one head office in Tokyo through which our operations are
primarily managed and the other in Matsuyama, Ehime Prefecture.
In July 2001, we established Nissin Servicer Co., Ltd., or Nissin Servicer, to acquire and
service non-performing assets of banks and other financial institutions. In September 2004, Nissin
Servicer listed its stock on the Mothers market of the Tokyo Stock Exchange and became Japan's
first loan servicing company to go public.
In November 2003, we established NIS Lease Co., Ltd., or NIS Lease, to commence capital and
operating lease operations in Japan.
In June 2004, NIS Property Co., Ltd., or NIS Property, was renamed from a subsidiary
previously established by us, to commence real estate-related business operations in Japan.
In June 2004, we sold most of the outstanding balance of our unguaranteed consumer loans to
Orient Credit for ¥32,697 million. See "Our Products — Integrated Financial Services — Consumer
Loans" in Item 4.B of this annual report on Form 20-F.
In July 2004, we established Matsuyama Nissin Investment & Consulting (Shanghai) Co., Ltd.,
currently Nissin Leasing (China) Co., Ltd, or Nissin Leasing, in Shanghai to commence arrangement
of investments and various business projects, as well as to operate a real estate agency and a
subleasing business in China. In September 2005, Nissin Leasing obtained a leasing license from
the Chinese government and began operating full-scale leasing business in China.
In December 2004, we acquired 100% of the outstanding shares of Yamagen Securities Co., Ltd.,
currently NIS Securities Co., Ltd., or NIS Securities, to commence securities and investment
banking business operations in Japan.
In December 2005, we acquired 69.3% of the outstanding shares of Aprek Co., Ltd., or Aprek, a
company listed on the JASDAQ Securities Exchange, to enhance financial services to owners of small
and medium-sized enterprises in Japan's Kyushu region.
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In June 2006, our general shareholders' meeting resolved to change our company name from
"Nissin Co., Ltd." to "NIS Group Co., Ltd." effective as of October 1, 2006.
Our principal executive office is located at Shinjuku L-Tower 25F, 6-1, Nishi Shinjuku
1-chome, Shinjuku-ku, Tokyo 163-1525, Japan, and its phone number is 81-3-3348-2424. Our principal
Internet website is http://www.nisgroup.jp. Information on this website does not form part of this
annual report on Form 20-F.
Information about our principal capital expenditures and divestitures is provided in Item 5.B
of this annual report on Form 20-F.
B. Business Overview.
Overview
We provide integrated financial services to small and medium-sized enterprises and their
owners in Japan, tailored to their stage of development and particular needs. We provide our
services directly and through alliances with other financial institutions. We also engage in real
estate-related businesses, including providing secured loans to property developers and principal
investment in real estate. We service distressed loans purchased from third parties and engage in
leasing and related businesses in Japan, as well as investment banking, securities and principal
investment businesses in Japan. In recent years, we have begun leasing and other operations in
China. For the year ended March 31, 2006, our net interest income after provision for loan losses
was ¥21,333 million and our net income was ¥8,455 million.
Our Strategies
Provide Integrated Financial Services to Small and Medium-Sized Enterprises in Japan
We seek to provide a broad range of non-bank financial services to small and medium-sized
enterprises in Japan and their owners. These services include the following:
•
Broad Range of Services to Small and Medium-Sized Enterprises.
We provide a
variety of financial services to small and medium-sized enterprises, depending on
their growth stage, in an effort to be our customer's primary source for financial
services. In addition to business loans, we provide leasing and other services,
including secured loans and investment banking services.
•
Services to Business Owners.
For small businesses owners, we provide small
business loans and Business Timely loans, described below, as well as installment
credit. We seek to customize our products to the needs of small business owners.
For example, we may loan to the owner's business directly, with a guarantee from
the owner or a third party, or secure such loans if appropriate collateral is
available.
In addition to our direct channels, we also seek to provide our services through alliances
with other financial service companies. We apply our credit expertise as a lender to small and
medium-sized enterprises and their owners to take advantage of allied customer databases and
established brand value to more effectively offer our products and services, as well as to develop
new products for these customers. Depending on the alliance, we market these products under our
own or our allied brands. We refer to this as our "financial OEM" strategy.
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Expand Real Estate-related Businesses
We seek to expand our real-estate related businesses in order to take advantage of our credit
and secured lending expertise in Japan's real estate markets. We believe that the recent
stabilization of asset values in major real estate markets in Japan, particularly major urban areas
such as Tokyo, provides an opportunity for secured real estate lending and principal investment
in real estate. We seek to leverage our credit and secured lending expertise in relation to small
and medium-sized enterprises, as well as our experience servicing distressed loans, to grow various
real-estate related businesses, including the following:
•
Providing real estate secured loans to property developers for working capital
.
This is currently our fastest growing business line, and we focus primarily on
small to medium-sized property developers that develop small commercial and
residential properties.
•
Investing in real property with a view to resale
. We seek to purchase real
estate, particularly commercial and residential rental properties, that we believe
can be resold at a higher price following renovations of the property or
improvements in property management. We conduct this business primarily through
our subsidiary, NIS Property.
•
Acquisition of distressed real estate
. Taking advantage of our network of
financial institutions selling distressed loans collateralized by real estate and
our experience servicing such loans, our subsidiary, Nissin Servicer, seeks to
acquire distressed real estate assets which it restructures and resells.
Develop Overseas Business, Particularly in China
We seek to expand our full-scale leasing business in China, which we operate through our
subsidiary, Nissin Leasing (China). We believe that economic and commercial growth in China has
created a demand for sophisticated leasing and other financial services, particularly among growing
enterprises. Through Nissin Leasing (China), we seek to become one of China's premier leasing
companies. We also seek to use our financial expertise and experience operating a large-scale
business in China to provide consulting services for companies looking to do business in China. We
also intend to explore opportunities in other financial markets in Asia, although we currently have
no concrete plans.
Develop Investment Banking, Securities and Venture Capital Businesses
Through our subsidiary, NIS Securities, we provide investment banking services targeted at
small and medium-sized enterprises in Japan, including arrangement of direct financing, initial
public offerings of securities, securities brokerage and other financial advisory services. We
seek to take advantage of our network of relationships with small and medium-sized enterprises to
provide customized investment banking services tailored to their stage of growth. We also seek to
expand our proprietary trading and brokerage services.
In addition, because many of our financial services clients are small or medium-sized
enterprises in relatively early stages of their growth, we believe that attractive principal
investment opportunities exist with many of our customers. We seek to take advantage of our
network of relationships with such companies to make proprietary venture capital investments in
growth enterprises with a view to capital gain. We believe such principal investments
may also lead to investment banking opportunities.
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In this manner, we seek to integrate investment banking, securities and venture capital
businesses into our overall package of integrated financial services that we offer to small and
medium-sized enterprises and their owners in Japan.
Our Markets
Japanese Small Business Finance Industry
We compete in the Japanese small business finance industry, which provides secured and
unsecured loans to small business entities or their owners. Many of our loan products are extended
principally to individuals who own small businesses on the basis of individual creditworthiness,
rather than to entities based upon business creditworthiness, which is the focus of general
business finance companies. However, to the extent that we provide loans to individual small
business owners, we compete with lenders in the business finance industry that loan to small
businesses.
Japanese Real Estate Finance and Other Real Estate Industries
We compete in the Japanese real estate finance industry, which provides secured loans for the
purpose of financing the purchase or development of real estate. Our secured loans are generally
provided to small and medium-sized property developers as working capital for the purpose of
developing small commercial and residential properties. Secured loans to property developers are
one of our largest growth products and a strategic focus for us. We also provide secured general
purpose loans to individual customers. In addition to real estate finance, we purchase commercial
and residential real estate with a view to resale, typically following renovations and other
improvements intended to increase property value. We target sales of such properties to Japanese
real estate investment funds, or J-REITs, and other real property investment funds and property
companies. We believe that the growing competition among such funds and property companies to
acquire quality properties provides an opportunity to realize value in purchasing, improving and
selling real properties.
Japanese Loan Servicing Industry
We compete in the Japanese loan servicing industry through our subsidiary, Nissin Servicer.
This industry has grown rapidly in the last few years due to the accelerated disposal of
nonperforming loans by Japanese financial institutions as a result of Japanese government measures
to combat nonperforming loans. Although we compete with a variety of companies for loan servicing
opportunities, we consider affiliated companies of the major consumer finance or small business
owner loan companies to be our primary competitors. According to the Ministry of Justice, as of
March 31, 2006, 94 companies were registered as licensed servicing companies, of which we believe
ten were affiliated with major consumer finance or small business owner loan companies.
Japanese Leasing Industry
Through our subsidiary, NIS Lease, we compete in the Japanese leasing industry, which provides
finance and operating lease products and services to customers in Japan. Our target market is
small and medium-sized enterprises in Japan. We therefore compete with other leasing and non-bank
finance companies that provide services to such companies.
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We compete in the Japanese investment banking and securities industry. Japan has highly
sophisticated financial markets, and we compete with Japanese and foreign investment banks to
provide investment banking and securities services to small and medium sized enterprises. We also
operate a principal investment business in Japan. We focus on the small and medium-sized
enterprise markets in Japan, in order to take advantage of our experience and relationships with
such companies developed through out other business lines.
Chinese Leasing and other Industries
We compete in the Chinese leasing market through our subsidiary, Nissin Leasing (China). We
may also compete in other markets in China as we begin to engage in consulting and import/export
businesses. In addition, we intend to consider opportunities to provide non-bank financial or
other services elsewhere in Asia, although we currently have no operations in outside of China and
no concrete plans for any such businesses.
Japanese Consumer Finance Industry
We compete in the Japanese consumer finance industry, which provides secured and unsecured
loans without restrictions on the purposes of use to Japanese individuals. Although banks and
credit finance companies outside the consumer finance industry also provide unsecured and secured
loans, we compete most directly with other consumer finance companies. We believe our focus on
consumers seeking to consolidate loans from multiple lenders and on small business owners
differentiates us from other consumer finance companies.
Our Products
We have two operating segments for financial reporting purposes: integrated financial
services and loan servicing.
The integrated financial services segment includes loan businesses, small business owner,
Business Timely, secured, Wide, consumer and other loans, as well as credit guarantee, leasing and
securities business. Included in this segment for the fiscal year ended March 31, 2006 are
investment in real estate properties, insurance agency and consultancy businesses. However,
because of the increasing significance of these businesses, we anticipate that they will be
included in a separate business segment for the fiscal year ending March 31, 2007.
As part of our loan servicing segment, we mainly acquire for our own portfolio and service
non-performing debts from banks and other financial institutions in Japan.
Integrated Financial Services
Our net interest income after provision for loan losses from our integrated financial services
segment was ¥21,611 million, or 94.3% of our consolidated net interest income after provision for
loan losses for the year ended March 31, 2004, ¥18,534 million, or 89.0% of our consolidated net
interest income after provision for loan losses for the year ended March 31, 2005, and ¥17,964
million, or 84.2% of our consolidated net interest income after provision for loan losses for the
year ended March 31, 2006. Net income from our integrated financial services segment was ¥5,671
million, or 93.3% of our consolidated net income for the year ended March 31, 2004, ¥6,244 million,
or 86.0% of our consolidated net income for the year ended March 31, 2005, and ¥6,117 million, or 72.3% of our consolidated
net income for the year ended March 31, 2006.
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The following table provides information on the
average balance of loans outstanding for each category of our loan business during each fiscal
year:
Year ended March 31,
2002
2003
2004
2005
2006
(in millions)
Small business owner loans
¥
32,195
¥
45,311
¥
55,647
¥
56,964
¥
63,320
Business Timely loans
12,238
17,256
17,909
19,687
23,656
Secured loans
1,589
1,252
2,235
9,976
39,496
Wide loans
50,940
59,743
61,592
52,722
44,240
Consumer loans
(1)
45,784
45,093
38,600
5,296
3,010
Other loans
24
13
261
4,166
10,243
Total average balance of loans outstanding
¥
142,770
¥
168,668
¥
176,244
¥
148,811
¥
183,965
(1)
Pursuant to an agreement between us and Orient Credit, on June 1, 2004, we sold most of the
outstanding balance of our consumer loans to Orient Credit for ¥32,697 million.
The following table provides information on the balance of loans outstanding for each
category of our loan business as of the end of each fiscal year:
As of March 31,
2002
2003
2004
2005
2006
(in millions)
Small business owner loans
¥
37,386
¥
53,915
¥
57,168
¥
58,961
¥
65,447
Business Timely loans
16,035
17,303
18,659
20,862
25,282
Secured loans
1,427
1,587
10,003
18,812
91,610
Wide loans
55,033
63,993
57,460
47,604
41,163
Consumer loans
(1)
46,180
40,938
35,604
2,827
2,995
Other loans
17
36
573
6,296
10,681
Total balance of loans outstanding
¥
156,078
¥
177,772
¥
179,467
¥
155,362
¥
237,178
(1)
Pursuant to an agreement between us and Orient Credit, on June 1, 2004, we sold most of the
outstanding balance of our consumer loans to Orient Credit for ¥32,697 million.
Small Business Owner Loans
Our small business owner loans comprised 34.4% of our total average loans outstanding for the
year ended March 31, 2006 and 27.6% of our total balance of loans outstanding as of March 31, 2006.
These small business owner loans are, in general, guaranteed, unsecured loans of up to ¥10 million
that require one or more guarantors from individuals with an income source separate from the
borrowers. We do not restrict the use of proceeds from these loans.
Small business owner loans are generally contracted at a fixed interest rate of up to 24.09%
per year and payable monthly. In addition, we charge an up-front origination fee of no greater
than 5% for each loan at the time of cash disbursement. These loans have initial repayment terms
of up to seven years and two months. The average maturity of small business owner loans at March
31, 2006 was 3.9 years. Customers may prepay their small business owner loans at any time without
penalty. Although we do not restrict the use of proceeds from small business owner loans, we
believe that customers generally use the proceeds to repay existing loans or to obtain working
capital for their businesses. Under normal circumstances, we do not extend additional credit to
small business owner loan customers until they pay off their existing small business owner loan.
As a result, any small business owner loan customer seeking a new small business owner loan must pay off his or her existing loan and be subject to the
same loan approval process as any new customer.
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In order to meet our customers' needs, the terms of these loans are often tailored to the
particular situation of a borrower. For example, if a small business owner customer cannot provide
a guarantor, a loan might be secured by real estate or securities to enhance the credit. In such
cases, the loan will still be recorded by us as a small business owner loan
In contrast to other lenders that target corporations and other business entities, we serve
almost entirely self-employed individuals, primarily individual small business owners in a wide
range of industries. As of March 31, 2006, approximately 41.2% of the borrowers were self-employed
individuals in wholesale, retail and restaurant businesses, while the remaining borrowers were
primarily self-employed individuals in industries such as manufacturing, construction,
transportation, communication, agriculture, fishery and other services. The loan process often
begins when staffs at our general branches or loan offices call a prospective client to determine
the loan amount to be applied for, followed by a credit check. Our staff then holds a face-to-face
meeting with the client and the guarantor to ensure that all parties understand the content and
implications of the loan agreement.
The following table shows the total number of small business owner loan accounts and the
average balance of small business owner loans per account:
As of March 31,
2002
2003
2004
2005
2006
Number of small business owner loan accounts
17,472
23,439
24,739
24,414
25,797
Average balance of loans per account (in
thousands)
¥
2,140
¥
2,300
¥
2,311
¥
2,415
¥
2,537
The following table shows advances, recognized on the disbursement date, to our customers
of small business owner loans:
Year ended March 31,
2002
2003
2004
2005
2006
(in millions)
Advances
¥
22,328
¥
36,560
¥
35,061
¥
45,834
¥
53,134
As we do not make additional advances under existing small business owner loan contracts,
the majority of the advances are to new customers, with the balance being made to existing
customers under new contracts.
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Business Timely Loans
We extend Business Timely loans, our unguaranteed, unsecured loans made under pre-approved
revolving credit lines, to more creditworthy small business owners. Holders of our Business Timely
Card may borrow unguaranteed and unsecured Business Timely loans of up to ¥5 million. These loans
accounted for 12.9% of our total average loans outstanding for the year ended March 31, 2006 and
10.7% of our total balance of loans outstanding as of March 31, 2006.
Business Timely loans are currently contracted at a fixed interest rate of no greater than
27.01% per year, payable monthly. Customers may prepay their loans at any time without penalty. A
Business Timely loan contract is automatically renewed after three years; however the credit line
is forfeited under certain conditions such as a delinquent loan for 16 days or more. Furthermore,
we generally conduct a credit assessment of an account holder every three months. We may terminate the account for a
number of reasons. For example, we may terminate the account if the holder is found to have
increased his or her borrowings from other institutions. Although we do not restrict use of
Business Timely loans, we believe customers generally use the proceeds to repay existing loans or
to obtain working capital. As a general rule, a customer seeking a Business Timely Card may have
loans outstanding from only up to two other companies at the time of application. Customers
granted a Business Timely Card can request transfer of funds to their account using our automated
telephone service on the same or following business day after our approval of the credit line.
We market Business Timely loans along with our small business owner loans. The provision of
Business Timely loans, first introduced in March 2000, allows us to tap into a segment of the
consumer finance industry that we believe has been underserved. We market this product to more
creditworthy small business owners from whom we do not require a guarantor. As of March 31, 2006,
approximately 27.6% of the borrowers earned more than ¥7 million annually, 55.6% have loans
outstanding from not more than two companies, and 67.0% engaged in wholesale, retail or restaurant
businesses. These potential borrowers often do not have an immediate need for a loan, but value
the security of access to a pre-approved revolving credit line. Of Business Timely Cards issued,
49.8% had outstanding balances as of March 31, 2006.
The following table shows the total number of Business Timely loan accounts and the average
loan balance per Business Timely loan account:
As of and for the year ended March 31,
2002
2003
2004
2005
2006
Total number of Business Timely loan accounts
22,559
24,594
29,950
34,059
34,617
Number of Business Timely loan accounts with
outstanding balances
13,239
14,511
16,163
17,493
17,228
Average balance of loans per account (in
thousands)
¥
1,211
¥
1,192
¥
1,154
¥
1,193
¥
1,467
The following table provides information on advances, recognized on the disbursement
date, to our customers of Business Timely loans:
Year ended March 31,
2002
2003
2004
2005
2006
(in millions)
Advances to existing
customers (including repeat customers)
¥
9,686
¥
10,030
¥
9,613
¥
12,455
¥
18,266
Advances to new customers
6,847
4,300
4,323
4,953
3,983
Total
¥
16,533
¥
14,330
¥
13,936
¥
17,408
¥
22,249
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Secured Loans
Secured loans comprised 21.5% of our total average loans outstanding for the year ended March
31, 2006 and 38.6% of our total balance of loans outstanding as of March 31, 2006. They
represented our fastest growing loan product for the fiscal year ended March 31, 2006, with growth
of 387% in loans outstanding during this period. These loans are primarily loans to property
developers secured by real property. In addition, we make loans to individuals and small and
medium-sized enterprises in Japan secured by real estate or securities, in many cases as
consolidation loans for customers who do not qualify for our unsecured Wide loans. Loans to
property developers for the purpose of property development represented 57.3% of our secured loans
for the fiscal year ended March 31, 2006 and are the strategic focus
of our secured loan business. Loans to individuals and
small and medium-sized enterprises represented 42.7% of our secured loans for this period.
Secured Loans to Property Developers.
We established our Real Estate Finance Department in
February 2004 in order to focus on loans designed for property developers secured by real property.
These loans have grown significantly in the last two fiscal years from a balance of ¥7,433 as of
March 31, 2004 to ¥52,330 million as of March 31, 2006. These loans are primarily used as working
capital for the development of small commercial or residential buildings by property developers.
Our primary customers are small to medium-sized property development companies in Japan. We
determine the interest rates for these loans on an individual basis, and the weighted period-end
average interest rate on secured loans to property developers at March 31, 2006 was 6.1% per year.
We also generally charge an upfront origination fee of typically
around 2% on each of these loans.
These loans have a high degree of liquidity and typically mature in a period ranging from one month to two years.
The average maturity of secured loans to property developers at March 31, 2006 was 1.1 years.
The following table shows the total number of accounts, the balance of loans outstanding, and
the average balance of loans per account with respect to secured loans to property developers:
As of March 31,
2002
2003
2004
2005
2006
(in millions except number of accounts)
Number of secured loan accounts
—
—
20
99
204
Balance of loans outstanding
—
—
7,433
11,890
52,330
Average balance of loans per account
—
—
372
120
257
The following table shows advances of secured loans, recognized on the disbursement date,
to property developers:
Year ended March 31,
2002
2003
2004
2005
2006
(in millions)
Advances
—
—
10,397
18,716
72,587
Unlike many of our other loans, the principal amounts of secured loans to property
developers are generally relatively large. This is because these loans are used for property
development, typically in Tokyo or other large urban areas in Japan, where land prices and
development costs are relatively high. During the fiscal year ended March 31, 2006, our average
principal amount of new secured loans to property developers per account was ¥454 million. As a
result, we are subject to the risk that declines in real estate values, and in turn the value of
our collateral for such loans, could subject us to significant unsecured risk on these loans.
Secured Loans to Individuals and Small and Medium-Sized Enterprises.
Our secured loans to
individuals and small and medium sized enterprises are typically general purpose loans secured by
equity in real property or securities. Many of our customers for these loans are consumers who do
not qualify for our unsecured Wide loans or other consumer loans. Our customers for these loans
often have other outstanding secured loans, and we make loans secured by second mortgages in the
customer's property in amounts generally based on the market value of the mortgaged property in
excess of the outstanding balances of other loans to that customer secured by such property. The
weighted period-end average interest rate on secured loans to individuals at March 31, 2006 was
7.1% per year. We also generally charge an upfront origination fee of typically around 2% on each
of these loans. The
average maturity of secured loans to individuals at March 31, 2006 was 2.0 years.
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Wide Loans — Debt Consolidation Loans
We also provide debt-consolidation loans to individuals in Japan indebted to multiple lenders.
We believe this product to be innovative and brand these loans as Wide loans. Major consumer
finance companies in Japan generally do not offer debt-consolidation loans. These loans comprised
24.0% of our total average loans outstanding for the year ended March 31, 2006 and 17.3% of our
total balance of loans outstanding as of March 31, 2006. Our balances of Wide loans have declined
both in absolute amounts and as a percentage of total loans outstanding in recent fiscal years,
primarily as a result of the growth of our secured loan and small business owner loan products and
or our sales and marketing emphasis in these areas.
We extend Wide loans of up to ¥10 million at a fixed contractual interest rate of no greater
than 24.09% per year. In addition, we charge an up-front origination fee of no greater than 3% at
the time of disbursement. The loans are repaid in equal monthly payments, comprising both interest
and principal, over a period of up to ten years and two months. The average maturity of Wide loans
as of March 31, 2006 was 5.1 years. The borrower must supply one or more guarantors with an
income source separate from that of the borrower. We require the proceeds from these loans to be
applied to the consolidation of loans from other consumer finance companies. Under normal
circumstances, we do not extend additional credit to Wide customers until they pay off their
existing Wide loan contracts. Our Wide loans usually cater to customers who already have a high
level of outstanding debt with several consumer finance lenders. As of March 31, 2006, 55.9% of
the borrowers were male, and 47.7% earned less than ¥3 million a year. In addition, a substantial
number of our Wide loan customers were former customers of our consumer loans. The following table
provides information on the total number of Wide loan accounts and the balance of Wide loans per
account:
As of March 31,
2002
2003
2004
2005
2006
Number of Wide loan accounts
32,075
36,482
35,126
31,440
27,701
Balance of loans per account (in thousands)
¥
1,716
¥
1,754
¥
1,636
¥
1,514
¥
1,486
The following table provides information on advances, recognized on the disbursement
date, to our customers of Wide loans:
Year ended March 31,
2002
2003
2004
2005
2006
(in millions)
Advances
¥
28,321
¥
34,294
¥
20,709
¥
15,897
¥
14,977
As we do not generally make additional advances under existing Wide loan contracts,
almost all advances are to new Wide loan customers, including current customers for our consumer
loans, with the balance being made to existing Wide loan customers under new contracts.
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Consumer Loans
Consumer loans comprised 1.6% of our total average loans outstanding for the year ended March
31, 2006 and 1.3% of our total balance of loans outstanding as of March 31, 2006. We extend these
unguaranteed revolving loans to individuals in amounts of up to ¥500,000 or, for more creditworthy
customers who qualify for our VIP consumer loans, up to
¥1 million. These loans are currently contracted at a fixed interest rate of up to 27.01% per year or, for VIP loans, up to 25.55%
per year. We do not restrict use of proceeds from the loan.
In recent years, we have increasingly shifted our resources away from our consumer loan
business, because of competition from the major consumer finance companies, which benefit
significantly from the scale of their consumer loan operations. In line with this strategic shift,
pursuant to an agreement between us and Orient Credit, on June 1, 2004, we sold most of the
outstanding balance of our consumer loans to Orient Credit for ¥32,697 million. Following the
sale, we continue to offer consumer loans to prospective customers, particularly those who are
referred to us by our alliance partners, but we expect that our consumer loan business will operate
on a substantially reduced scale for the foreseeable future.
Other Loans/Leasing
Other loans comprised 5.6% of our total average loans outstanding for the year ended March 31,
2006 and 4.5% of our total balance of loans outstanding as of March 31, 2006. These loans
primarily include installment credits and collateralized lease financing to small and medium-sized
businesses through our wholly-owned subsidiary, NIS Lease. The average maturity of other loans at
March 31, 2006 was 4.3 years.
Our leasing business is a key growth business, particularly in China. In July 2004 we
established Nissin Leasing (China), our wholly-owned subsidiary in China. In September 2005,
Nissin Leasing (China) obtained a leasing license from the Chinese government and began operating
full-scale leasing business in China, providing operating leases, finance leases and services for
offices and commercial facilities in China. Nissin Leasing (China) also engages in consulting
business with respect to Chinese incorporation procedures, credit investigations and product test
marking. Nissin Leasing (China) also serves as an origination channel for investments by us in China.
Other Products and Services
Credit Guarantee
. We guarantee loans to customers of third party lenders for which we receive
guarantee fees. We provide credit-guarantee services, including for third party loan transactions,
to customers of our affiliate, Chuo Mitsui Finance Service Co., Ltd., or Chuo Mitsui Finance
Service, as well as customers of several third parties including Shinsei Business Finance Co. Ltd.,
or Shinsei Business Finance, our former affiliate, and Sanyo Club Co., Ltd., or Sanyo Club.
Real Estate Investment.
We also invest in real estate through our wholly-owned subsidiary,
NIS Property, as well as obtain real estate through entities which are consolidated by us in
accordance with Financial Accounting Standards Board ("FASB") Interpretation ("FIN") No. 46(R),
"Consolidation of Variable Interest Entities." Because of the recently brisk Japanese real estate
market, we have begun to purchase real estate properties, and seek to add value by undertaking
improvements and increasing tenancy rates and sell the properties at a value-added price.
During the fiscal year ended March 31, 2006, we sold 10 commercial and residential properties,
variously to real property investment funds and property companies in Japan. As of March 31,
2006, we had ¥20,792 million in real estate available for sale, consisting of 38 commercial and
residential properties.
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Investment Banking, Securities and Venture Capital Business.
In December 2004, we started
investment banking and securities businesses through the acquisition of our wholly-owned
subsidiary, NIS Securities, which provides investment banking services. We seek to take advantage of our
network of relationships with small and medium-sized enterprises in Japan. As these businesses
grow, we believe that we can take advantage of our knowledge gained through lending in this market
to provide investment banking and securities services to emerging companies, such as arrangement of
financings, initial public offerings, securities brokerage and listings on exchanges and other
financial advisory, asset financing and asset management services. In December 2005, we completed
our first transaction as lead underwriter in an initial public offering with the listing of Gamepot
Inc. on the Ambitious market of the Sapporo Securities Exchange.
NIS Securities also engages in trading for its own account, realizing trading profits of ¥265
million in the fiscal year ended March 31, 2006.
In addition, we engage in principal investment activities, conducting principal investment in
growing enterprises. During the fiscal year ended March 31, 2006, we invested ¥12,878 million in
54 companies. We seek principal investment opportunities primarily through our network of
relationships with small and medium-sized enterprises in Japan.
Loan Servicing
Our net interest income after provision for loan losses from our loan servicing segment was
¥1,311 million, or 5.7% of our consolidated net interest income after provision for loan losses for
the year ended March 31, 2004, ¥2,286 million, or 11.0% of our consolidated net interest income
after provision for loan losses for the year ended March 31, 2005, and ¥3,369 million, or 15.8% of
our consolidated net interest income after provision for loan losses for the year ended March 31,
2006. Our net income from our loan servicing segment was ¥406 million, or 6.7% of our consolidated
net income for the year ended March 31, 2004, ¥1,018 million, or 14.0% of our consolidated net
income for the year ended March 31, 2005, and ¥2,338 million, or 27.7% of our consolidated net
income for the year ended March 31, 2006.
Mainly through our subsidiary, Nissin Servicer, which commenced its operations in October
2001, we service distressed loans that we purchase from other financial institutions for our own
portfolio. We seek to renegotiate the terms and conditions of these loans with the borrowers and
carry and service the loans through their maturities. These loans are normally collateralized or
carry personal guarantees.
The following table shows information on the aggregate purchase price and aggregate principal
and interest collection of the purchased loans:
Year ended March 31,
2002
(1)
2003
2004
2005
2006
(in millions)
Aggregate purchase price of distressed loans
¥
403
¥
4,854
¥
4,502
¥
16,896
¥
19,779
Aggregate principal and interest collection
of distressed loans
33
2,859
4,538
10,095
11,923
(1)
Commenced operations in October 2001.
As a part of our plans to further develop our loan servicing segment, in September 2004,
Nissin Servicer listed its shares on the Mothers market of the Tokyo Stock Exchange and became
Japan's first loan servicing company to go public.
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Channels for the Origination, Guarantee and Acquisition of Loans
We have various loan acquisition channels for the origination and guarantees of loans for our
integrated financial service segment and for the acquisition of distressed loans for our loan
servicing segment. Our direct channels include our loan offices and automated telephone services.
In addition, through alliances primarily with financial institutions, we originate business through
affiliates and third parties, taking advantage of their customer databases and brand recognition.
We refer to this as our "financial OEM" strategy, in the sense that we provided our original
financial products through our alliance companies' brands and marketing channels.
Integrated Financial Services
We have sought to improve our operating efficiency by relying less on costly physical
infrastructure. Most of our competitors rapidly spread their physical presence throughout Japan,
particularly in the 1990s, with the establishment of networks of automated loan machines and
proprietary ATMs. Instead we shifted our focus to eliminate unnecessary physical infrastructure,
relying on telephone, loan office and Internet interaction with our customers. More recently, we
have diversified our loan acquisition channels by increasingly using the channels of our affiliates
and third parties, as we seek new ways to develop our loan business while avoiding deterioration in
the credit levels of our customers. To further diversify our business, we also started a loan
guarantee business whereby we guarantee loans provided to customers of our affiliates and third
parties. Additionally, we have grown our secured loan business, particularly with respect to
secured loans to property developers, through our direct channels, primarily our loan offices. The
following table shows loans originated and loans guaranteed through our various distribution
channels:
Year ended March 31,
2004
2005
2006
(in millions)
Loan origination channels:
Direct channels
¥
53,068
¥
59,363
¥
109,524
Channels of our affiliates
(1)
5,825
4,829
4,573
Channels of third parties
(1)
9,075
13,993
11,552
Total
¥
67,968
¥
78,185
¥
125,649
Channels
for loans that we
guarantee
(2)
:
Direct channels
¥
—
¥
—
¥
—
Channels of our affiliates
1,318
3,080
3,769
Channels of third parties
2,301
4,621
9,081
Total
¥
3,619
¥
7,701
¥
12,850
(1)
We acquired through Ascot Co., Ltd., or Ascot, loans in the amount of ¥920 million for the
year ended March 31, 2004, ¥467 million for the year ended March 31, 2005 and ¥203 million for
the year ended March 31, 2006. Because Ascot was our affiliate for the year ended March 31,
2004, but not for the years ended March 31, 2005 and 2006, we have included the amount of ¥920
million under "Channels of our affiliates" for the year ended March 31, 2004 and the amount of
¥467 million and \203 million under "Channels of third parties" for the years ended March 31,
2005 and 2006, respectively.
(2)
As of March 31 of each of the respective period.
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Channels for Loan Origination
Direct Channels
: The following are our principal direct channels, which have traditionally
been and continue to be our most important channels to acquire loans for our loan business:
•
Loan Offices
: Our loan offices enable loan applicants and current borrowers to meet
with our employees, who provide a full range of services, including disbursement of
cash, collection of repayments and responses to balance inquiries. Loan offices are
generally located near train stations and city centers in buildings owned or used by
banks and insurance companies. The total number of loan offices as of March 31, 2005
decreased significantly compared to that as of March 31, 2004, because we have
eliminated a substantial number of our general branches following the sale of most of
the outstanding balance of our consumer loans to Orient Credit in June 2004 and
concentrated our resources in providing loans to small business owners. The total
number of loan offices, however, increased as of March 31, 2006 because of the
acquisition of Aprek, which also originates loans to small business owners. The
following table shows selected information regarding our loan offices:
As of March 31,
2002
2003
2004
2005
2006
Total loan offices
72
72
70
50
60
Full-time employees
859
832
851
818
998
of which are dedicated to loan origination
641
615
571
487
571
Regarding our loan offices, most of them specialize in small business owner loans
and Business Timely loans in order to target small to medium-sized business financing
market. However, the number of full-time employees at loan offices decreased since
March 31, 2003 as we have increased the number of seconded employees to affiliates and
alliance partners in connection with our alliance strategy. Then again, as of March 31,
2006, the number of employees dedicated to loan origination increased because of the
acquisition of Aprek for development of the small to medium-sized business financing
market in Japan's Kyushu region.
In addition, we established the Real Estate Finance Department in February 2004 to
provide secured loans backed by real estate to property developers in order to take
advantage of recent brisk real estate market conditions. Also, we established the Tokyo
Sales Department in July 2004 and the Osaka Sales Department in February 2005 to further
enhance our provision of loans to owners of small to medium-sized enterprises.
•
Automated Telephone Service
. We primarily serve our Business Timely and consumer
loan customers through our automated telephone service, which we call the telephone
cashing system. Loan applications through the telephone currently comprise a majority
of all applications and all loans extended. After opening an account, customers place a
toll-free call and follow pre-recorded instructions on our computer system to receive
computerized services such as for balance inquiries and withdrawal of funds up to their
authorized limit. These services enhance convenience for our customers by eliminating
the need, and for some customers, embarrassment of visiting a loan office or ATM of a
consumer finance company. They also greatly reduce the need and costs of personal
service from our staff.
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Channels of Our Affiliates
: The following are the principal channels of our affiliates we use
for our loan business:
•
Shinsei Business Finance
: In November 2002, we established Shinsei Business Finance
as a joint venture with Shinsei Bank, to expand our provision of loans to small
business owners. We owned a 25% interest in the joint venture; however, our interest
in Shinsei Business Finance became less than 20% in April 2006. Shinsei Business
Finance will no longer be categorized as an affiliate in the fiscal year ending March
31, 2007. The amount of loans provided through Shinsei Business Finance was ¥841
million for the year ended March 31, 2004, ¥2,339 million for the year ended March 31,
2005 and ¥866 million for the year ended March 31, 2006.
•
Chuo Mitsui Finance Service
: In November 2004, we established Chuo Mitsui Finance
Service as a joint venture with The Chuo Mitsui Trust and Banking Co., Ltd., to expand
our provision of loans to small business owners. We own a 30% interest in the joint
venture. The amount of loans provided through Chuo Mitsui Finance Service was ¥35
million for the year ended March 31, 2005 and ¥570 million for the year ended March 31,
2006.
•
Webcashing.com
: We accepted applications, until January 2006, for all loan products
through our affiliate Webcashing.com Co., Ltd., or Webcashing.com, a former
wholly-owned subsidiary and a current 60% online loan marketing subsidiary of livedoor
MARKETING Co., Ltd. The amount of
loans provided through Webcashing.com was ¥4,064 million for the year ended March 31,
2004, ¥2,455 million for the year ended March 31, 2005 and ¥3,137 million for the year
ended March 31, 2006.
Channels of Third Parties:
We maintain numerous referral relationships with other consumer
finance companies and financial institutions. These relationships provide an opportunity for these
companies to generate fees, in the form of commissions we pay based on acquired loan balances, in
respect of loans that these companies would otherwise reject because of the indebtedness level of
the applicants. We benefit from these relationships because we believe our credit assessment
expertise gives us an advantage in evaluating the creditworthiness of such borrowers. We continue
to negotiate actively to expand these channels. Our significant third party channels include the
following:
•
USEN Corp./USEN Partner Service Corp.
We commenced a relationship with USEN Corp.
in November 2005 and its wholly owned subsidiary, USEN Partner Service Corp., which
commenced operations in January 2005, through which we market our products to customers
of USEN, focusing on owners of small and medium-sized enterprises. We have 25 sales
personnel seconded from us to USEN. Primary products sold through this channel are
unsecured, unguaranteed USEN Business Timely loans and SME Loans, which are typically
unsecured loans guaranteed by third parties.
•
Gulliver International Co., Ltd.
We began our relationship with Gulliver
International Co., Ltd. in October 2003 and target Gulliver's dues paying members,
particularly used car dealers. Our NIS Asset Finance product, which is a loan to used
car dealers secured by vehicles in stock, is a primary product sold through this
channel. NIS Lease also provides installment credit services to Gulliver's customers
for an annual membership fee.
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Channels for Loans That We Guarantee
We currently rely exclusively on the channels of our affiliates and third parties to provide
loan guarantees.
Channels of Our Affiliates
: The following are the channels of our affiliates we use for our
loan guarantee business:
•
Shinsei Business Finance
: In addition to acquiring loans through Shinsei Business
Finance, which ceased to be an affiliate in April 2006, we use our credit assessment
and credit management expertise to provide guarantees to the loan customers of Shinsei
Business Finance. Our outstanding guarantees amounted to ¥1,318 million as of March
31, 2004, ¥3,051 million as of March 31, 2005 and ¥3,178 million as of March 31, 2006.
•
Chuo Mitsui Finance Service
: In addition to acquiring loans through Chuo Mitsui
Finance Service, we use our credit assessment and credit management expertise to
provide guarantees to the loan customers of Chuo Mitsui Finance Service. Our
outstanding guarantees amounted to ¥29 million as of March 31, 2005 and ¥591 million as
of March 31, 2006.
Channels of Third Parties
:
Our significant third party channels for guarantees include the following:
•
Sanyo Club.
Our main third-party channel in providing loan guarantees is through
Sanyo Club. Our outstanding guarantees of loans to customers of Sanyo Club amounted to
¥2,280 million as of March 31, 2004, ¥4,178 million as of March 31, 2005 and ¥6,806
million as of March 31, 2006.
•
ShinGinko Tokyo, Ltd.
In January 2006 we commenced our relationship with ShinGinko
Tokyo, Ltd., a recently formed bank operated by the city of Tokyo, targeting start-up
small and medium-sized enterprise customers of ShinGinko Tokyo. We use our credit
assessment and credit management expertise to provide guarantees to the loan customers
of ShinGinko Tokyo, Ltd. Our outstanding guarantees amounted to ¥205 million as of
March 31, 2006.
Loan Servicing
We acquire distressed loans for our loan servicing segment through various channels including
banks, investment funds and bankruptcy court proceedings. In the past, we primarily acquired
distressed loans from banks that provided various banking services to us in the ordinary course of
business. However, as the Japanese economy improves, asset quality and prices have increased,
while the volume of distressed loans has diminished. At the same time, competition for acquisition
of such loans has increased, including from domestic and foreign investment funds. This has
resulted in highly competitive auctions for distressed loans from banks, which have lowered our
margins on such loans. As a result, we have sought to broaden our acquisition strategy, and are
increasingly focusing on distressed real estate and real estate secured loans.
Strategic Investments
We invest in enterprises that we believe have the potential to strategically complement our
business whose values we expect to appreciate. Some of these enterprises are our affiliates, and
our total initial investments in these affiliates amounted to ¥792 million as of March 31, 2006. The
remainder of these enterprises is mostly small to medium-sized enterprises that we view as
potential strategic partners, rather than sources of potential capital gains, and our total initial
investments in these enterprises amounted to ¥19,490 million as of March 31, 2006.
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Loan Disbursements
We wire loan funds to accounts designated by borrowers. Unlike many of our competitors, we do
not use proprietary automated loan machines to disburse loans, in order to minimize physical
infrastructure. Until May 31, 2004, we disbursed loans through ATMs operated by third parties such
as local and regional banks with whom we had entered into access agreements. On May 31, 2004, we
ceased all arrangements to use these ATMs. As a result, we now rely on bank accounts designated by
borrowers to disburse cash in addition to cash disbursement at loan offices.
Opening of Loan Accounts
Effective screening and approval of loan applicants and guarantors are critical factors in the
success of our business. The application procedure focuses principally on confirmation through an
interview of the identity and credit capacity of the customer and, if relevant, the guarantor. A
new customer or guarantor must first provide proof of identity, date of birth, address, place of
work, length and nature of employment, family situation, existing borrowings from other lenders,
and other details. To establish their credit standing, we check the customer information and, if
relevant, guarantor information against our proprietary database and also check the customer
information against other databases. One such database is maintained by numerous credit
information centers solely for use by consumer and small business finance companies, sales finance
companies and credit sales companies. These credit information centers for consumer and small
business finance companies record all transactions on a real-time basis, as participating companies
are required to provide customer credit information on an ongoing basis. Another database with
information on delinquent loans is shared by moneylenders, banks and installment sales finance
companies.
Small Business Owner Loans, Business Timely Loans and Wide Loans
Loan approvals for small business owner loans, Business Timely loans and Wide loans depend on
both telephone and face-to-face interviews. The staff in the local loan office, a loan office
manager and our credit screening department review the information provided by applicants for small
business owner loans, Business Timely loans and Wide loans. The credit screening department
reviews and makes a decision based on the information relating to the customer and, if applicable,
the guarantor forwarded by the loan office after it completes its check. The information we
examine may include information about the applicant's employer or business, including its
registration and financial information.
To determine the creditworthiness of potential borrowers, we examine a combination of factors
including their history of borrowings, employment, and outstanding loans, particularly those that
are secured.
For small business owner loans and Wide loans, within two or three business days from a
successful initial application, the staff at the local loan office normally visit the applicant and
the guarantor to execute the loan and guarantee agreements and to discuss the consequences of the
guarantee provision to ensure that both the applicant and the guarantor know the purpose of the
loan and the obligations they separately incur. We have never used blanket guarantees, a practice
for which some small business lenders came under widespread social criticism in 1999. A blanket
guarantee holds the guarantors liable for all current and future loans of the borrower, even those of which the
guarantor is not aware.
For Business Timely loans, a credit line is established immediately following a successful
application. We generally conduct a credit assessment of an account holder every three months.
This credit assessment is conducted based on a credit reference on each customer from a credit
information center for consumer and small business finance companies. This credit reference,
together with our own data, helps us to maintain the customer's credit level at what we believe is
an appropriate level. We may terminate the account for a number of reasons.
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Secured Loans
Because we provide loans backed by real estate, which is our principal secured loan product,
primarily to business entities, we tailor our screening and approval process to the individual
circumstances of the entities. Also, the terms and conditions of these loans are heavily
negotiated. To determine the creditworthiness of a potential borrower, we examine a combination of
factors including publicly available information about the borrower, such as its financial
statements, and the value and quality of the secured real estate.
Consumer Loans
We rely almost entirely on telephone interviews for our unguaranteed consumer loans. Our
computerized credit scoring system weighs and analyzes the information provided by the applicant
and, if the loan is approved, produces a credit line recommendation, with a final review made by
the local loan office manager. Each loan office has authority to establish a credit limit of up to
¥500,000 per customer, subject to the credit limit established by our credit scoring system. Any
history of substantial outstanding borrowings or past defaults, shown in our database or databases
maintained by credit information centers, provides grounds for rejection. We generally conduct a
credit assessment of current account holders every three months.
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Collection
If a borrower fails to make a timely repayment, the loan office that holds the loan account
has initial responsibility for collection of any overdue repayment. Overdue balances on all loans
accrue interest at a penalty rate of 29.2% per year. We have the right in case of non-payment of a
loan installment or any other specified event of default to accelerate the maturity of the loan
only if the borrower fails to repay the interest portion within the maximum rate set forth in the
Interest Rate Restriction Law. From the first day of delinquency, our computer system produces
automatic daily reports on overdue repayment; then loan office personnel attempt to contact by
telephone the customer and, if applicable, the guarantor. Most delinquent customers pay their
overdue balances shortly after this notice. When initial collection efforts fail, loan office
personnel continue their collection efforts, and if necessary, we transfer the loan collection
responsibility to our legal section for collection.
Each loan office is in charge of collection efforts for a loan account until it is deemed to
be a bad loan account. A loan account becomes bad when the borrower has deceased or become
bankrupt, or a legal proceeding has begun to recover the loan or in the following cases:
•
In the case of a small business owner loan or Wide loan, when interest payments are
delinquent for 44 days;
•
In the case of a Business Timely loan, when contractual payments are past due for 7
days;
•
In the case of a secured loan, when interest payments are delinquent for 44 days,
and there is a decline in the availability or value of the collateral; and
•
In the case of a consumer loan, when interest payments are delinquent for 67 days.
We transfer all bad loan accounts to our Research Group, which then takes on the collection
responsibility. When we choose to provide an allowance, the Research Group continues to examine
the possibility of collection and compile information with which to determine whether or not to
charge off the debts. See "Allowance for Loan Losses, Loan Charge-offs and Provisions for Loan
Losses" in Item 5.A of this annual report on Form 20-F for discussion of the determination of our
allowance for loan losses.
Since February 2004, we began extending real estate financing to property developers through
our Real Estate Finance Department. Although the amount of these real estate-backed loans has
grown significantly, we have not yet experienced any delinquent loans or charged-off any such
loans. We are currently devising collection procedures for these loans.
Technology
Branch and Office Network
The application and e-mail servers in our branches and offices are connected through dedicated
lines. We outsource our maintenance and operation work on the networks to an NEC affiliate.
Customer Information
An outsourcing center in Matsuyama houses our main computer, which stores all customer
information. Our main computer stores information for approximately 2.7 million customers and can
store information for up to approximately 4 million customers. Each transaction data is
transferred to our main computer in real time. We outsource our maintenance and operation work on
the main computer to another NEC affiliate. Although we have back-up systems for our data, we do
not maintain a back-up system that can replace our main computer in the event our main computer
becomes inoperative.
Loan Disbursements
We extend funds to our customers accounts maintained by banks or financial institutions of
their choice through Sanyo Electric Credit, which provides wire transfer services.
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Competition
Business Owner and Consumer Finance Industries
Japan's business owner and consumer finance industries are becoming increasingly competitive.
In the past, the country's financial system was more strictly regulated. In recent years, however,
the Financial Services Agency, or FSA, and other government bodies have taken steps to deregulate
the financial system and allow increased competition.
We strategically target small and medium-sized enterprises and their owners for our products
and services. In this regard our products and services include those targeted at individual
business owners as well as those targeted at businesses, in some cases enhanced by guarantees or collateral of
the owners or third parties. To the extent we provide products and services to individuals, we
compete with companies that provide consumer or other personal finance services. To the extent we
provide products and services to small business enterprises, we compete with bank and non-bank
finance companies. Competition often overlaps among these competitors. Major categories of
competitors include the following:
•
Large Japanese non-bank finance and leasing companies that provide financing,
leasing and related services to small and medium-sized enterprises, including Lopro,
SFCG, Orix, Sumisho Lease and Diamond Lease;
•
Japanese banks and other financial institutions expanding out of their traditional
markets, particularly by forming joint ventures and alliances with finance companies,
to the extent that they provide loans or other financial services to small and
medium-sized enterprises and individual business owners;
•
Large Japanese consumer finance companies and credit sales companies, including
Takefuji, Acom, Promise, and Aiful, which continue to seek greater market shares of the
consumer finance market through extensive marketing, to the extent that they provide
loans to individuals;
•
Foreign financial institutions, a number of which have been entering the Japanese
finance industry;
•
Credit card companies, particularly overseas companies such as MasterCard, which
have formed distribution relationships with major Japanese consumer finance companies;
and
•
Non-financial institutions, including East Japan Railway Company, a railway company
that provides consumer credit services through in-house cards with electronic money
functions, and information technology companies including Yahoo Japan and Rakuten, that
provide consumer credit services through the Internet.
We compete in our market on the basis of interest rates, speed and effectiveness of credit
assessment and credit risk management, product mix, ability to identify and maintain relationships
with strategic partners for customer referrals, brand recognition, location and network of offices
and marketing.
Loan Servicing Industry
We compete in the Japanese loan servicing industry through our subsidiary, Nissin Servicer.
The industry has grown rapidly in the last few years due to the accelerated disposal of
nonperforming loans by Japanese financial institutions. However, the competition is also
intensifying as the number of entrants into the industry increased, resulting in increased prices
of distressed loans. According to the Ministry of Justice, as of March 31, 2006, 94 companies were
registered as licensed servicing companies, of which we believe ten companies were affiliated with
consumer finance or small business owner loan companies. Our current and potential competitors
include the Japanese financial institutions that have obtained or may obtain a license to operate
in the loan servicing market. We compete in this market on the basis of our ability to identify
loan servicing opportunities, the purchase price we offer, loan servicing capability, effectiveness
of credit assessment and credit risk management and brand recognition.
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Investment Banking, Securities and Venture Capital Industries
In the investment banking, securities and venture capital industries, we compete with the
major Japanese investment banks and securities firms. In addition, many foreign investment banks
and securities firms have gained strength in Japan, and many independent fund management companies
and other parties compete for attractive merchant banking opportunities. These businesses are
highly competitive in Japan, however, we believe that we differentiate ourselves by our focus small
and medium-sized enterprises and network with these companies. In this manner, we believe that can
successfully compete by focusing on customers who are not the primary targets of many of the major
companies competing in these markets.
Regulation
The Moneylending Business Restriction Law, Contributions Law and Interest Rate Restriction Law
We are subject to an extensive regulatory scheme under Japanese law, including:
•
the Law Concerning the Regulation, Etc. of the Money Lending Business, together with
a cabinet order and a ministerial ordinance, collectively referred to as the
Moneylending Business Restriction Law;
•
the Law for Control of Acceptance of Contributions, Money Deposits and Interest,
Etc., more commonly known as the Contributions Law; and
•
the Interest Rate Restriction Law.
The Financial Services Agency of Japan, or the FSA, has also released administrative
guidelines, or FSA Guidelines, to clarify the administrative application, business practices and
supervision procedures of the Moneylending Business Restriction Law.
Registration Requirements
Under the Moneylending Business Restriction Law, any company wishing to engage in moneylending
is required to register with the chief officer of the FSA if it lends through offices in more than
one prefecture. The registration is renewed every three years. The FSA must reject a registration
or renewal application if it contains any untrue statement or omission of a material fact or the
applicant is disqualified under the Moneylending Business Restriction Law. A disqualified person
includes:
•
any person who has had its registration revoked because of specified misconduct or
other reasons under the Moneylending Business Restriction Law within five years prior
to the application,
•
any person who was fined for violating the Moneylending Business Restriction Law or
other specified statues and five years have not passed since the person completed the
payment of the fine (or became excused from paying it),
•
any person who was sentenced to imprisonment for any reason and five years have not
yet passed since person completed the term of imprisonment (or became excused from
serving it),
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•
any person in respect of which any of the directors, statutory auditors or specified
senior employees is a disqualified person,
•
any person who is a member of a crime syndicate, and
•
any person who does not meet the minimum net asset requirement of ¥3 million, in the
case of an individual, or ¥5 million, in the case of a corporation.
We registered under the Moneylending Business Restriction Law in 1984, and have since renewed
our registration periodically as required. Our registration permits us to engage in the
moneylending business in all prefectures in which we presently conduct the business.
Government Supervision
The FSA has general authority to supervise and discipline registered moneylenders under the
Moneylending Business Restriction Law. A registered moneylender with an outstanding loan balance
of more than ¥50 billion at the end of its fiscal year is required to submit an operational report
to the FSA concerning its operations during the fiscal year, including information on officers,
employees, loan offices, sources of funding and status of loans, together with its financial
statements for the fiscal year, within two months of the end of such fiscal year. The FSA may
request that a registered moneylender make further reports under the Moneylending Business
Restriction Law. A representative of the FSA may also enter a registered moneylender's offices,
inspect its books, documents and other materials or interview its officers, employees and other
related persons as may be necessary to protect the interest of its customers. The FSA may suspend
all or part of a registered moneylender's business for up to one year under specified
circumstances, including violation of the Moneylending Business Restriction Law. The FSA must
revoke the registration of a registered moneylender under specified circumstances, including when
it becomes a disqualified person for the purpose of registration or renewal or when it is in
significant violation of the Moneylending Business Restriction Law.
Restrictions on Usury
The Contributions Law and the Interest Rate Restriction Law primarily regulate the interest
rates we charge.
Under the Contributions Law, no person in the moneylending business may charge interest at a
rate exceeding 29.2% per year. Charging or receiving interest at a rate exceeding 29.2% per year
is subject to criminal penalty. The violation of the maximum interest rate is subject to a
criminal sanction of imprisonment of 5 years or less and/or penalty of ¥10 million or less, in the
case of an individual, and ¥30 million or less, in the case of a corporation. It is expected that
the Japanese Diet will discuss amendments to the Contributions Law in autumn 2006 and the maximum
interest rate legally chargeable is expected to be reviewed and reduced around January 2007, in
consideration of funding circumstances, economic and financial conditions and business practices of
moneylenders.
The Moneylending Business Restriction Law provides that a loan agreement with an interest rate
exceeding 109.5% per year is invalid.
The Interest Rate Restriction Law provides that a loan with an interest rate exceeding a
prescribed rate is invalid with respect to the portion exceeding the maximum rate. Prescribed
rates are:
•
20% per year for loans of less than ¥100,000,
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•
18% per year for loans of ¥100,000 or more but less than ¥1,000,000, and
•
15% per year for loans of ¥1,000,000 or more.
The Moneylending Business Restriction Law provides, however, that a payment by a borrower or
guarantor of interest in excess of the rate prescribed by the Interest Rate Restriction Law to a
registered moneylender is valid and non-refundable so long as the excess interest is paid without
coercion, mistake or threat and additional requirements are satisfied.
These additional requirements include:
•
delivery to the borrower or the guarantor, as the case may be, upon execution of the
relevant loan or guarantee agreement, of a prescribed written instrument setting forth
the principal terms of the loan or the guarantee, and
•
delivery to the borrower or guarantor, upon the payment of the excess interest, of a
written receipt for the payment, unless the payment is transferred to the bank account
of the moneylender, in which case a written receipt is required upon the borrower's
request.
In addition, the FSA Guidelines require us to provide the borrower with written notice of the
terms of any loans extended under a loan agreement at the time of each disbursement, if multiple
loans may be provided under the same loan agreement.
As is typical for most other lenders in the Japanese consumer finance and business finance
industries, the interest rates of most of our current loans exceed the relevant maximum rates
permitted under the Interest Rate Restriction Law. Consequently, collection of unpaid excess
interest is legally unenforceable by lenders. These rates, however, are below the levels that
would subject us to criminal penalty under the Contributions Law. When paid by the borrower, the
excess interest portion of loans subject to such rates is non-refundable so long as we have met the
requirements stated above.
Previously virtually no borrowers refused to pay interest in excess of the Interest Rate
Restriction Law. More recently, the number of borrowers who refuse to pay or request refunds has
increased, largely due to increases in the number of individuals in Japan experiencing financial
difficulties as a result of ongoing economic difficulties in Japan. In addition, the Supreme Court
passed decisions concerning excess interest and the necessary requirements pertaining to excess
interest which were interpreted in the consumers' favor, resulting in an increase in demand for
excess interest refunds by borrowers. In January 2006, the Supreme Court further made decisions
with stricter interpretation of the requirement of delivery of documents and the requirement of
voluntary payment of the excess interests without coercion, mistake or threat explained above.
According to the court decisions, the Enforcement Regulations under the Moneylending Business
Restriction Law was amended with effect from July 1, 2006. As a result of the court decisions,
when a borrower exercises his or her legal right to refuse to pay interest in excess of the level
set by the Interest Rate Restriction Law, we cannot collect the excess interest, despite the terms
of our contract. In addition, we are no longer able to demand immediate repayment of the remaining
balance in such instances. In addition, pursuant to the new regulations, the loan documentation
should provide that non-payment of interest constitutes an event of default only if the borrower
fails to repay the interest within the maximum rate under the Interest Rate Restriction Law.
Therefore, borrowers who fail to repay the unpaid excess interest portion will not be subject to
the general collection procedures applicable to borrowers discussed in "Business — Collection." On
occasion, we negotiate refunds of previously paid excess interest in certain situations primarily
involving threatened customer bankruptcy or threatened litigation. For the year ended March 31,
2006, we agreed to return the excess interest payments totaling approximately ¥387 million, compared with approximately ¥190 million for the
year ended March 31, 2005 and approximately ¥134 million for the year ended March 31, 2004. Also,
as of March 31, 2006, we recognized reserve of ¥590 million for estimated losses on excess interest
repayments to provide for estimated probable refunds claims of excess interest previously paid by
borrowers.
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The Interest Rate Restriction Law also applies to discounted loans. A discounted loan results
when an interest amount is deemed to have been deducted in advance because the stated value of the
loan exceeds the actual cash disbursement in respect of the loan. This deemed interest amount is
subject to the general restrictions on interest under the Interest Rate Restriction Law. We do not
make any discounted loans.
Servicer Law
With the purpose of protecting borrowers from unfair collection practices, the Practicing
Attorney Law (the "Attorney Law") stipulates that no person other than a qualified attorney can
engage in providing legal services or acquiring claims in order to enforce them against debtors.
In February 1999, the Law on Debt Servicing Business by Servicing Companies (the "Servicer Law")
was enforced in order to facilitate third-party debt servicing for performing and nonperforming
loans of financial institutions and to deal effectively with the sale, liquidation, and servicing
of their bad loans.
The Servicer Law requires a minimum capital of ¥500 million for a company to be licensed by
the Minister of Justice to conduct third-party servicing. In addition, to make this law consistent
with the provisions of the Attorney Law, at least one attorney must be appointed as a director of a
licensed debt servicing company.
The Servicer Law, as amended in September 2001, covers a range of financial assets specified
in the law, including:
•
loan receivables held by financial institutions (including banks, insurance
companies and finance companies licensed under the Moneylending Business Restriction
Law and other miscellaneous financial entities), money claims under the Securitization
Law, and other claims as set out by cabinet orders; and
•
loan receivables under bankruptcy or rehabilitation proceedings and loan receivables
which are securitized through special purpose vehicles.
A licensed servicer is entitled to manage and collect receivables in relation to the above
claims on behalf of its clients or its own account. A servicer is also able to engage in real
estate transactions in connection with secured loans. According to the Ministry of Justice, as of
March 31, 2006, there were 94 licensed servicing companies in Japan.
The Law on Protection of Personal Information
The Personal Information Protection Law clarifies the legal duty of a business to protect
personal information by setting out basic principles for a proper treatment of such information.
The Personal Information Protection Law applies to information concerning individuals and does not
extend to corporations.
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The Guidelines issued by several governmental authorities have supplemented the Personal
Information Protection Law. The Guidelines concerning Protection of Personal Information in
Financial Area issued by the FSA govern money-lending business. Industry associations have established
guidelines for their member organizations, detailing how such organizations must comply with the
Personal Information Protection Law.
Personal information, as defined by the Personal Information Protection Law, is any
information that distinguishes a living individual from another living individual. This includes a
person's name, address, birth date, birthplace, phone number, financial history, employment
history, academic history and occupation. The Personal Information Protection Law applies to
personal information-handling enterprises, or data collectors, defined as persons that use
databases that contain the personal information of 5,000 or more people. A personal information
database is defined as a collection of information, which is systematically arranged to conduct
searches.
The Personal Information Protection Law provides the following general restrictions on the use
of personal information:
•
the purpose of the use of information must be specified as much as possible;
•
personal information may not be obtained through fraud or by other illegal means;
•
upon acquiring the personal information, the use of information must be notified to
the relevant individual or published;
•
personal information collected should be relevant to the purposes for which it is to
be used and, to the extent necessary for those purposes, should be accurate and kept up
to date;
•
to prevent loss, unauthorized access, destruction, use, modification or disclosure
of personal information, security safeguards must be implemented;
•
personal data may not be disclosed or made available to third parties without the
prior consent of the individual to whom the personal information relates; and
•
the purpose of use of all personal data and the procedures of amendment,
suspensions, etc., of the use or deletion of personal data must be made available to
the individual to whom the personal information relates; and
•
corresponding to a person's requests to control his or her personal information,
including amendment, suspension of the use or deletion of his or her personal data.
Data collectors must deal adequately and promptly with complaints regarding their use of
personal information. For example, a data collector is expected to appoint a person who is
responsible for customer information, and establish complaint hotlines. If data collectors violate
their duty by disregarding the competent minister's orders, they may be subject to imprisonment not
exceeding six months, or a fine not exceeding ¥300,000.
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Properties
Our head office in Tokyo, Japan occupies 3,206.88 square meters of office space, and our head
office in Matsuyama, Ehime, occupies 1,986.38 square meters of office space on 642.78 square meters
of land. We lease the Tokyo Head Office space and own the Matsuyama Head Office space. We lease
most of our 60 loan offices, located throughout Japan. Approximately one-third of the total number
of our loan offices operate in the metropolitan regions surrounding Tokyo and Osaka.
Legal Proceedings
We are not a party to any material legal proceedings.
C. Organizational Structure.
The table below provides information about our principal subsidiaries, all of which were
incorporated under the laws of Japan, except for Nissin Leasing, which was incorporated under the
laws of China:
Shares and voting
rights held by us,
directly or
Name
indirectly
Principal business
Nissin Servicer Co., Ltd.
74.6%
Loan servicing business
NIS Lease Co., Ltd.
(1)
100.0
Leasing business
NIS Property Co., Ltd.
(1)
100.0
Real estate-related business
Nissin Leasing (China) Co., Ltd.
(2)
100.0
Leasing business
NIS Securities Co., Ltd.
(3)
100.0
Securities business
Aprek Co., Ltd.
(4)
69.3
Loan business
(1)
Prior to June 22, 2004, NIS Property Co., Ltd., was named Nissin Credit Guarantee Co., Ltd.
and its principal business was providing credit guarantees. On June 15, 2004, Nissin
Guarantee Co., Ltd. transferred its credit guarantee business operations to NIS Lease Co.,
Ltd.
(2)
Established on July 9, 2004, obtained leasing license from Chinese government on September
14, 2005, and changed its name from Matsuyama Nissin Leasing (Shanghai) Co., Ltd. on March 13,
2006.
(3)
Acquired on December 3, 2004, and changed its name from Yamagen Securities Co., Ltd. on May
1, 2005.
(4)
Acquired on December 2, 2005 through a cash tender offer.
D. Property, Plants and Equipment.
The information required by this item is provided in Item 4.B of this annual report on Form
20-F.
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Item 4A.
Unresolved Staff Comments.
None.
Item 5. Operating and Financial Review and Prospects.
A. Operating Results.
You should read the following discussion and analysis of our financial condition and results
of operations together with Item 3.A of this annual report on
Form 20-F
and our audited U.S. GAAP
financial statements, including the notes to these statements, appearing beginning on page F-1 of
this annual report on
Form 20-F
. This discussion and analysis is based on U.S. GAAP financial
information except as noted otherwise. This discussion and analysis contains forward-looking
statements that involve risks, uncertainties and assumptions. Our actual results may differ
materially from those anticipated in these forward-looking statements as a result of factors
including but not limited to those in Item 3.D of this annual report on
Form 20-F
.
Overview
We
are primarily engaged in the business of providing secured and
unsecured loans to individuals, including small business owners,
consumers and small and medium-sized enterprises in Japan. Most of our income comes from interest
income on loans receivable from this business, which comprises our integrated financial services
segment. We also acquire non-performing debts from banks and other financial institutions in Japan
and service such non-performing debts as part of our loan servicing segment.
Our net interest income after provision for loan losses was ¥22,922 million for the year ended
March 31, 2004, ¥20,820 million for the year ended March 31, 2005 and ¥21,333 million for the year
ended March 31, 2006. Over the last three years, we have been strategically shifting away from
consumer loans and concentrating our resources on providing financial services to small and
medium-sized business owners. We sold most of the outstanding balance of our consumer loans in
June 2004. We also seek to enhance loans to business owners, and have added focus on real estate
financing. Real estate financing contributed to a significant growth in our average amount of
loans outstanding during the year ended March 31, 2006. Also, the growth of our loan servicing
business, full-scale operations of our leasing business and a decline of our interest expense has
counterbalanced the decline of our interest income from loans receivable and increase of our loan
loss-related costs, which resulted in an increase of our net interest income after provision for
loan losses.
Our net income was ¥6,077 million for the year ended March 31, 2004, ¥7,262 million for the
year ended March 31, 2005 and ¥8,455 million for the year ended March 31, 2006. Our net income has
increased steadily, reflecting the change in the mix of our operating assets portfolio, as well as
our efforts to contain the growth of our non-interest expenses.
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Integrated Financial Services
We categorize our loans in our integrated financial services into the following five primary
categories:
•
Small Business Owner Loans
: Small business owner loans are primarily unsecured
loans to self-employed individuals guaranteed by one or more guarantors. In recent
years, the amount of total small business owner loans outstanding and number of
customer accounts has increased, primarily as a result of our active promotion of these
loans through the direct telemarketing efforts of our loan offices specializing in
loans to small to medium-sized business owners, and newly established Tokyo and Osaka
Sales Departments, as well as through referrals from our strategic alliance partners.
Interest
income derived from small business owner loans has contributed significantly to our
total interest income.
•
Business Timely Loans
: Business Timely loans are unguaranteed, unsecured loans to
individual small business owners pursuant to revolving lines of credit. In recent
years, despite a slight decrease in the number of customer accounts between March 31,
2005 and 2006, the amount of total Business Timely loans outstanding, as well as
interest income from Business Timely loans has increased, primarily as a result of our
active promotion of these loans through the direct telemarketing efforts of our loan
offices specializing in loans to small to medium-sized business owners, and newly
established Tokyo Sales Department and Osaka Sales Department.
•
Secured Loans
: Secured loans are conventional loans secured by real property or
securities to individuals and small and medium-sized enterprises in
Japan. Recently, our secured loans portfolio has grown
significantly, reflecting our strategic shift toward promotion of
secured loans to property developers, focusing on small and
medium-sized enterprises and their owners, through the
active sales and marketing efforts of our Real Estate Finance Department established in February 2004. These loans are targeted primarily to be used as working
capital for property developers. As a result, the percentage of interest income
derived from secured loans has been increasing.
•
Wide Loans
: Wide loans are unsecured loans for which the proceeds are used to
consolidate individual debts which are guaranteed by one or more guarantors. In recent
years, the amount of total Wide loans outstanding and the number of customer accounts, as
well as interest income from Wide loans has decreased, primarily as a result of a
strategic shift over the last several years toward promotion of financial services to
small and medium-sized business owners.
•
Consumer Loans
: Consumer loans are unguaranteed, unsecured loans to individuals.
In line with a strategic shift over the last several years toward promotion of
financial services to small and medium-sized business owners, on June 1, 2004, we sold
most of the outstanding balance of our consumer loans to Orient Credit for ¥32,697
million. See "— Factors Affecting Our Financial Results — Sale of Consumer Loans"
below for a further discussion.
In addition, NIS Lease, a subsidiary, commenced full-scale leasing operations in February
2004. As a result, the amount of total lease receivables and installment loans outstanding
included in other loans has increased, and we expect the portfolio of
these loans to continue growing in
the short to medium term.
Further, we continue to develop our credit enhancement business by providing loan guarantees
to affiliates and third parties.
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The following table provides information on the average balance of loans outstanding for each
of the years indicated for each of our main product categories and the percentage of total average
loans outstanding represented by each loan category:
Year ended March 31,
2004
2005
2006
(in millions except percentages)
Small business owner loans
¥
55,647
31.6
%
¥
56,964
38.3
%
¥
63,320
34.4
%
Business Timely loans
17,909
10.2
19,687
13.2
23,656
12.9
Secured loans
2,235
1.3
9,976
6.7
39,496
21.5
Wide loans
61,592
34.9
52,722
35.4
44,240
24.0
Consumer loans
(1)
38,600
21.9
5,296
3.6
3,010
1.6
Other loans
261
0.1
4,166
2.8
10,243
5.6
Total average balance of loans outstanding
¥
176,244
100.0
%
¥
148,811
100.0
%
¥
183,965
100.0
%
(1)
Pursuant to an agreement between us and Orient Credit, on June 1, 2004, we sold most of the
outstanding balance of our consumer loans to Orient Credit for ¥32,697 million.
The following table shows the interest income from loans receivable and the percentage of
our total interest income from loans receivable derived from each major category of loans for the
years ended March 31, 2004, 2005 and 2006:
Year ended March 31,
2004
2005
2006
(in millions except percentages)
Small business owner loans
¥
11,411
30.0
%
¥
11,189
38.2
%
¥
11,233
38.9
%
Business Timely loans
4,590
12.1
4,924
16.8
5,718
19.8
Secured loans
205
0.5
960
3.3
2,886
10.0
Wide loans
12,873
33.8
10,450
35.7
8,581
29.8
Consumer loans
9,807
25.8
2,003
6.8
744
2.6
Other loans
35
0.1
502
1.7
1,095
3.8
Total interest revenue from loans receivable
38,921
102.3
30,028
102.5
30,257
104.9
Less amortization of loan origination costs
(751
)
(2.0
)
(540
)
(1.9
)
(431
)
(1.5
)
Less excess interest repayment costs
(1)
(134
)
(0.3
)
(190
)
(0.6
)
(977
)
(3.4
)
Interest income from loans receivable
¥
38,036
100.0
%
¥
29,298
100.0
%
¥
28,849
100.0
%
(1)
Including provision for losses on excess interest repayments of ¥590 million for the year
ended March 31, 2006.
Loan Servicing
Through
our subsidiary, Nissin Servicer, we mainly service distressed loans that we purchase from third-party financial institutions for our own portfolio. The table below shows the aggregate
purchase price and aggregate principal and interest collection amount of distressed loans for the
years ended March 31, 2004, 2005 and 2006:
Year ended March 31,
2004
2005
2006
(in millions)
Aggregate purchase price of distressed loans
¥
4,502
¥
16,896
¥
19,779
Aggregate principal and interest collection
of distressed loans
4,538
10,095
11,923
We expect that the relative importance of this operating segment will continue to
increase in the short to medium term.
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Factors Affecting Our Financial Results
The principal determinants of our profitability have been our net interest income, the levels
of provisions for loan losses and the amount of non-interest expenses that we incur.
Net Interest Income
Integrated Financial Services
Net interest income from our integrated financial services is presented as interest income
minus interest expense from loans receivable. The principal determinants of total interest income
are our loan portfolio size, which is the average balance of loans outstanding and the average
interest rate we charge on our loans. Our interest expense reflects the funding cost to us of
making loans to our customers. The difference between the interest rates we charge our customers
and the interest rates we pay to finance our loans to customers largely determines our margins and
profitability. Because the average interest rate per account and average outstanding balance per
account vary by loan product, changes in the relative composition of loan products in our total
portfolio also affect net interest income. For the year ended March 31, 2006, although our loan
portfolio grew significantly, our total interest revenue from loans receivable did not change in
proportion to the increase in the portfolio size, due to a decrease in our average interest rate as
described below. In addition, our net interest income from loans receivable also declined due to
an increase in excess interest repayment costs, which is a deduction from total interest revenue.
Loan Portfolio Size
: Our loan portfolio grew steadily in recent years until June 2004, at
which time we sold most of the outstanding balance of our consumer loans to a third party, which
has contributed to a significant decline in our loan portfolio between March 31, 2004 and March 31,
2005. See "—Factors Affecting Our Financial Results — Sale of Consumer Loans" below. Recently,
despite the fact that the average balance of loans outstanding for our Wide loans and consumer
loans continues to decline, our loan portfolio size grew significantly as a result of the increase
in the average balance of loans outstanding for our small business owner loans, Business Timely
loans and the enhancement of real estate financing, secured loans. Generally, in recent years
balances per account for our small business owner loans, Business Timely loans and secured loans
have increased, although balances per account for our Wide loans have decreased. For additional
information on account numbers and balances per account, see "Our Products" in Item 4.B of this
annual report on Form 20-F. We believe that the number of customers and the portfolio size for our
small business owner loans, Business Timely loans and secured loans will continue to increase as a
result of expanded customer acquisition channels for our loans, including our Tokyo and Osaka Sales
Departments and Real Estate Finance Department, our referral arrangements with other financial
service providers and the overall demand for small and medium-sized business owner financing in
Japan. We also believe that our loan portfolio will resume growth over the medium to long term
reflecting increases in our portfolio, especially secured loans.
Interest Rates
: We determine the interest rates we charge on our loans based on factors
including competition from other lenders, legal restrictions on interest rates as discussed under
"Regulation — The Moneylending Business Restriction Law, Contributions Law and Interest Rate
Restriction Law" in Item 4.B of this annual report on Form 20-F and the willingness of our
customers to borrow at the interest rates we charge. The weighted period-end average contractual
interest rate on our outstanding loans has been decreasing, from 24.0% at March 31, 2004, to 22.1%
at March 31, 2005 and to 16.1% at March 31, 2006.
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The weighted period-end average is determined by
calculating the average interest rate for each of our loan products on the period-end date,
weighting these rates by the proportion of total loans outstanding represented by the loan category
on this date, and averaging these weighted interest rates. We last
lowered the contractual interest rate on each of our major loan products by 0.73% during the
year ended March 31, 2002, but did not reduce the rate further during the years thereafter. The
gradual decrease mainly reflected the change in our loan portfolio mix, resulting from increased
acquisition of high quality receivables with lower interest lending rate. Also, the sale of most
of the outstanding balance of our consumer loans in June 2004 contributed to a further decrease in
the weighted period-end average contractual interest rate on our outstanding loans, because
consumer loans normally carry higher interest rates than other loans. In addition to the above
factors, the enhancement of our real estate financing has contributed to a steep increase in the
amount of total secured loans outstanding, which normally carry the lowest interest rates among our
loan products.
Interest Expense
: Our interest expense fluctuates with changes in market interest rates,
market conditions, the mix of our funding sources, our credit ratings and the amount of our
borrowings.
•
Market Interest Rates and Market Conditions
: In recent periods, we have benefited
from the extremely low interest rate environment in Japan created by government
policies intended to combat ongoing economic weakness. The weighted period-end average
rate of long-term borrowings was 2.3% at March 31, 2004, 1.9% at March 31, 2005 and
1.3% at March 31, 2006. The weighted period-end average rate of short-term borrowings
was 1.3% at March 31, 2004, 1.2% at March 31, 2005 and 1.0% at March 31, 2006. We
expect market interest rates to rise, as the Bank o Japan has begun raising interest
rates tightening the money supply in response to improved economic conditions and
possible emerging inflation in Japan.
•
Mix of Our Funding Sources and Credit Ratings
: Beginning in the year ended March
31, 2000, when legal restrictions on debt issuances to fund our lending business were
eliminated, we have increased our borrowings through debt issuances relative to bank
loans, which had previously accounted for substantially all of our borrowings. To the
extent that debt issuances have been available to us, we have benefited from their
typically lower funding costs than those of bank loans. The percentage of our debt
issuances to our total borrowings was 32.0% at March 31, 2004, 22.6% at March 31, 2005
and 31.1% at March 31, 2006. The percentages as of March 31, 2004, 2005 and 2006
reflect our asset backed securities, including asset backed commercial paper, which we
began issuing in October 2002. The significant decline in the amount of debt issued as
a percentage of our total borrowings between March 31, 2004 and 2005 is principally
attributable to a net decrease in bonds as our capital requirements decreased as a
result of the sale of most of the outstanding balance of our consumer loans in June
2004. Nonetheless, the effect of the smaller percentages of our debt issuances as
compared to that of March 31, 2004 has been partly offset by a gradual decline in the
interest rates that banks charge us in recent years. On the other hand, the amount of
debt issuances as a percentage of our total borrowings between March 31, 2005 and 2006
increased significantly, reflecting an increase in our issuance of commercial paper and
asset-backed securities as our capital requirements increased in connection with the
expansion of real estate-related financing. In addition, while any downgrades of our
credit ratings by rating agencies could harm our ability to tap the debt markets, our
current intention, subject to market conditions and other uncertainties, is to increase
our proportion of direct financing to around 40%.
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•
Amount of Our Borrowings
: To the extent that the size of our loan portfolio grows,
we rely primarily on borrowings to finance the growth of the portfolio. We expect the
amount of borrowings to increase in the near term, reflecting the expected growth of
our loan portfolio.
Loan Servicing
Our net interest income from loan servicing is our interest income minus our interest expense
from purchased loans. The factors that affect our interest expense in our loan servicing segment
are largely identical to those affecting our integrated financial service segment. However, the
principal determinants of our total interest income in our loan servicing segment differ
significantly from those affecting our integrated financial service segment. The principal
determinants of interest income from loan servicing are the amount of purchased loans in our
portfolio, our ability to service distressed loans, including through negotiation with the
borrowers and restructuring of the loan terms, and the prices at which we purchase the distressed
loans. Because we generally do not recognize interest income on a distressed loan until we fully
recover the purchase cost, our recognition of interest income may be significantly delayed compared
to the recognition of interest income for our integrated financial services. See "— Critical
Accounting Policies — Purchased Loans Receivable and Revenue Recognition." Also, due to increasing
competition in this market, which has created an upward pressure on the purchase prices for the
distressed loans, we expect our interest income from purchased loans as a percentage of the amount
of our purchased loans to decrease over the long term.
Provisions for Loan Losses
Our provisions for loan losses are allocations made each period to our existing allowance for
loan losses. Our allowances for possible loan losses are based upon our estimates of probable
uncollectable loan losses from known and inherent risks in our loan portfolio. We determine these
allowances based upon various factors including the status and risk profile of the borrower and, if
applicable, guarantor, economic conditions, unemployment rates, bankruptcy cases and our historical
loss experience. Increases to our allowance are made by charges to our provision for loan losses.
Recoveries of previously charged-off amounts are deducted from our provision for loan losses for
the year in which the recoveries occur. Based upon our estimated allowance needs, we then
supplement the remaining balance through provisions for loan losses. Our provisions for loan
losses decreased during the year ended March 31, 2005 compared to the year ended March 31, 2004
reflecting the sale of most of the outstanding balance of our consumer loans to a third party. See
"— Sale of Consumer Loans" below. However, our provision for loan losses increased during the year
ended March 31, 2006, generally reflecting the growth in the amount of our total loans outstanding.
Also, our provision for loan losses in any given fiscal year depends partly on the adequacy of our
allowance for loan losses for the previous fiscal year, as we must make up for any such inadequacy,
if any, with increased provision for loan losses in the following fiscal year. To the extent that
our provision for loan losses increases, it signifies the increasing risk that our loan portfolio
carries. Additional detail on provisions for loan losses for our various loan products is included
below under "Allowance for Loan Losses, Charge-offs and Provisions for Loan Losses."
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Non-interest Expense
The most significant components of our non-interest expense are salaries and employee
benefits, occupancy, furniture and equipment, and other general and administrative expenses.
•
Salaries and Employee Benefits
: Our salaries and employee benefits depend on the
number of our employees and the compensation and benefits we provide to each employee.
The number of full-time employees decreased from 851 at March 31, 2004 to 818 at March
31,
2005, but increased to 998 at March 31, 2006. Our salaries and employee benefits
decreased slightly during the year ended March 31, 2005 compared to the year ended
March 31, 2004, reflecting a significant reduction in the scale of our consumer loan
business due to the sale of most of the outstanding balance of our consumer loans to a
third-party. However, to the
extent that our operational scale increases over the medium to long term, we expect our
salaries and employee benefits to continue to increase in the medium to long term.
Salaries and employee benefits for the year ended March 31, 2006 increased as the number
of full-time employees increased, reflecting development in the business activities of
our subsidiaries.
•
Occupancy, Furniture and Equipment
: Our expense in connection with our occupancy,
furniture and equipment depends largely on the number of our loan offices and branches,
and the associated rents. The number of loan offices was 70 at March 31, 2004,
decreased to 50 at March 31, 2005 (following the sale of most of the outstanding
balance of our consumer loans and related closure of branches) and increased to 60 at
March 31, 2006, due to the acquisition of Aprek. We expect office rents to remain
stable at the current level since we have no plan to significantly expand the number of
offices in the short term.
•
Other General and Administrative Expenses
: The major items in our other general and
administrative expense include communication expenses, taxes and duties, travel and
transportation expenses, recruiting expenses and commission fees. Although we continue
to make efforts to reduce operational inefficiencies, we expect our other general and
administrative expenses as a percentage of our non-interest expenses to increase in the
short term, reflecting the increase in our recruiting expenses and commission fees, and
the growth in activities of our subsidiaries.
Non-interest expense also includes advertising expenses, net losses on sale and impairment of
long-lived assets, minority interests, and other expenses. Regarding advertising expenses, despite
the fact that the amount has increased gradually, advertising expenses have remained at relatively
low levels for each of the past three fiscal years in line with the increasing importance of
referrals in origination. However, we expect our advertising expenses to continue to increase
gradually in the short to medium term, reflecting increases in Internet-related advertisements.
Sale of Consumer Loans
In June 2004, we sold most of the outstanding balance of our unguaranteed consumer loans to
Orient Credit for ¥32,697 million. The effect of this sale was a decrease in our interest income
and net interest income after provision for loan losses for the year ended March 31, 2005, as
compared to what our results would have been without the sale. However, our net income increased
slightly for the year ended March 31, 2005, as compared to what our net income would have been
without the sale because the reduction of expenses associated with our consumer loan business, such
as loan loss-related expenses and non-interest expenses offset the decline in our interest income.
In addition, for the year ended March 31, 2005, we recognized a non-interest gain as a result of
the sale. Following the sale, we continue to offer consumer loans to prospective customers,
particularly those who are referred to us by our alliance partners, but we expect that our consumer
loan business will operate at a substantially reduced scale for the foreseeable future.
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Table of Contents
Results of Operations
Consolidated Information
The following table shows selected income statement data in yen amounts and as percentages of
total interest income for the years ended March 31, 2004, 2005 and 2006:
Year ended March 31,
2004
2005
2006
(in millions except percentages)
Total interest income
¥
40,107
100.0
%
¥
32,555
100.0
%
¥
33,901
100.0
%
Total interest expense
3,724
9.3
3,159
9.7
3,105
9.2
Net interest income
36,383
90.7
29,396
90.3
30,796
90.8
Provision for loan losses, net
13,461
33.6
8,576
26.3
9,463
27.9
Net interest income after provision
for loan losses
22,922
57.1
20,820
64.0
21,333
62.9
Total non-interest income
730
1.8
5,984
18.4
9,934
29.3
Non-interest expense:
Salaries and employee benefits
6,735
16.8
6,521
20.0
7,181
21.2
Occupancy, furniture and equipment
2,060
5.1
2,395
7.4
2,654
7.8
Advertising
218
0.6
332
1.0
629
1.9
Other general and administrative
expenses
3,349
8.3
4,869
15.0
5,060
14.9
Losses on
sale, disposal and
impairment of long-lived assets,
net
530
1.3
94
0.3
16
0.1
Other
97
0.2
493
1.5
456
1.3
Minority interests
4
0.0
192
0.6
602
1.8
Total non-interest expense
12,993
32.3
14,896
45.8
16,598
49.0
Income before income taxes
10,659
26.6
11,908
36.6
14,669
43.2
Income taxes
4,582
11.4
4,646
14.3
6,214
18.3
Net income
¥
6,077
15.2
%
¥
7,262
22.3
%
¥
8,455
24.9
%
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Segment Information
For
financial reporting purposes, we operate under two business segments,
the integrated financial services segment and the loan servicing
segment. The integrated financial services segment is
comprised of the loan business, which includes small business owner, Business Timely, secured,
Wide, consumer and other loans as well as credit guarantees, leasing and securities business. In
the loan servicing segment, Nissin Servicer mainly acquires and services non-performing debts from
banks and financial institutions in Japan. The loan servicing segment is operated as a separate
segment for financial reporting purposes. Investment in real estate
properties, insurance agency and consultancy business are insignificant for financial reporting
purposes and are included in the integrated financial services segment for financial reporting
purposes. However, because of the increasing significance of these
businesses, we anticipate that they will be included in a separate
business segment for the fiscal year ending March 31, 2007. We currently conduct our operating activities mainly in Japan. We also conduct
activities in China, but these are currently insignificant for financial reporting purposes. The
following tables show selected information for our business segments for the years ended March 31,
2004, 2005 and 2006:
Year ended March 31,
2004
Integrated
Financial Services
Loan Servicing
Total
(in millions)
Total interest income
¥38,038
¥2,069
¥40,107
Total interest expense
3,603
121
3,724
Provision for loan losses, net
12,824
637
13,461
Net income
5,671
406
6,077
Year ended March 31,
2005
Integrated
Financial Services
Loan Servicing
Total
(in millions)
Total interest income
¥29,299
¥3,256
¥32,555
Total interest expense
3,006
153
3,159
Provision for loan losses, net
7,759
817
8,576
Net income
6,244
1,018
7,262
Year ended March 31,
2006
Integrated
Financial Services
Loan Servicing
Total
(in millions)
Total interest income
¥28,938
¥4,963
¥33,901
Total interest expense
2,697
408
3,105
Provision for loan losses, net
8,277
1,186
9,463
Net income
6,117
2,338
8,455
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Year Ended March 31, 2006, Compared to Year Ended March 31, 2005
Total Interest Income
Total interest income for the year ended March 31, 2006 was ¥33,901 million, an increase of
¥1,346 million, or 4.1%, from ¥32,555 million for the previous fiscal year.
Integrated Financial Services
: Interest income from loans receivable was ¥28,849 million, a
decrease of ¥449 million, or 1.5%, compared to ¥29,298 million for the previous year despite an
increase in the average balance of outstanding loans from ¥148,811 million for the year ended March
31, 2005 to ¥183,965 million for the year ended March 31, 2006. The decrease in interest income
from loans receivable reflected a decline in the weighted period-end average contractual rate on
our outstanding loans from 22.1% at March 31, 2005 to 16.1% at March 31, 2006. In addition, excess
interest repayment costs, including provision for estimated losses from excess interest repayments
since March 31, 2006, of ¥977 million for the year ended March 31, 2006, compared to ¥190 million
for the year ended March 31, 2005, also contributed to the decrease in interest income from loans
receivable. See "Critical Accounting Policies — Interest Income from Loans Receivable and Loan
Origination Costs" below for further discussion of reserves for estimated losses from excess
interest repayments.
The increase in the average balance of our loans outstanding was led by an increase in our
average balance of small business owner loans of ¥6,356 million, or 11.2%, to ¥63,320 million for
the
year ended March 31, 2006 compared to ¥56,964 million for the previous fiscal year, an
increase in our average balance of Business Timely loans of ¥3,969 million, or 20.2%, to ¥23,656
million for the year ended March 31, 2006 compared to ¥19,687 million for the previous fiscal year,
and an increase in our average balance of secured loans of ¥29,520 million, or 295.9%, to ¥39,496
million for the year ended March 31, 2006 compared to ¥9,976 million for the previous fiscal year.
This increase was partially offset by a decrease in our average balance of Wide loans of ¥8,482
million, or 16.1%, to ¥44,240 million for the year ended March 31, 2006 compared to ¥52,722 million
for the previous fiscal year, and a decrease in our average balance of consumer loans of ¥2,286
million, or 43.2%, to ¥3,010 million for the year ended March 31, 2006 compared to ¥5,296 million
for the previous fiscal year.
The decline of the weighted period-end average contractual rate was primarily attributable to
a decline in the weighted period-end average rate of secured loans of 2.1 points to 6.5% at March
31, 2006, compared to 8.6% at March 31, 2005 due to the growing share of real estate financing in
our loan portfolio, which generally carries the lowest interest rates among our products, as well
as a decline in the weighted period-end average rate of small business owner loans of 1.4 points to
21.7% at March 31, 2006, compared to 23.1% at March 31, 2005 due to our increased acquisition of
high quality loans receivable derived from referral relationships, including our affiliates, which
amounted to ¥33,029 million as of March 31, 2006, an
increase of ¥739 million, or 2.3%, compared to
¥32,290 million as of the end of the previous fiscal year.
Regarding excess interest repayment costs, we recognized reserves for estimated losses on
excess interest repayments to provide for probable refund claims beginning in the year ended March
31, 2006. See "Business Overview — Regulation" in
Item 4.B. of this annual report on Form 20-F for
details. We agreed to refund excess interest payments of
¥387 million and provided reserves of ¥590
million for estimated losses on excess interest for the year ended March 31, 2006.
Loan Servicing
: Interest income from purchased loans amounted to ¥4,960 million for the year
ended March 31, 2006, an increase of ¥1,705 million, or 52.4%, compared to ¥3,255 million for the
previous fiscal year. This increase was principally due to the growth of our loan servicing
business through our subsidiary, Nissin Servicer.
Total Interest Expense
Total interest expense for the year ended March 31, 2006 decreased by ¥54 million, or 1.7%, to
¥3,105 million from ¥3,159 million for the previous fiscal year. The decrease in total interest
expense reflected our efforts in negotiating improved borrowing terms, particularly from banks,
which reduced our weighted period-end average rate of long-term borrowings from 1.9% as of March
31, 2005 to 1.4% as of March 31, 2006, despite the fact that our overall average balance of
borrowings for the year ended March 31, 2006 increased by ¥58,120 million, or 43.7%, to ¥191,081
million from ¥132,961 million for the previous fiscal year, reflecting increased capital
requirements for loan originations centering on secured loans.
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Net Interest Income
As a result of the increase in the total interest income and the decrease in our total
interest expense, net interest income for the year ended March 31, 2006 increased by ¥1,400
million, or 4.8%, to ¥30,796 million from ¥29,396 million for the previous fiscal year.
Net Interest Income After Provision for Loan Losses
Net interest income after provision for loan losses for the year ended March 31, 2006
increased by ¥513 million, or 2.5%, to ¥21,333 million from ¥20,820 million for the previous fiscal
year. Net provision for loan losses increased by ¥887 million, or 10.3%, to ¥9,463 million for the
year ended March 31, 2006, compared to ¥8,576 million for the previous fiscal year. Provision for
loan losses as a percentage of total interest income increased slightly from 26.3% for the previous
fiscal year to 27.9% for the year ended March 31, 2006. The increase in the net provision for loan
losses reflected the increase in the outstanding balance of our loans receivable and purchased
loans receivable, causing our net provision for loan losses to increase accordingly. However,
allowance for loan losses as a percentage of total loans outstanding declined from 6.46% at March
31, 2005 to 4.64% at March 31, 2006 resulting from increasing secured real estate financing, which
generally results in a lower charge-off ratio. See "Allowance for Loan Losses, Loan Charge-offs
and Provision for Loan Losses — Integrated Financial Services — Charge-off Ratios and Allowance
Ratios" below for details. We expect our provision for loan losses to continue to increase as the
outstanding balance of our loans receivable increases.
Total Non-interest Income
Total non-interest income increased by ¥3,950 million, or 66.0%, to ¥9,934 million for the
year ended March 31, 2006 from ¥5,984 million for the previous fiscal year. The increase was
primarily attributable to an increase of ¥4,221 million in net gains on sales of investment
securities to ¥3,708 million, compared to net losses of ¥513 million for the previous fiscal year.
Further, revenue from real estate for sale of ¥1,584 million, income from investment funds of
¥1,857 million and commission fees from securities business of ¥712 million, which were included in
rents, dividends and other, also contributed to the increase of total non-interest income. These
contribution factors were partially offset by a decrease of ¥1,382 million in net gain on sales of
subsidiaries and affiliates to net losses of ¥43 million for the year ended March 31, 2006 from net
gain of ¥1,339 million for the previous fiscal year, reflecting a gain on equity interest in Nissin
Servicer recognized in the previous fiscal year in connection with its listing on the Mothers
market of the Tokyo Stock Exchange. In addition, the absence of any gain on sale of consumer loans
receivable for the year ended March 31, 2006 also offset increases in our total non-interest
income. We recognized a gain on sale of consumer loans receivable in an amount of ¥3,327 million
for the previous fiscal year.
Total Non-interest Expense
Total non-interest expense increased by ¥1,702 million, or 11.4%, to ¥16,598 million for the
year ended March 31, 2006 from ¥14,896 million for the previous fiscal year. The increase resulted
primarily from increases in the operations of our subsidiaries, including Aprek, a newly acquired
subsidiary during the year ended March 31, 2006, which contributed to increases in our selling,
general and administrative expenses of ¥1,407 million, or 10.0%, to ¥15,524 million for the year
ended March 31, 2006 from ¥14,117 million for the previous fiscal year. This was primarily due to
increases in expenses such as salaries and employee benefits, occupancy, furniture and equipment,
and advertising costs. Further, income transferred to minority interests increased by ¥410 million,
to ¥602 million for the year ended March 31, 2006 from ¥192 million for the previous fiscal year,
which reflected an increase in net income of Nissin Servicer. These contributing factors were
partially offset by a decrease in net losses on sale, disposal and impairment of long-lived assets
of ¥78 million, or 83.0%, to ¥16 million for the year ended March 31, 2006 from ¥94 million for the
previous fiscal year.
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Income Before Income Taxes
Income before income taxes increased by ¥2,761 million, or 23.2%, to ¥14,669 million for the
year ended March 31, 2006 from ¥11,908 million for the previous fiscal year. Despite the slight
increase in net interest income after provision for loan losses, the increase of 23.2% in our
income before income taxes resulted primarily from an increase in our total non-interest income
reflecting net gains on sales of investment securities.
Income Taxes
Income taxes increased by ¥1,568 million, or 33.7%, to ¥6,214 million for the year ended March
31, 2006 from ¥4,646 million for the previous fiscal year. The effective tax rate applicable to us
increased from 38.4% for the previous fiscal year to 40.7% for the year ended March 31, 2006. For
the year ended March 31, 2006, the absence of a non-taxable gain on change of equity interest in
Nissin Servicer, which was recognized for the previous fiscal year, contributed to the increase in
the effective tax rate applicable to us.
Net Income
As a result of these factors, net income increased by ¥1,193 million, or 16.4%, to ¥8,455
million for the year ended March 31, 2006 from ¥7,262 million for the previous fiscal year.
Year Ended March 31, 2005, Compared to Year Ended March 31, 2004
Total Interest Income
Total interest income for the year ended March 31, 2005 was ¥32,555 million, a decrease of
¥7,552 million, or 18.8%, from ¥40,107 million for the previous fiscal year.
Integrated
Financial Services
: Interest income from loans receivable was ¥29,298 million, a
decrease of ¥8,738 million, or 23.0%, as compared to ¥38,036 million for the previous year. This
was primarily due to a decrease in the average balance of our loans outstanding which amounted to
¥148,811 million for the year ended March 31, 2005 as compared to ¥176,244 million for the previous
fiscal year. This decrease reflected the sale of most of the outstanding balance of our consumer
loans in June 2004, and a decrease in the weighted period-end average contractual interest rate on
our loans outstanding from 24.0% at March 31, 2004 to 22.1% at March 31, 2005. The decrease in
this rate reflected the growing share of small business owner loans and secured loans in our loan
portfolio, which carry lower interest rates than consumer loans.
The decrease in the average balance of our loans outstanding was led by a decrease in our
average balance of consumer loans of ¥33,304 million, or 86.3%, to ¥5,296 million for the year
ended March 31, 2005 compared to ¥38,600 million for the previous fiscal year, and a decrease in
our average balance of Wide loans of ¥8,870 million, or 14.4%, to ¥52,722 million for the year
ended March 31, 2005 compared to ¥61,592 million for the previous fiscal year. This decrease is
despite an increase in our average balance of small business owner loans of ¥1,317 million, or
2.4%, to ¥56,964 million for the year ended March 31, 2005 compared to ¥55,647 million for the
previous fiscal year, an increase in our average balance of Business Timely loans of ¥1,778
million, or 9.9%, to ¥19,687 million for the year ended March 31, 2005 compared to ¥17,909 million
for the previous fiscal year, and an increase in our average balance of secured loans of ¥7,741
million, or 346.4%, to ¥9,976 million for the year ended March 31, 2005 compared to ¥2,235 million
for the previous fiscal year.
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Despite increased customer acquisition efforts and customer acquisition channels mainly
through referral relationships with financial service providers and significant growth in our
secured loans, the average balance of our loans outstanding has decreased primarily as a result of
the sale of most of the outstanding balance of our consumer loans in June 2004. The balance of
loans outstanding derived from referral relationships, including with our affiliates, as of March
31, 2005 was ¥32,290 million, or 20.8% of our balance of loans outstanding as of the same date, and
we expect that percentage to increase in future periods as we increase our dependence on referral
relationships.
Loan
Servicing
: Interest income from purchased loans amounted to ¥3,255 million for the year
ended March 31, 2005, an increase of ¥1,186 million, or 57.3%, as compared to ¥2,069 million for
the previous fiscal year. This increase was principally due to the rapid growth of our loan
servicing business through our subsidiary Nissin Servicer.
Total Interest Expense
Total interest expense for the year ended March 31, 2005 decreased by ¥565 million, or 15.2%,
to ¥3,159 million from ¥3,724 million for the previous fiscal year. The decrease in total interest
expense reflected our efforts in negotiating improved borrowing terms, particularly from banks,
which reduced our weighted period-end average rate of long-term borrowings from 2.3% as of March
31, 2004 to 1.9% as of March 31, 2005. Further, this decrease was also contributed by the decrease
in our average balance of borrowings for the year ended March 31, 2005 of ¥13,495 million, or 9.2%,
to ¥132,961 million from ¥146,456 million for the previous fiscal year, reflecting our reduced
capital requirement for loan originations following the decrease in our average balance of loans
outstanding.
Net Interest Income
As a result of the decrease in our total interest income and the decrease in our total
interest expense, net interest income for the year ended March 31, 2005 decreased by ¥6,987
million, or 19.2%, to ¥29,396 million from ¥36,383 million for the previous fiscal year.
Net Interest Income After Provision for Loan Losses
Net interest income after provision for loan losses for the year ended March 31, 2005
decreased by ¥2,102 million, or 9.2%, to ¥20,820 million from ¥22,922 million for the previous
fiscal year. Net provision for loan losses decreased by ¥4,885 million, or 36.3%, to ¥8,576
million for the year ended March 31, 2005, compared to ¥13,461 million for the previous fiscal
year. Provision for loan losses as a percentage of total interest income decreased from 33.6% for
the previous fiscal year to 26.3% for the year ended March 31, 2005. The decrease in our provision
for loan losses reflects the sale of most of the outstanding balance of our consumer loans in June
2004, despite an increase in loan defaults which reflects the difficult economic environment in
Japan. The allowance for loan losses as a percentage of total loans outstanding declined from
7.54% at March 31, 2004 to 6.46% at March 31, 2005 resulting from the sale. This reduction was
partially offset by increased allowance for loan losses caused by concerns over the Japanese
economy. We expect the number of loan defaults to continue to increase, given the current economic
conditions in Japan.
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Table of Contents
Total Non-interest Income
Total non-interest income increased by ¥5,254 million, or 719.7%, to ¥5,984 million for the
year ended March 31, 2005 from ¥730 million for the previous fiscal year. The increase resulted
primarily from a gain on sale of our consumer loans of ¥3,327 million. Further, net gain on sales
of subsidiaries
and affiliates increased by ¥669 million, or 99.9%, to ¥1,339 million for the year ended March
31, 2005 from ¥670 million for the previous fiscal year, which reflected a gain on equity interest
in Nissin Servicer in conjunction with its listing on the Mothers market of the Tokyo Stock
Exchange. Net guarantee fees received increased by ¥204 million, or 180.5%, to ¥317 million for
the year ended March 31, 2005 from ¥113 million for the previous fiscal year, which reflected the
developments in our guarantee business. Revenue from property for sale of ¥477 million and
operation support fees received in connection with the sale of loans receivable of ¥392 million,
which were included in rents, dividends and other, also contributed to this increase. These
contributing factors were partially offset by an increase in net losses on sale and impairment of
investment securities of ¥245 million, or 91.4%, to ¥513 million for the year ended March 31, 2005
from ¥268 million for the previous fiscal year.
Total Non-interest Expense
Total non-interest expense increased by ¥1,903 million, or 14.6%, to ¥14,896 million for the
year ended March 31, 2005 from ¥12,993 million for the previous fiscal year. The increase resulted
primarily from increases in the operations of our subsidiaries, which contributed to increases in
our selling, general and administrative expenses of ¥1,755 million, or 14.2%, to ¥14,117 million
for the year ended March 31, 2005 from ¥12,362 million for the previous fiscal year, which
reflected increases in expenses such as occupancy, furniture and equipment, advertising costs, and
taxes and duties. Further, income transferred to minority interests increased by ¥188 million, to
¥192 million for the year ended March 31, 2005 from ¥4 million for the previous fiscal year, which
reflected increases in net income of Nissin Servicer. These contributing factors were partially
offset by a decrease in losses on sale, disposal and impairment of long-lived assets of ¥436
million, or 82.3%, to ¥94 million for the year ended March 31, 2005 from ¥530 million for the
previous fiscal year.
Income Before Income Taxes
Income before income taxes increased by ¥1,249 million, or 11.7%, to ¥11,908 million for the
year ended March 31, 2005 from ¥10,659 million for the previous fiscal year. Although our net
interest income after provision for loan losses decreased compared to the previous fiscal year, the
increase in our income before income taxes resulted primarily from an increase in our total
non-interest income reflecting the gain on sale of our consumer loans.
Income Taxes
Income taxes increased slightly by ¥64 million, or 1.4%, to ¥4,646 million for the year ended
March 31, 2005 from ¥4,582 million for the previous fiscal year. The effective tax rate applicable
to us decreased from 43.0% for the previous fiscal year to 38.4% for the year ended March 31, 2005
due to a non-taxable gain on change of equity interest in Nissin Servicer, which listed its shares
on the Mothers market of the Tokyo Stock Exchange.
Net Income
As a result of these factors, net income increased by ¥1,185 million, or 19.5%, to ¥7,262
million for the year ended March 31, 2005 from ¥6,077 million for the previous fiscal year.
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Financial Condition
The following table provides selected balance sheet data as of March 31, 2005 and 2006:
As of March 31,
2005
2006
(in millions)
Total assets
¥
228,401
¥
359,943
Cash and cash equivalents
25,709
22,860
Loans receivable, net
146,119
225,947
Purchased loans receivable, net
13,581
24,155
Real estate for sale
1,136
20,792
Investment securities
28,443
42,071
Property and equipment, net
5,285
11,169
Deferred income taxes
333
721
Total liabilities
160,284
277,006
Short-term borrowings
12,600
60,411
Long-term borrowings
136,844
198,924
Deferred income taxes
4,439
1,382
Total shareholders' equity
66,971
80,504
Total assets increased by ¥131,542 million to ¥359,943 million at March 31, 2006,
compared to ¥228,401 million at the end of the previous fiscal year. The increase was primarily
due to a significant increase in net loans receivable reflecting the enhancement of loans to
business owners as we focused our efforts on real estate financing, which resulted in a significant
increase in secured loans. It was also due to the acquisition of Aprek, an increase in net
purchased loans receivable reflecting favorable growth in the loan servicing business, an increase
in real estate for sale reflecting the increases in the activities of our real estate-related
business, an increase in investment securities resulting from active investments in venture
businesses in hopes of producing synergies with our existing businesses, and an increase in
property and equipment resulting from acquisition of real estate by entities which are consolidated
by us in accordance with FIN No. 46(R), "Consolidation of Variable Interest Entities," or VIEs.
Total liabilities increased by ¥116,722 million to ¥277,006 million at March 31, 2006,
compared to ¥160,284 million at the end of the previous fiscal year. This change was due to a
significant increase in both short-term and long-term borrowings primarily reflecting our increased
capital requirements for loan origination centering on real estate financing. Also, our deferred
income tax liabilities decreased due to a decline in unrealized gains on marketable securities.
Total shareholders' equity increased by ¥13,533 million to ¥80,504 million at March 31, 2006,
compared to ¥66,971 million at the end of the previous fiscal year. This was mainly attributable
to an increase in common stock and additional paid-in capital primarily due to conversion of
convertible bonds, as well as an increase in our net income, offset by a decrease in cumulative
other comprehensive income due to a decrease in unrealized gains on marketable securities, which
reflects the sales of certain marketable securities as well as decline in market valuation of our
marketable securities, compared to the previous fiscal year. However, as our total borrowings
increased considerably, shareholders' equity as a percentage of total assets decreased by 6.9
points to 22.4% at March 31, 2006, compared to 29.3% at the end of the previous fiscal year.
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Table of Contents
Allowance for Loan Losses, Loan Charge-offs and Provisions for Loan Losses
We maintain our allowances for loan losses at a level that we believe is adequate to provide
for estimated probable uncollectible loan losses from known and inherent risks in our loan
portfolio. For all of our loan products, we generally determine our allowance for loan losses
based on various factors
including the risk profile and status of the borrower and, if applicable, guarantor, economic
conditions, unemployment rates, bankruptcy cases and historical loss experience. We have not made
any significant changes in estimation methods or assumptions in calculating the allowance for loan
losses in recent years.
Integrated Financial Services
Increases in our allowance are made by charges to our provision for loan losses. Recoveries
of previously charged-off amounts are deducted from our provision for loan losses for the year in
which the recoveries occur. Based on the amount of our loans outstanding and our allowance ratio,
we then supplement the remaining balance through our provisions for loan losses. The following
table provides information on our allowance for loan losses along with amounts provided for our
loan losses and charge-offs, net of recoveries and other, with respect to our integrated financial
services segment for the years ended March 31, 2004, 2005 and 2006:
Year ended March 31,
2004
2005
2006
(in millions)
Balance at beginning of period
¥
11,827
¥
13,528
¥
10,034
Provision for loans receivable sold
—
(3,327
)
—
Provision for loan losses
12,824
7,759
8,277
Charge-offs, net of recoveries, and other
(11,123
)
(7,926
)
(7,308
)
Balance at end of period
¥
13,528
¥
10,034
¥
11,003
Recent growth in our total loans outstanding reflecting increased loans to business
owners contributed to the rise in our provision for loan losses between the years ended March 31,
2005 and 2006. However, the sale of most of the outstanding balance of our consumer loans in June
2004 contributed to the decrease in our provision for loan losses between the years ended March 31,
2004 and 2005, despite an increase in loan defaults, which reflected the uncertainties in Japan's
current economic environment.
Upon closing each reporting period, we charge off our loans in the following manner:
•
Guaranteed Loans
. We generally charge off or provide an allowance for loan losses
on small business owner loans and Wide loans in default at the end of the semi-annual
period in which the default occurs and we believe the likelihood of any future
collection from the borrower as well as the guarantor is minimal. We charge off
guaranteed loans to customers who have declared bankruptcy at the end of the
semi-annual period in which we become aware of the bankruptcy filing.
•
Unguaranteed Loans
. We generally charge off Business Timely loans and consumer
loans for which interest payments have been delinquent for 67 days. We charge off
Business Timely loans and consumer loans to customers who have declared bankruptcy
immediately after we become aware of the bankruptcy filing. Because of our rapid
charge-off, we do not place Business Timely loans or consumer loans that have become
delinquent loans, which we define as loans on which interest payments are delinquent,
on non-accrual status before they are charged off.
•
Secured Loans
. We generally charge off or provide an allowance for loan losses on
secured loans in default at the end of the semi-annual period in which the default
occurs after considering the availability and value of collateral.
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Charge-off Ratios and Allowance Ratios
The following table provides information on our loans outstanding, allowance for loan losses,
the ratio of allowance for loan losses to total loans outstanding, as well as average balance of
loans outstanding, loans charged-off and the ratio of loans charged-off to the average balance of
loans outstanding:
Year ended/as of March 31,
2004
2005
2006
(in millions except percentages)
Small business owner loans
Loans outstanding
¥
57,168
¥
58,961
¥
65,447
Allowance for loan losses
3,677
3,606
4,711
Ratio of allowance for loan losses to loans outstanding
6.4
%
6.1
%
7.2
%
Average balance of loans outstanding
55,647
56,964
63,320
Loans charged-off
2,468
2,809
3,128
Ratio of loans charged-off to average balance of loans
outstanding
4.4
%
4.9
%
4.9
%
Business Timely loans
Loans outstanding
¥
18,659
¥
20,862
¥
25,282
Allowance for loan losses
1,962
2,231
2,694
Ratio of allowance for loan losses to loans outstanding
10.5
%
10.7
%
10.7
%
Average balance of loans outstanding
17,909
19,687
23,656
Loans charged-off
1,787
1,999
2,174
Ratio of loans charged-off to average balance of loans
outstanding
10.0
%
10.2
%
9.2
%
Secured loans
Loans outstanding
¥
10,003
¥
18,812
¥
91,610
Allowance for loan losses
274
761
558
Ratio of allowance for loan losses to loans outstanding
2.7
%
4.0
%
0.6
%
Average balance of loans outstanding
2,235
9,976
39,496
Loans charged-off
100
22
22
Ratio of loans charged-off to average balance of loans
outstanding
4.5
%
0.2
%
0.1
%
Wide loans
Loans outstanding
¥
57,460
¥
47,604
¥
41,163
Allowance for loan losses
3,661
2,897
2,372
Ratio of allowance for loan losses to loans outstanding
6.4
%
6.1
%
5.8
%
Average balance of loans outstanding
61,592
52,722
44,240
Loans charged-off
2,978
2,815
2,275
Ratio of loans charged-off to average balance of loans
outstanding
4.8
%
5.3
%
5.1
%
Consumer loans
Loans outstanding
¥
35,604
¥
2,827
¥
2,995
Allowance for loan losses
3,868
308
213
Ratio of allowance for loan losses to loans outstanding
10.9
%
10.9
%
7.1
%
Average balance of loans outstanding
38,600
5,296
3,010
Loans charged-off
4,426
779
412
Ratio of loans charged-off to average balance of loans
outstanding
11.5
%
14.7
%
13.7
%
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Year ended/as of March 31,
2004
2005
2006
(in millions except percentages)
Other loans
Loans outstanding
¥
573
¥
6,296
¥
10,681
Allowance for loan losses
86
231
455
Ratio of allowance for loan losses to loans outstanding
15.0
%
3.7
%
4.3
%
Average balance of loans outstanding
261
4,166
10,243
Loans charged-off
2
83
108
Ratio of loans charged-off to average balance of loans
outstanding
0.8
%
2.0
%
1.1
%
Total
Loans outstanding
¥
179,467
¥
155,362
¥
237,178
Allowance for loan losses
13,528
10,034
11,003
Ratio of allowance for loan losses to loans outstanding
7.5
%
6.5
%
4.6
%
Average balance of loans outstanding
176,244
148,811
183,965
Loans charged-off
11,761
8,507
8,119
Ratio of loans charged-off to average balance of loans
outstanding
6.7
%
5.7
%
4.4
%
Charge-off Ratios
: Our Business Timely loans and consumer loans have higher charge-off
ratios than our small business owner loans and Wide loans primarily because Business Timely loans
and consumer loans do not require guarantors and have less rigorous screening requirements than
small business owner loans and Wide loans. We have changed our loan mix in recent years to improve
our charge-off ratios. For example, the sales of most of the outstanding balance of our consumer
loans in June 2004, which had a charge-off ratio of over 10% in the previous 3 years lowered our
overall charge-off ratio. We have also striven to accumulate high quality loans receivable
centering on real estate financing. As a result, our overall charge-off ratio decreased from 6.7%
for the year ended March 31, 2004 to 5.7% for the year ended March 31, 2005. This ratio decreased
further to 4.4% for the year ended March 31, 2006, primarily due to the increase of secured loans,
which have a lower charge-off ratio.
Allowance Ratios
: The overall ratio of allowances for loan losses to total loans outstanding
decreased from 7.5% as of March 31, 2004 to 6.5% as of March 31, 2005, resulting from the change in
our loan mix resulting from the sale of most of the outstanding balance of our consumer loans in
June 2004, and decreased further to 4.6% as of March 31, 2006 due to the expansion of secured loans
centering on real estate financing, despite an increase in ratio of allowance for loan losses to
loans outstanding of our small business owner loans reflecting the uncertainties in Japan's
economic environment, which has negatively affected the repayment ability of many of our
long-standing customers. Regarding secured loans, ratio of allowance for loans losses to loans
outstanding declined remarkably from 4.0% as of March 31, 2005 to 0.6% as of March 31, 2006. This
decline reflected a significant increase in real estate financing to property developers by our
Real Estate Finance Department, which are specifically reviewed on determination of allowances for
estimated losses. We started offering these loans beginning in February 2004 and we had not
charged off any of these loans in the past, therefore we maintained the allowances at a very low
level, which we believe is adequate to provide for the estimated losses from these loans. This
factor has contributed to a decline of approximately 9.1 points in the ratio of secured loans with
specific allowances provided to secured loans outstanding from 9.4% as of March 31, 2005 to 0.3% as
March 31, 2006. This represented an increased proportion of high quality secured loans receivable
in our loan portfolio.
Delinquent Loans and Non-accrual Loans
Delinquent Loans
: Delinquent loans still accruing interest are loans with respect to which
interest payments are delinquent, but which have not been put on non-accrual status or charged off.
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Non-accrual Loans
: Non-accrual loans are loans that no longer accrue interest, as collection
of the entire principal is deemed unlikely. We place loans on non-accrual status when they are
either partially or fully reserved for or are charged off due to our assessment that full or
partial collection is unlikely.
Our non-accrual loans comprise restructured loans and loans with a specific allowance
provided.
•
Restructured Loans
. Restructured loans are comprised of loans with respect to which
terms have been revised such as waiver, postponement or partial forgiveness of interest
or principal payments for the benefit of the borrower in order to secure some return on
the loan. Impaired loans are included in restructured loans and represent loans we
have specifically identified as partially or wholly uncollectable due to the bankruptcy
of the borrower, lack of collateral or other various reasons. We reserve for the
amounts of impaired loans and related accrued interest deemed uncollectable in our
allowance for loan losses. The decrease in impaired loans between March 31, 2004 and
March 31, 2005 reflected the decrease in impaired consumer loans as a result of the
sale of most of the outstanding balance of our consumer loans in June 2004. The
decrease in impaired loans between March 31, 2005 and March 31, 2006 reflected the
decrease in impaired Wide loans as we strategically have shifted toward promotion of
financial services to business owners.
•
Loans with Specific Allowances Provided
. Loans with specific allowances provided
are delinquent loans for which we increase allowances beyond the general allowance. We
provide specific allowances only for small business owner loans, Wide loans, secured
loans and other loans.
The following table provides information on our delinquent loans still accruing interest and
our non-accrual loans, which comprise restructured loans, including impaired loans, and loans with
specific allowances provided:
As of March 31,
2004
2005
2006
(in millions)
Small business owner loans
Delinquent loans still accruing interest
¥
936
¥
719
¥
1,022
Non-accrual loans
(1)
8,412
9,064
10,717
Restructured loans
5,768
6,371
6,917
Impaired loans included in restructured loans
1,183
1,388
1,250
Loans with specific allowance provided
2,644
2,693
3,800
Business Timely loans
Delinquent loans still accruing interest
¥
430
¥
351
¥
515
Non-accrual loans
(1)
516
567
779
Restructured loans
516
567
779
Impaired loans included in restructured loans
120
158
188
Loans with specific allowance provided
—
—
—
Secured loans
Delinquent loans still accruing interest
¥
93
¥
186
¥
77
Non-accrual loans
(1)
156
1,836
963
Restructured loans
87
71
665
Impaired loans included in restructured loans
—
—
—
Loans with specific allowance provided
69
1,765
298
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As of March 31,
2004
2005
2006
(in millions)
Wide loan
Delinquent loans still accruing interest
¥
903
¥
500
¥
693
Non-accrual loans
(1)
9,227
8,654
7,383
Restructured loans
6,852
6,758
5,934
Impaired loans included in restructured loans
1,688
1,757
1,398
Loans with specific allowance provided
2,375
1,896
1,449
Consumer loans
Delinquent loans still accruing interest
¥
1,148
¥
94
¥
124
Non-accrual loans
(1)
1,182
108
103
Restructured loans
1,182
108
103
Impaired loans included in restructured loans
528
19
34
Loans with specific allowance provided
—
—
—
Other loans
Delinquent loans still accruing interest
¥
—
¥
—
¥
10
Non-accrual loans
(1)
87
29
68
Restructured loans
14
—
12
Impaired loans included in restructured loans
—
—
—
Loans with specific allowance provided
73
29
56
Total
Delinquent loans still accruing interest
¥
3,510
¥
1,850
¥
2,441
Non-accrual loans
(1)
19,580
20,258
20,013
Restructured loans
14,419
13,875
14,410
Impaired loans included in restructured loans
3,519
3,322
2,870
Loans with specific allowance provided
5,161
6,383
5,603
(1)
The amounts of non-accrual loans represent the balance of non-accrual loans outstanding
before allowances for loan losses.
Loan Servicing
We record purchased loans at cost. We then establish an allowance for estimated loan losses
and employ one of two methods to determine if further allowances are appropriate. Under the cost
recovery method, if we determine that we cannot recover our cost, an allowance for the expected
uncollectible portion is established, and the loan is charged off once we deem the loan
uncollectible. Under the level yield method, which is used for those purchased loans for which we
can reasonably estimate the expected timing and amount of cash flows, if the carrying amounts of
those loans are greater than the present value of expected future cash flows from those loans, the
difference is recorded as an allowance for the uncollectible portion.
The following table provides information on our allowance for loan losses along with amounts
provided for loan losses and charge-offs with respect to our loan servicing segment:
Year ended March 31,
2004
2005
2006
(in millions)
Balance at beginning of period
¥
132
¥
717
¥
1,282
Provision for loan losses
637
817
1,186
Charge-offs
(52
)
(252
)
(676
)
Balance at end of period
¥
717
¥
1,282
¥
1,792
See also "Critical Accounting Policies – Purchased Loans Receivable and Revenue
Recognition" below.
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Critical Accounting Policies
The following describes our critical accounting policies that affect our more significant
judgments and estimates used in the preparation of our financial statements. The preparation of
our financial statements in conformity with U.S. GAAP requires us to make estimates and judgments
that affect the reported amounts of assets and liabilities, revenues and expenses, and related
disclosures of contingent assets and liabilities. These estimates are based on, but not limited
to, historical results, industry standards and current economic conditions, giving due
consideration to materiality. Our estimates are based on information that is currently available
to us and on various other assumptions that we believe are reasonable under the circumstances.
Actual results may vary materially from those estimates, and those estimates could differ, under
different assumptions or conditions.
On an ongoing basis, we evaluate our critical accounting policies, including those related to
interest income from loans receivable and loan origination costs, loans receivable and allowance
for loan losses, and purchased loans receivable and revenue recognition.
Interest Income from Loans Receivable and Loan Origination Costs
We recognize interest income from our loans except for our purchased loans on an accrual basis
based on the principal amount outstanding. In Japan, the maximum interest rates are set by law at
two general levels: an absolute maximum rate (legal limit) and a lower interest rate based on the
principal amount of the loan (restricted rate). Our contractual loan interest rates do not exceed
the legal limit but may exceed the restricted rate. We may charge interest rates in excess of the
restricted rate as long as it meets the specified requirements. Borrowers have a right to refuse
to pay interest in excess of the restricted rate, and we cannot legally require borrowers to pay
the excess interest. However, once a borrower has paid interest in excess of the restricted rate,
and provided that we have complied with the specified legal documentation and notification
procedures, we have no legal or contractual obligation to refund or otherwise reimburse the excess
interest payments.
Based on our recognition of the risk involved in charging interest rates above the restricted
rate, even if under the legal limit, we recognize accrued interest income on our loans receivable
outstanding as of the balance sheet date at the lower of the restricted rate or the contractual
interest rate. Contractual interest in excess of the restricted rate is recognized as interest
income when collected, provided there are no remaining legal obligations to refund this excess
portion. Accrual of interest income is suspended when loan principal is charged off or is wholly
or partially reserved. The accrued interest portion of a charged off loan balance is deducted from
the current period interest income and the principal amount is charged off against the allowance
for loan losses.
We maintain reserves for estimated losses from the above-mentioned excess interest repayments
at a level that we believe is adequate to provide for estimated probable refund claims of excess
interest previously paid by borrowers. Provisions to the reserve are deducted from interest
income. In evaluating the adequacy of the reserve, we consider various factors, including recent
conditions on repayments of excess interest and historical loss experience.
We capitalize direct origination costs and defer fees on successful loan originations. Loan
origination costs, net of loan origination fees, are deferred and amortized over the contractual
life of loans, which averaged approximately 49 months as of March 31, 2006.
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Loans Receivable and Allowance for Loan Losses
We report loans receivable at the principal amount less an allowance for loan losses. The
allowance for loan losses is maintained at a level that we believe is adequate to provide for
estimated probable uncollectible loan losses from known and inherent risks in our loan portfolios.
Increases to the allowance are made by charges to the provision for loan losses. Recoveries of
previously charged-off amounts are deducted from the provision for loan losses. Allowances are
reviewed both on an individual loan and portfolio basis. In evaluating the adequacy of the
allowance, we consider various factors, including current economic conditions, such as unemployment
rates, bankruptcy cases and historical loss experience. Restructured loans include any loans for
which interest, principal or term is restructured. Allowances for restructured loans are based on
collection history or legal classification of the borrowers.
Our policy is generally to charge off loan balances and cease accrual of interest as follows:
•
Guaranteed Small Business Owner Loans and Wide Loans
: Loan balances are charged off
when we believe the likelihood of any future collection is minimal. Events triggering
charge-offs include bankruptcy of both the borrower and guarantor. In the case that
loans are restructured, we charge off the amount of the recorded loan balance less the
restructured loan balance. Interest accrual is terminated at the earlier of the date
when contractual payments are 97 days delinquent or the date when all or a part of loan
principal is deemed uncollectible.
•
Unguaranteed Business Timely Loans and Consumer Loans
: Loan balances are charged
off and interest accrual is terminated when a loan's contractual payment becomes 67
days delinquent or upon the occurrence of other events such as bankruptcy of the
borrower.
•
Secured Loans
: Loan balances are charged off when we believe the likelihood of any
future collection is minimal. We consider the availability and value of collateral in
determining the level of charge-off. Interest accrual is terminated at the earlier of
the date when contractual payments are 97 days delinquent or the date when all or a
part of loan principal is deemed uncollectible.
Purchased Loans Receivable and Revenue Recognition
In December 2003, the Accounting Standards Executive Committee issued Statement of Position
("SOP") 03-3, "Accounting for Certain Loans or Debt
Securities Acquired in a Transfer". SOP 03-3
addresses accounting for differences between contractual cash flows and cash flows expected to be
collected from an investor's initial investment in loans or debt securities acquired in a transfer.
We have adopted SOP 03-3 beginning April 1, 2005.
Cost Recovery Method
Purchased loans represent loans purchased from third party originators and are reported at
purchased cost. We then establish an allowance for estimated loan losses on reduced credit quality
subsequent to acquisition. Due to the non-performing status of these loans when initially
purchased and lack of history with the borrowers, subsequent to acquisition, we initially recognize
revenue from these loans using the cost recovery method. Under this method, payments from a
borrower are first applied to loan principal. Once the purchased cost is fully recovered,
subsequent receipts are recognized as interest income. If we determine that we cannot recover our
cost, an allowance for the expected uncollectible portion is established. This determination is
made based on numerous factors including the length of non-payment, extent of deviation from the
agreed upon payment plan, accessibility of the borrower and
bankruptcy or death of the borrower. The loan is written off once we deem the loan
uncollectible. The amount of the book value of the loans accounted for under this method was
¥12,745 million, or 93.8% of our net purchased loans receivable as of March 31, 2005 and ¥23,228
million, or 96.2% of our net purchased loans receivable as of March 31, 2006.
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Level Yield Method
For those purchased loans for which we can reasonably estimate the expected timing and amount
of cash flows, we use those expected future cash flows to record the loans receivable and amortize
the implied interest into revenue using the level yield method. Our determination to use the level
yield method, rather than the cost recovery method, to account for a purchased loan depends on our
judgment regarding the borrower's ability to meet the restructured payments following our
negotiation with the borrower. We will adjust the future yield rate for expected changes in
interest rates or collections. If the carrying amounts of those loans are greater than the present
value of expected future cash flows from those loans due to delinquency in payment or use of legal
means by the borrower, the difference is recorded as an allowance for the uncollectible portion.
The amount of the book value of the loans accounted for under the level yield method was ¥836
million, or 6.2% of our net purchased loans receivable as of March 31, 2005 and ¥927 million, or
3.8% of our net purchased loans receivable as of March 31, 2006.
Accounting Developments
In December 2004, the FASB issued SFAS No. 123-R (revised 2004) "Share-Based Payment," a
revision of SFAS No. 123 "Accounting for Stock-Based Compensation." SFAS No. 123-R requires a
public entity to measure the cost of employee services received in exchange for an award of equity
instruments based on the grant-date fair value of the award. In April 2005, the Securities and
Exchange Commission ("SEC") delayed the effective date of FASB Statement No. 123-R to the annual
reporting period that began after June 15, 2005, and for us, this date is April 1, 2006. We expect
the adoption of this statement will reduce our reported net income and earnings per share. The
effect of adopting this statement on our historical consolidated financial statements of operations
is reflected on our pro forma in the "Financial Statements — Notes to Consolidated Financial
Statements — Summary of Significant Accounting Policies".
B. Liquidity and Capital Resources.
Cash Flows
We had cash and cash equivalents ("cash") totaling ¥22,860 million as of March 31, 2006, a
decrease of ¥2,849 million, or 11.1%, from ¥25,709 million as of March 31, 2005. We had cash
totaling ¥25,709 million as of March 31, 2005, an increase of ¥5,466 million, or 27.0%, from
¥20,243 million as of March 31, 2004.
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The following table shows information about our cash flows during the years ended March 31,
2004, 2005 and 2006:
Year ended March 31,
2004
2005
2006
(in millions)
Net cash provided by operating activities
¥
21,942
¥
14,686
¥
24,270
Net cash used in investing activities
(18,301
)
(12,546
)
(135,976
)
Net cash (used in) provided by financing activities
(7,010
)
3,335
108,675
Effect of exchange rate changes on cash
—
(9
)
182
Net (decrease) increase in cash
(3,369
)
5,466
(2,849
)
Cash Flows during the Year Ended March 31, 2006
Operating Activities
Net cash provided by operating activities for the year ended March 31, 2006 was ¥24,270
million, an increase of ¥9,584 million, or 65.3%, compared to ¥14,686 million for the previous
fiscal year. Cash inflows were primarily attributable to an increase of ¥1,193 million, or 16.4%,
in our net income to ¥8,455 million for the year ended March 31, 2006, ¥9,463 million in net
provision for loan losses and a ¥5,521 million in net increase of accrued income taxes and
expenses. These factors, resulting in the increase in net cash provided by operating activities,
were partially offset by ¥3,708 million in net gains on sales of investment securities, as well as
¥1,460 million in deferred income tax benefits.
Investing Activities
Net cash used in investing activities for the year ended March 31, 2006 was ¥135,976 million,
an increase of ¥123,430 million, or 983.8%, compared to ¥12,546 million for the previous fiscal
year. Cash outflows were primarily attributable to ¥82,347 million used in net origination of
loans receivable reflecting the growth in our loans to small and medium-sized business owners
centering on real estate financing, ¥12,112 million used in net acquisition of purchased loans
receivable reflecting the active operations in our loan servicing business, ¥14,087 million used in
net purchases of investment securities reflecting increases of investments in venture business in
hopes of producing synergies with our existing businesses, ¥19,304 million used in net acquisitions
of real estate for sale reflecting expansion of real estate-related businesses mainly operated by
NIS Property, and ¥6,365 million used in net purchases of property and equipment reflecting
acquisitions of real estate by VIEs consolidated by us in accordance with FIN No. 46(R).
Financing Activities
Net cash provided by financing activities was ¥108,675 million for the year ended March 31,
2006, an increase of ¥105,340 million, or 3,158.6%, compared to ¥3,335 million for the previous
fiscal year. Cash inflows were primarily attributable to ¥65,493 million provided by net proceeds
from long-term borrowings and ¥46,828 million provided by net proceeds from short-term borrowings
reflecting the increased capital requirement for our loan business, centering in real estate
financing, as well as ¥2,207 million provided by net proceeds from sale of treasury stock
reflecting exercises of stock options by our directors and employees. Inflow factors were
partially offset by ¥2,571 million in net increase of deposit of restricted cash mainly pledged as
collateral for borrowings from banks by Nissin Servicer and Nissin Leasing (China), and ¥2,670
million used for dividend payments to our shareholders and minority shareholders of a subsidiary.
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Cash Flows during the Year Ended March 31, 2005
Operating Activities
Net cash provided by operating activities for the year ended March 31, 2005 was ¥14,686
million, a decrease of ¥7,256 million, or 33.1%, compared to ¥21,942 million for the previous
fiscal year. This change was primarily attributable to a decrease of ¥6,987 million, or 19.2%,
in our net interest income, a decrease of ¥4,885 million, or 36.3%, in our net provision for loan
losses and a gain on sale of loans receivable of ¥3,327 million, which reflected the sale of most
of the outstanding balance of our consumer loans to Orient Credit as discussed in further detail in
"Results of Operations — Year Ended March 31, 2005, Compared to Year Ended March 31, 2004".
Further, gain on equity interest in Nissin Servicer of ¥1,339 million in conjunction with its
listing on the Mothers market of the Tokyo Stock Exchange and a decrease of ¥2,123 million in net
changes in accrued income taxes and expenses also contributed to this change. These contributing
factors were offset by an increase of ¥2,060 million in deferred income tax expenses.
Investing Activities
Net cash used in investing activities for the year ended March 31, 2005 was ¥12,546 million, a
decrease of ¥5,755 million, or 31.4%, compared to ¥18,301 million for the previous fiscal year.
This change was primarily attributable to proceeds of ¥32,697 million from the sale of most of the
outstanding balance of our consumer loans offset by an increase of ¥3,851 million in our net
origination of loans receivable, an increase of ¥8,023 million in our net purchases of distressed
loans, which reflected the developments in our loan servicing business, an increase of ¥12,903
million in our purchases of investment securities and an increase of ¥874 million in our purchases
of property and equipment in connection with acquisition of software for the development of our new
operating system infrastructure.
Financing Activities
Net cash provided by financing activities was ¥3,335 million for the year ended March 31,
2005, compared to net cash used in financing activities in the amount of ¥7,010 million for the
previous fiscal year. This change was primarily attributable to an increase of ¥7,429 million in
our net proceeds from short-term borrowings and a decrease of ¥1,252 million in our net repayment
of long-term borrowings, which reflected increased capital requirements for our loan servicing
business. Furthermore, an increase of ¥1,607 million in our proceeds from issuance of new shares
by subsidiaries, which reflected Nissin Servicer's listing on the Mothers market of the Tokyo Stock
Exchange. A decrease of ¥1,208 million in our purchases of treasury stock also contributed to this
change. These contributing factors were partially offset by a decrease of ¥1,170 million in our
proceeds from exercise of stock warrants and an increase of ¥299 million in dividend payments.
Capital Requirements
In our business operations, our principal capital and liquidity needs are for funding loans to
customers and purchases of distressed loans from banks and other financial institutions, payment of
principal and interest on outstanding borrowings, general and administrative expenses, capital
expenditures to finance the growth of our business, strategic investments and payment of cash
dividends and stock repurchases.
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Funding Loan Origination and Loan Servicing
We require capital to provide new loans and to purchase distressed loans from banks and other
financial institutions.
Loan
Origination
: As we are principally in the business of providing loans to customers, our
most critical capital requirement is loan origination. As of March 31, 2006, our total loans
outstanding were in the amount of ¥237,178 million, an increase of ¥81,816 million, or 52.7%, as
compared to ¥155,362 million as of the end of the previous year reflecting the enhancement of loans
to business owners as we focused our efforts on real estate financing which resulted in significant
increase in secured loans, as well as the acquisition of Aprek in December 2005. Our capital
requirements for loan origination have been easier to meet in recent years. However, because we
expect our loan portfolio to grow due to increasing demand for small and medium-sized business
owner financing, our capital requirements to fund loan origination may become more demanding.
Loan
Servicing
: Since October 2001, when we commenced our loan servicing operations through
Nissin Servicer, our capital requirements for purchases of distressed loans from banks and other
financial institutions have been increasing. We purchased distressed loans in the aggregate amount
of ¥16,896 million for the year ended March 31, 2005 and ¥19,779 million for the year ended March
31, 2006. We expect our capital requirements for our loan servicing segment to increase in the
short to medium term.
Payments of Interest and Principal Borrowings
We require capital for payments of interest and principal on our outstanding borrowings. For
a further discussion, see "— Commitments" below.
General and Administrative Expenses
We require capital for general and administrative expenses, including salaries and employee
benefits, occupancy, furniture and equipment, etc. In recent years, we have made efforts to reduce
our general and administrative expenses as a percentage of our interest income, and intend to
continue these efforts. Our general and administrative expenses were ¥14,117 million, or 43.4% of
our total interest income, for the year ended March 31, 2005 and ¥15,524 million, or 45.8%, for the
year ended March 31, 2006, respectively.
Capital Expenditures
The following table provides our capital expenditures calculated on a cash basis:
For the year ended March 31,
2004
2005
2006
(in millions)
Capital expenditures
¥
880
¥
1,754
¥
6,368
Our capital expenditures for the above stated periods were mainly used to acquire
property and equipment in connection with the establishment and relocation of our loan and other
offices and branches throughout Japan, relocation of our subsidiary's head offices, as well as
acquisition of intangible assets in connection with the implementation and development of our new
operating system. Recently, we used our capital expenditures in acquisition of property and
equipment through VIEs which were consolidated by us in accordance
with FIN No. 46 (R). We have
budgeted main capital expenditures in the amount of approximately ¥105 million for the year ending March 31, 2007, primarily for the
refurbishment and renovation of our head office, and renovation and relocation of our branches and
loan offices.
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Strategic Investments
We invest in enterprises that have the potential to complement our business strategically
whose values are expected to appreciate:
•
Affiliates
. Some of these enterprises are our affiliates. Our total initial
investments in these affiliates amounted to ¥735 million as of March 31, 2005 and ¥792
million as of March 31, 2006. These affiliates had a book carrying value of ¥514
million as of March 31, 2005 and ¥617 million as of March 31, 2006.
•
Non-affiliates
. These are investments in enterprises that we view as potential
strategic partners, rather than sources of potential capital gains. Our total initial
investments in these enterprises amounted to ¥9,019 million as of March 31, 2005 and
¥19,490 million as of March 31, 2006. These enterprises had a book carrying value of
¥20,376 million as of March 31, 2005 and ¥28,057 million as of March 31, 2006.
Dividends and Stock Repurchases
Cash Dividends
: Historically we have paid cash dividends twice per year. Our board of
directors presently intends to continue to pay cash dividends on a semi-annual basis and to provide
a stable level of dividends to our shareholders. Pursuant to the Articles of Incorporation which
were amended on June 24, 2006, the Board of Directors, instead of the Shareholders' Meeting, have
the right to distribute retained earnings on the stipulated record dates and/or other dates as the
record date pursuant to the Japanese Corporate Law. Starting from the year ended March 31, 2005,
in order to reflect consolidated results as an indicator for our business performance, we changed
our dividend policy and plan to maintain a dividend payout ratio of 30% on the consolidated net
income basis. The declaration and payment of dividends, however, depends on our future earnings,
financial condition and other factors, including statutory and other restrictions on the payment of
dividends. We paid cash dividends in an amount of ¥1,001 million for the year ended March 31,
2004, ¥1,300 million for the year ended March 31, 2005 and ¥2,670 million for the year ended March
31, 2006. For a further discussion of cash dividends, see "Dividend Policy — Cash Dividends" under
Item 8.A of this annual report on Form 20-F.
Stock Repurchases
: We repurchased 28,096 shares for an aggregate price of ¥1 million during
the year ended March 31, 2005 and 37,502 shares for an aggregate price of ¥2 million during the
year ended March 31, 2006. We sold 30,291,840 shares for an aggregate price of ¥909 million during
the year ended March 31, 2005 and 52,833,762 shares for an aggregate price of ¥2,209 million during
the year ended March 31, 2006 as a result of exercises of stock options. We also sold an
additional 9,245,120 shares between April 1, 2006 and
August 31, 2006 for an aggregate price of ¥362
million as a result of exercise of stock options. For a further discussion of stock repurchases,
see "Dividend Policy — Stock Repurchases" under Item 8.A of this annual report on Form 20-F.
Capital Resources
We seek to manage our capital resources and liquidity to provide adequate funds for current
and future financial obligations. We derive the funds we require to meet our capital requirements
principally from cash flow provided by operations, borrowings from financial institutions and
issuances of bonds and
commercial paper. We also may raise proceeds from the sale of our shareholdings in our
subsidiaries and affiliates.
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We derive the funding necessary to provide loans to our customers through borrowings from
financial institutions, long-term debt issuances and interest income. We seek to enhance our
ability to tap a diverse range of funding sources and to lower our funding costs. In support of
this strategy, since the year ended March 31, 2000, when legal restrictions on debt issuances to
fund our lending business were eliminated, we have increased our borrowings from capital markets
through issuances of commercial paper and medium-term and long-term bonds, and we have reduced the
proportion of our borrowings from banks, insurance companies and other financial institutions. Our
current intention, subject to market conditions and other uncertainties, is to increase our
proportion of direct financing to around 40%.
We believe that our existing cash and cash equivalents and the amount of cash that we
anticipate will be generated from our business operations, together with our existing access to
borrowings and capital markets, will be sufficient for us to continue to operate our business at
current levels through the year ending March 31, 2007. We do not have current plans for any equity
offerings for Nissin Co., Ltd., and we do not currently expect to significantly increase our
indebtedness through the year ending March 31, 2007.
Commitments
Our material commitments include long-term borrowings, short-term borrowings, unfunded credit
lines, and operating and capital leases. See Item 5.F of this annual report on Form 20-F for a
tabular disclosure of our contractual obligations.
Borrowings
Long-Term Borrowings
We require a significant amount of funds for payment of principal and interest on our
borrowings, most of which are used for extending loans to our customers. Generally, our borrowings
are denominated in yen. As of March 31, 2006, we had long-term borrowings, including a convertible
bond and asset backed securities, totaling ¥198,924 million.
Of our total long-term borrowings at March 31, 2006, ¥169,952 million were from loans,
principally from banks and other financial institutions, including asset backed securities.
Generally, our long-term loans have a maturity of one to five years and accrue interest on a fixed
rate basis or on a variable rate basis. At March 31, 2006, the weighted average contractual rate
at period end of our long-term loans from banks and other financial institutions was 1.5%. As is
customary in Japan, bank loans are made under general agreements which provided that under certain
circumstances, security and guarantees for present and future indebtedness will be given upon
request of the bank, and that the bank shall have the right, as the obligations become due, or in
the event of their default, to offset cash deposits against such obligations due to the bank.
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In
addition, ¥28,972 million of our total long-term borrowings
at March 31, 2006 was from the
issuance of long-term bonds, including convertible bonds. We have a limited history of debt
issuances because consumer finance companies and small business lenders were barred from using
direct financing to fund lending operations until May 1999. Long-term bonds outstanding as of
March 31, 2005 and 2006 comprised the following:
As of March 31,
2005
2006
(in millions)
2.35% unsecured bonds, due November 1, 2005
¥
5,000
¥
—
1.18% unsecured bonds, due February 25, 2008
7,500
7,500
1.90% unsecured bonds, due July 31, 2006
500
500
0.75% unsecured bonds, due September 19, 2008
210
150
0.64% unsecured bonds, due March 26, 2007
500
500
0.45% unsecured bonds, due September 27, 2006
500
500
0.67% unsecured bonds, due September 27, 2007
500
500
1.17% unsecured bonds, due June 20, 2008
—
7,500
1.08% unsecured bonds, due September 16, 2008
—
10,000
0.90% unsecured bonds, due March 27, 2009
—
1,000
1.70% unsecured convertible bonds, due September 29, 2006
8,942
822
Total bonds
¥
23,652
¥
28,972
The aggregate future annual principal and interest commitments of bonds, long-term loans
from banks and other financial institutions as of March 31, 2006 are as follows:
Year ending March 31,
(in millions)
2007
¥
76,272
2008
71,155
2009
43,471
2010
4,513
2011 and thereafter
8,125
Total future payments for long-term borrowings
¥
203,536
Short-Term Borrowings
Our short-term borrowings are comprised of bank loans and commercial paper. Our short-term
borrowings were ¥12,600 million as of March 31, 2005,
of which ¥9,017 million was bank loans,
¥3,500 million was commercial paper and the remainder were rediscounted notes, and ¥60,411 million
as of March 31, 2006, of which ¥30,283 million was
bank loans, ¥30,000 million was commercial
paper and the remainder were rediscounted notes.
Information
regarding interest rates of short-term borrowings as of March 31, 2005 and 2006 is as follows:
As of March 31,
2005
2006
Bank loans
(under fixed or variable rate contracts):
Minimum interest rate
1.0
%
1.0
%
Maximum interest rate
2.2
5.0
Weighted average contractual rates
1.6
1.4
Commercial
paper:
Minimum interest rate
0.3
0.3
Maximum interest rate
0.5
1.0
Weighted average contractual rates
0.4
0.7
Rediscounted notes
2.4
2.4
All short-term borrowings have terms ranging from approximately one month to twelve
months and are usually renewed at maturity subject to renegotiation of interest rates and other
factors. We pledge some of our loans receivable, cash and certain other assets as collateral for
these loans.
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Commitment Facilities
As of March 31, 2006, the total amount of prescribed limits of syndicated loans, overdraft
facilities, and loan commitment limits available from banks was ¥21,737 million. The outstanding
borrowings within the limits were ¥15,810 million and the
unused balance was ¥5,927 million.
Debt Service
As of March 31, 2006, we had contractual commitments to repay ¥73,875 million in long-term
borrowings through the year ending March 31, 2007. We expect to repay this amount through a
combination of new or existing loan credits from banks, bond offerings and new cash from
operations.
Collateral for Borrowings
As of March 31, 2006, we had pledged as collateral for short-term and long-term borrowings
with banks and other financial institutions the following assets: ¥1,662 million in restricted
cash, ¥15,510 million in loans receivable, ¥380 million in purchased loans receivable, and ¥6,542
million in real estate for sale. The lender may obtain this collateral in the event of financial
default, including missed or delinquent payments as provided for in the loan agreements.
In
addition, certain entities which are consolidated by us in accordance with FIN No. 46 (R)
obtained non-recourse loans from financial institutions. For these loans, ¥10,462 million in these
entities' assets was pledged as collateral as of March 31, 2006.
Unfunded Credit Lines
Under the terms and conditions of our credit line agreements, we may, but are not committed
to, lend funds to our Business Timely loan, consumer loan and other loan customers. We review
credit lines and our related funding needs based on account usage and customer creditworthiness.
We had unfunded credit lines of ¥57,679 million as of
March 31, 2006, of which ¥9,642 million was unfunded
credit lines with loans outstanding and ¥48,037 million was unfunded credit lines without
loans outstanding.
Operating and Capital Leases
We lease office space under operating lease agreements that generally allow us to cancel
leases with six months' advance notice. We have paid approximately ¥965 million under our office
lease agreements for the year ended March 31, 2006. In addition, we lease certain equipment,
software and vehicles under capital lease obligations. We have paid ¥614 million under our capital
lease agreements for the year ended March 31, 2006. Consequently, total lease payments under these
operating lease and capital lease agreements were ¥1,579 million for the year ended March 31, 2006.
Contingencies
We have guarantee obligations on the borrowings by the customers of third parties. See Item
5.E of this annual report on Form 20-F for a further discussion.
We are not a party to any material legal proceedings.
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C. Research and Development, Patents and Licenses, etc.
We have not implemented any material research and development policy and have not conducted
any material research and development activities during the period from April 1, 2003 through the
date of this annual report on Form 20-F.
D. Trend Information.
The information required by this item is provided in Item 5.B of this annual report on Form
20-F.
E.
Off-Balance Sheet Arrangements.
Our off-balance sheet arrangements that have or are reasonably likely to have a current or
future material effect on us are those pursuant to which we guarantee the borrowings of customers
of third parties and bank loans borrowed by our equity-method affiliates, as follows:
Sanyo Club
Pursuant to an agreement with Sanyo Club, in exchange for guaranteeing 40% of the outstanding
balance of specified borrowings, we receive 40% of the interest income from the total amount of
these borrowings and pay 40% of the related administrative expenses and other expenses incurred by
Sanyo Club. We are required to pay out on our guarantees for 40% of the outstanding loan balance
of specified borrowings for which contractual payments are overdue by 120 days or more as of the
end of each month, and distressed loans due to legal processes. Under a loan agreement, borrowers
are neither required to have a guarantor nor to provide collateral. We maintain reserves for
estimated guarantee losses in our other liabilities on our balance sheet.
Shinsei Business Finance
In return for a fee, we guarantee borrowings and corresponding interest receivable from
customers of Shinsei Business Finance, an affiliate in which we owned a 25% interest until April
2006, with respect to the following loan products:
•
3S Loans
: 3S Loans are unsecured loans that require
one or more guarantees from third party individuals with an income
source separate from the customer, and are designed for small or
medium-sized corporations.
For a guarantee fee of the contractual interest rate minus 4%, we
guarantee 100% of loans outstanding and corresponding interest receivable from
borrowers of 3S loans. We are required to pay out on our guarantees of loans for which
contractual payments are overdue by 14 days or more. Borrowers of 3S loans are
required to have one or more guarantors, but not collateral.
•
Business Loans
: Business Loans are unsecured loans
designed for small or medium-sized corporations. We guarantee 10% of loans outstanding and corresponding interest
receivable from borrowers of Business Loans and earn 10% of the interest received from
these loans. We are required to pay out on our guarantees of loans for which
contractual payment are overdue by 90 days or more. Borrowers of Business Loans are
neither required to have a guarantor nor to provide collateral.
We are also liable as a guarantor for bank loans borrowed by Shinsei Business Finance, and
received guarantee fees equivalent to an annual interest rate of 1.5%. However, during the year
ended March 31, 2006, we were released from our obligation as a guarantor for bank loans borrowed
by Shinsei Business Finance.
We maintain reserves for estimated guarantee losses in our other liabilities on our balance
sheet.
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Chuo Mitsui Finance Service
In return for a fee, we guarantee borrowings and corresponding interest receivable from
customers of Chuo Mitsui Finance Service, an affiliate in which we own a 30% interest, with respect
to the following loan products:
•
Business Card Loans
: Business Card Loans are unsecured
loans designed for small or medium-sized corporations.

We guarantee 10% of loans outstanding and corresponding
interest receivable from borrowers of Business Card Loans and earn 10% of the interest
received from these loans. We are required to pay out on our guarantees of loans for
which contractual payment are overdue by 90 days or more. Borrowers of Business Card
Loans are neither required to have a guarantor nor to provide collateral.
•
Real Estate Finance
: Real Estate Finance is a secured
loan designed for small or medium-sized corporations.

We guarantee 10% of loans outstanding and corresponding
interest receivable from borrowers of Real Estate Finance and earn 10% of the interest
received from these loans. We are required to pay out on our guarantees of loans for
which contractual payment are overdue by 30 days or more.
We are also liable as a guarantor for bank loans borrowed by Chuo Mitsui Finance Service, and
received guarantee fees equivalent to an annual interest rate of 1.0%.
We maintain reserves for estimated guarantee losses in our other liabilities on our balance
sheet.
Other
Our consolidated subsidiary NIS Lease guarantees accounts receivable of certain borrowers for
a fee determined based on borrower's creditworthiness and contract duration. As of March 31, 2005
and 2006, the fee rate ranged from 0.5% to 5.0% and 0.4% to 21.6%, with an average fee rate of
1.95% and 2.25%, respectively.
We maintain reserves for estimated guarantee losses in our other liabilities on our balance
sheet.
Upon payment of any guarantees, we record corresponding receivables from the borrower, which
are offset by allowances for deemed uncollectible amounts. Receivables from payment of guarantees
were ¥235 million as of March 31, 2005 and ¥663 million as of March 31, 2006. Those were offset by
allowances of ¥208 million as of March 31, 2005 and ¥588 million as of March 31, 2006, and the
resulting amounts were recorded in our other assets on our balance sheets.
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The following table shows information about our guaranteed borrowings, guaranteed accounts
receivable, guarantees for borrowings of other companies and reserves for guarantee losses as of
March 31, 2005 and 2006:
As of March 31,
2005
2006
(in millions)
Guaranteed borrowings
¥
7,343
¥
11,886
Guaranteed accounts receivable
358
964
Guarantees for borrowings of other companies:
Shinsei Business Finance
3,645
—
Chuo Mitsui Finance Service
150
1,920
Reserves for guarantee losses
371
629
The following table shows information about our guarantee fees received and related
administrative and other expenses paid by us during the years ended March 31, 2004, 2005 and 2006:
Year ended March 31,
2004
2005
2006
(in millions)
Guarantee fees received from:
Guaranteed borrowings and accounts receivable
¥
362
¥
845
¥
1,386
Guarantees for borrowings of other companies
6
34
20
Total guarantee fees received
368
879
1,406
Administrative expenses and other expenses paid
(255
)
(562
)
(898
)
Guarantee fees received, net
¥
113
¥
317
¥
508
As a result of our guarantee commitments, we paid ¥89 million for the year ended March
31, 2004, ¥270 million for the year ended March 31, 2005 and ¥607 million for the year ended March
31, 2006.
F. Tabular Disclosure of Contractual Obligations.
The following table shows our contractual payment obligations under our agreements as of March
31, 2006:
Payments Due by Period
April 1,
April 1,
April 1,
2006 to
2007 to
2009 to
After
March 31,
March 31,
March 31,
April 1,
Contractual obligations
Total
2007
2009
2011
2011
(in millions)
Long-term borrowings
(1)
¥
198,924
¥
73,875
¥
112,704
¥
12,345
¥
—
Capital (finance) lease obligations
1,372
641
639
92
—
Operating lease obligations
1,497
971
526
—
—
Purchase commitments
(2)
—
—
—
—
—
Total
¥
201,793
¥
75,487
¥
113,869
¥
12,437
¥
—
(1)
Includes only principal payment obligations.
(2)
These are obligations pursuant to agreements to purchase goods or services that are
enforceable and legally binding on us and that specify all significant terms.
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G. Safe Harbor.
1.
The safe harbor provided in Section 27A of the Securities Act and Section 21E of
the Exchange Act ("statutory safe harbors") shall apply to forward-looking information
provided pursuant to Item 5.E and F of this annual report on Form 20-F, provided that the
disclosure is made by: an issuer; a person acting on behalf of the issuer; an outside
reviewer retained by the issuer making statement on behalf of the issuer; or an
underwriter, with respect to information provided by the issuer or information derived
from information provided by the issuer.
2.
For purpose of Item 5.G.1 of this Item only, all information required by Item 5.E
of this Item is deemed to be a "forward looking statement" as that term is defined in the
statutory safe harbors, except for historical facts.
3.
With respect to Item 5.E of this annual report on Form 20-F, the meaningful
cautionary statements element of the statutory safe harbors will be satisfied if a
company satisfies all requirements of that same Item 5.E of this annual report on Form
20-F.
Item 6. Directors, Senior Management and Employees.
A. Directors and Senior Management.
Directors and Statutory Auditors
All of our directors except Hidenori Nakagawa are engaged in our business on a full-time
basis. The business address of all of our directors except Hideo Sakioka is Shinjuku L-Tower 25F,
6-1, Nishi-Shinjuku l-chome, Shinjuku-ku, Tokyo 163-1525, Japan. The business address of Hideo
Sakioka is 7-6, Chifunemachi 5-chome, Matsuyama City, Ehime 790-8584, Japan. No director or member
of senior management was selected pursuant to any arrangement or understanding with major
shareholders, customers, suppliers or others.
Except as described below with respect to Hideo Sakioka, Kunihiko Sakioka and Akio Sakioka,
none of our directors are related to one another.
The following table provides detailed information about our directors and statutory auditors.
Position
Name
(Executive Officer
(Date of Birth)
Position)
Business Career
Kunihiko Sakioka
(1)
(January 10, 1962)
Chairman,
Representative
Director and Co-CEO
April 1986
Joined Nissin Co., Ltd.
September 1988
Manager of Hiroshima Branch
March 1989
Director
December 1989
Director and General Manager of Finance Department
February 1991
Executive Director, Advice to Finance and System
Information
December 1992
Senior Executive Director and Head of Sales & Marketing
Control
October 1996
Representative Senior Executive Director and General
Manager of Tokyo Branch Office, Advice to Sales &
Marketing Control
April, 1998
Representative Senior Executive Director and Head of
Sales & Marketing Control
June 2000
President and Representative Director, and Head of
Sales & Marketing Control
March 2004
Representative Director of Shuho Ltd. (current position)
July 2005
President and Representative Director and Executive
Officer
June 2006
Chairman and Representative Director and Co-CEO
(current position)
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Position
Name
(Executive Officer
(Date of Birth)
Position)
Business Career
Shinsuke Amiya
(October 3, 1957)
President,
Representative
Director and Co-CEO
June 1994
Joined Merrill Lynch Securities Inc. (currently Merrill
Lynch Japan Securities Co., Ltd.)
June 2003
Director and Head of Investment Banking Group
March 2005
Vice-Chairman and Head of Investment Banking Group
May 2006
Joined Nissin Co., Ltd.
Special Advisor
June 2006
President and Representative Director and Co-CEO
(current position)
Hideo Sakioka
(1) (2)
(May 14, 1928)
Director and Advisor
August 1953
May 1960
Started money lending business
Founded Nissin Shoji Co., Ltd. (currently Nissin Co., Ltd.)
President and Representative Director
January 1980
Founded Nissin Building Co., Ltd.
President and Representative Director
March 1989
Representative Director of Shuho Ltd.
June 2000
Chairman and Representative Director
May 2001
President and Representative Director of Nissin
Building Co., Ltd. (current position)
January 2004
Director of Nissin Servicer Co., Ltd. (current position)
June 2006
Director and Advisor (current position)
Hitoshi Higaki
(December 14, 1959)
Senior Executive
Director and
Executive Officer
(Head of Group
Strategy)
November 1983
March 1994
Joined Nissin Co., Ltd.
General Manager of Accounting Department and Finance
Department
June 1994
Director and General Manager of General Affairs
Department
May 1995
Director, General Manager of Corporate Planning
Department and Accounting Department
June 1996
Director and General Manager of Corporate Planning
Department, Advice to Accounting Department
June 2000
Executive Director and General Manager of Corporate
Planning Department
April 2003
Executive Director and Head of Operations Control
July 2004
Concurrently General Manager of Corporate Planning
Department
August 2004
Statutory Auditor of Venture Link Co., Ltd. (current
position)
July 2005
Senior Executive Director and Executive Officer
June 2006
Senior Executive Director, Executive Officer and Head
of Group Strategy (current position)
Toshioki Otani
(December 22, 1970)
Executive Director
and Executive
Officer
(Head of Sales &
Marketing)
April 1994
September 1995
July 2000
Joined Nissin Co., Ltd.
Manager of Kumamoto Branch
General Manager of Finance Department
January 2001
General Manager of Finance Department and Business
Development Department
April 2002
General Manager of Eastern Japan Sales Department
June 2002
Director
April 2003
Director and General Manager of Business Development
Department
November 2003
President and Representative Director of NIS Lease Co.,
Ltd. (current position)
July 2004
Director and Deputy Head of Sales & Marketing and
General Manager of Business Development Department
July 2005
Executive Director, Executive Officer and Head of Sales
& Marketing and General Manger of Sales Department
November 2005
Concurrently General Manager of Osaka Branch Office
June 2006
Executive Director, Executive Officer and Head of Sales
& Marketing (current position)
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Position
Name
(Executive Officer
(Date of Birth)
Position)
Business Career
Akihiro Nojiri
(November 15, 1968)
Executive Director
and Executive
Officer
(Head of Operations
Control)
April 1991
August 2003
Joined Ministry of Finance
Joined Nissin Co., Ltd.
General Manager, Assistant to President
June 2004
Director
July 2004
Director and General Manager of Finance Department
July 2005
Executive Director, Executive Officer and General
Manager of Finance Department
February 2006
Executive Director, Executive Officer and Head of
Operations Control (current position)
Yunwei Chen
(January 16, 1969)
Executive Director
and Executive
Officer
(General Manager of
Investor Relations
Department and
Officer-in-Charge
East Asia Region)
April 1998
April 2001
September 2002
April 2003
Joined Nissin Co., Ltd.
Manager of Corporate Planning Department 2nd Section
Concurrently Assistant General Manager of Corporate
Planning Department
General Manager of Investor Relations Department
June 2003
Director
July 2004
Chairman of Matsuyama Nissin Investment & Consulting
(Shanghai) Co., Ltd. (currently renamed to Nissin
Leasing (China) Co., Ltd.) (current position)
July 2005
Executive Director, Executive Officer, General Manager
of Investor Relations Department and Officer-in-Charge
East Asia Region (current position)
Keishi Ishigaki
(April 3, 1971)
Director and
Executive Officer
(Deputy Head of
Sales & Marketing
and Sales &
Marketing Group
Manager)
April 1995
April 1996
April 2001
April 2002
Joined Nissin Co., Ltd.
Manager of Koriyama Branch
General Manager of Finance Department
General Manager of Osaka Branch Office and Western
Japan Sales Department
June 2002
Director
April 2003
Director and General Manager of Finance Department
July 2004
Director and General Manager, Advice to Sales &
Marketing Control Division
August 2004
Director of Venture Link Co., Ltd. (current position)
July 2005
Concurrently Executive Officer
June 2006
Director, Executive Officer, Deputy Head of Sales &
Marketing and Sales & Marketing Group Manager (current
position)
Katsutoshi Shimizu
(April 9, 1954)
Director and
Executive Officer
(Deputy Head of
Sales & Marketing,
Real Estate
Business Group
Manager and General
Manager of Real
Estate Business
Control Department)
April 1999
October 2002
June 2003
January 2004
March 2004
September 2005
Joined RISA Partners, Inc.
Director
Joined A-MAX Corporation
Director
Joined Nissin Servicer Co., Ltd.
Director and General Manager of Credit Screening
Department
Director and General Manager of Asset Management
Department
Director, Advice to Asset Management Department
(current position)
Joined Nissin Co., Ltd.
General Manager of Real Estate Business Control
Department
February 2006
Concurrently Executive Officer
June 2006
Director, Executive Officer, Deputy Head of Sales &
Marketing, Real Estate Business Group Manager and
General Manager of Real Estate Business Control
Department (current position)
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Position
Name
(Executive Officer
(Date of Birth)
Position)
Business Career
Akira Imaki
(February 15, 1949)
Director and
Executive Officer
(Deputy Head of
Sales & Marketing
and Strategic
Business
Development Group
Manager)
October 2003
September 2004
October 2005
Joined Capital Partners Securities Co., Ltd.
Managing Director of Investment Banking Division
Joined Mercer Human Resource Consulting LLC.
Joined Nissin Co., Ltd.
General Manager, Assistant to President, Sales &
Marketing Control Division
April 2006
Concurrently Executive Officer
June 2006
Director, Executive Officer, Deputy Head of Sales &
Marketing and Strategic Business Development Group
Manager (current position)
Hidenori Nakagawa
(3)
(November 20, 1967)
Director (Outside)
April 1992
Registered Daiichi Tokyo Bar Association
Joined the Law offices of Nagashima & Ohno (currently
the Law offices of Nagashima Ohno & Tsunematsu)
September 1999
Joined Merrill Lynch Securities Inc. (currently Merrill
Lynch Japan Securities Co., Ltd.)
June 2004
Joined TMI Associates as a Partner (current position)
June 2006
Outside Director (current position)
Yoshiki Kishimura
(August 25, 1944)
Statutory Auditor
(Standing)
May 1980
February 2001
Joined Sanyo Shinpan Finance Co., Ltd.
Joined Nissin Co., Ltd.
Corporate Adviser of Finance Department
June 2003
Statutory Auditor (current position)
August 2004
Statutory Auditor of Venture Link Co., Ltd. (current
position)
Akio Sakioka
(2)
(September 22,1950)
Statutory Auditor
(Standing)
March 1971
January 1976
Joined Nissin Co., Ltd.
Manager of Takamatsu Branch
April 1984
Director
July 1994
Executive Director and General Manager of Tokyo Office
October 1996
Executive Director and General Manager of Finance
Department
October 2000
Executive Director, Advice to Business Audit Department
June 2002
Retired from Director
Statutory Auditor (current position)
Isao Narimatsu
(4)
(July 6, 1949)
Statutory Auditor
(Outside)
April 1979
July 1981
Joined Miyata Certified Public Tax Accountant Office
Opened Isao Narimatsu Certified Public Tax Accountant
Office
June 2001
Statutory Auditor (current position)
Katsuhiko Asada
(4)
(February 10, 1955)
Statutory Auditor
(Outside)
October 1979
Joined Arthur Andersen Tokyo Office (currently KPMG
AZSA & Co.)
September 1985
Opened Katsuhiko Asada Certified Public Accountant Firm
December 2001
Opened Konishi & Asada Certified Public Accountant Firm
June 2004
Statutory Auditor (current position)
(1)
Kunihiko Sakioka is the second son of Hideo Sakioka.
(2)
Akio Sakioka is the nephew of Hideo Sakioka.
(3)
Hidenori Nakagawa is a Director assigned from outside the
Group pursuant to Article 2-15 of
the Corporate Law.
(4)
Isao Narimatsu and Katsuhiko Asada are Statutory Auditors
assigned from outside the Group pursuant to Article 2-16 of the Corporate Law.
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B.
Compensation.
The aggregate compensation to our directors and statutory auditors as a group for the year
ended March 31, 2006 was ¥579 million, which included ¥392 million for their services as directors
and statutory auditors, ¥82 million as compensation to the directors as our employees and ¥105
million in bonuses.
Previously, in accordance with customary Japanese business practices, a retiring director or
statutory auditor would receive a lump-sum retirement payment, which amount was reserved, subject
to the approval of the general meeting of shareholders. However, all of our retirement plans have
been terminated and retirement liabilities as of termination date are now paid at the time of
retirement. During the year ended March 31, 2006, we did not make any retirement payments to any
director or statutory auditor. As of March 31, 2006, the balance of our retirement liability for
our directors and statutory auditors was ¥382 million.
During the year ended March 31, 2006, we issued stock options exercisable for a total of
1,920,000 shares to directors and statutory auditors in connection with our July 2005 and March
2006 stock option plans. During the same year, our directors and statutory auditors exercised, as
a group, stock options for a total of 4,608,000 shares at a total price of ¥194 million. For a
description of our stock option plans, see Item 6.E of this annual report on Form 20-F.
C. Board Practices.
The following table shows the terms of office of our directors and statutory auditors and
certain other information:
Start of
Expiration of
Name
Start of first term
current term
current term
Directors:
Kunihiko Sakioka
March 1989
June 2006
June 2007
Shinsuke Amiya
June 2006
June 2006
June 2007
Hideo Sakioka
May 1960
June 2006
June 2007
Hitoshi Higaki
June 1994
June 2006
June 2007
Toshioki Otani
June 2002
June 2006
June 2007
Akihiro Nojiri
June 2004
June 2006
June 2007
Yunwei Chen
June 2003
June 2006
June 2007
Keishi Ishigaki
June 2002
June 2006
June 2007
Katsutoshi Shimizu
June 2006
June 2006
June 2007
Akira Imaki
June 2006
June 2006
June 2007
Hidenori Nakagawa
(1)
June 2006
June 2006
June 2007
Statutory Auditors:
Yoshiki Kishimura
June 2003
June 2003
June 2007
Akio Sakioka
June 2002
June 2005
June 2009
Isao Narimatsu
(2)
June 2001
June 2004
June 2008
Katsuhiko Asada
(2)
June 2004
June 2004
June 2008
(1)
Outside director pursuant to the Article 2-15 of the Corporate Law.
(2)
Outside statutory auditors pursuant to the Article 2-16 of the Corporate Law.
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Board of Directors
Our board of directors has the ultimate responsibility for the administration of our affairs.
Our articles of incorporation provide for not more than twelve directors. Directors are elected at
a general meeting of shareholders, and the normal term of office of directors is one year, although
they may serve any number of consecutive terms. The board of directors elects one or more
representative directors, who have the authority individually to represent us. The board of
directors elects one president and may also elect from among its members a chairman of the board of
directors, one or more executive vice presidents, senior executive directors and executive
directors. Our executive officers serve at the discretion of the board of directors.
None of our directors have service contracts with us or any of our subsidiaries providing for
benefits upon termination of employment.
Board of Statutory Auditors
Our articles of incorporation provide for not more than four statutory auditors, and the
Japanese Corporate Law sets the minimum at three for large companies, including us, and that, at
least 50% of statutory auditors must be from outside our company. Statutory auditors are elected
at a general meeting of shareholders, and the normal term of office of a statutory auditor is four
years, although they may serve any number of consecutive terms. Statutory auditors are under a
statutory duty to review the administration of our affairs by the directors and to examine our
financial statements and business reports to be submitted by the board of directors to the general
meetings of shareholders. Statutory auditors also have a statutory duty to provide their report to
the board of statutory auditors, which must submit its auditing reports to the board of directors.
They have the duties to attend meetings of the board of directors and to express their opinions,
but they are not entitled to vote. The statutory auditors elect from among themselves one or more
standing auditors who serve on a full-time basis. See Exhibit 1.4 to this annual report on Form
20-F for our regulations of our board of statutory auditors.
Independent Registered Public Accounting Firm
In addition to statutory auditors, we must appoint independent certified public accountants,
who have the statutory duties of examining the financial statements to be submitted by the board of
directors to the general meetings of shareholders, reporting to the board of statutory auditors and
directors, and examining the financial statements to be filed with the relevant local finance
bureau of the Ministry of Finance. Since the beginning of the year ended March 31, 1992, we have
appointed BDO Sanyu & Co., a member of the Japanese Institute of Certified Public Accountants and a
PCAOB registered public
accounting firm, as our independent certified public accountants. Its address is Aqua Dojima
Nishi-kan 14F, 4-16, Dojimahama 1-chome, Kita-ku, Osaka 530-0004, Japan.
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Significant Differences Between Our Corporate Governance Practices and Those of New York Stock
Exchange-listed U.S. Companies
Companies listed on the New York Stock Exchange, or NYSE, must comply with certain standards
regarding corporate governance under Section 303A of the NYSE Listed Company Manual. However,
listed companies that are foreign private issuers, such as us, are permitted to follow home country
practice in lieu of certain provisions of Section 303A.
The following table shows the significant differences between the corporate governance
practices followed by U.S. listed companies under Section 303A of the NYSE Listed Company Manual
and those followed by us:
Corporate Governance Practices Followed
Corporate Governance Practices Followed
by NYSE-listed U.S. Companies
by Us
A NYSE-listed U.S. company must have
a majority of directors meeting the
independence requirements under
Section 303A of the NYSE Listed
Company Manual.
Under the Corporate Law effective as
of May 1, 2006, Japanese joint stock
corporations are permitted to choose
between the traditional corporate
governance system based on a board
of statutory auditors (the
"statutory auditor system") and a
corporate governance system based on
committees (the "committee system").
The vast majority of Japanese
companies employ the statutory
auditor system. For Japanese
companies with the statutory auditor
system, including us, the Corporate Law
of Japan has no independence
requirement with respect to
directors. The task of overseeing
management and accounting firms is
assigned to the statutory auditors,
who are separate from the company's
management. Pursuant to the
Corporate Law which came into effect
as of May 1, 2006, Japanese
companies with a board of statutory
auditors, including us, are required
to have at least 50% of our
statutory auditors be outside
statutory auditors who must meet
independence requirements under the
Corporate Law, by which he or she
must have not served as a director,
accounting officer (
kaikei-sanyo
),
executive officer, manager or any
other employee of the company or any
of its subsidiaries. Currently, we
have two outside statutory auditors.
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Corporate Governance Practices Followed
Corporate Governance Practices Followed
by NYSE-listed U.S. Companies
by Us
A NYSE-listed U.S. company must have
an audit committee composed entirely
of independent directors, and the
audit committee must have at least
three members.
As discussed above, we employ the
statutory auditor system. Under
this system, the board of statutory
auditors is a legally separate and
independent body from the board of
directors.
The function of the
board of statutory auditors is
similar to that served by
independent directors, including
those who are members of the audit
committee, of a U.S. company: to
monitor the performance of the
directors, and review and express
an opinion on the method of auditing by
our independent public accounting
firm and on such accounting firm's
audit reports, for the protection of
the company's shareholders.
Japanese companies with a board of
statutory auditors, including us,
are required to have at least three
statutory auditors. Currently, we
have four statutory auditors. The
term of each statutory auditor is
four years. In contrast, the term
of each director is one year.
Since July 31, 2005, when the
requirements of Rule 10A-3 under the
U.S. Securities Exchange Act of 1934
relating to listed company audit
committees became applicable to
foreign private issuers, we have
relied on an exemption under that
rule, which is available to foreign
private issuers with boards of
statutory auditors meeting certain
criteria. We make disclosure
regarding such reliance in Item 16D
of this annual report on Form 20-F.
A NYSE-listed U.S. company must have
a nominating/corporate governance
committee composed entirely of
independent directors.
Directors are elected at a meeting
of shareholders. The board of
directors does not have the power to
fill vacancies in the board.
Statutory auditors are also elected
at a meeting of shareholders. Under
the Corporate Law, a proposal to a
meeting of shareholders by our board
of directors to elect a statutory
auditor must be approved by a
resolution of its board of statutory
auditors. The board of statutory
auditors is empowered to adopt a
resolution requesting that our
directors submit a proposal for
election of a statutory auditor to a
meeting of shareholders. Statutory
auditors have the right to state
their opinion concerning election
and resignation of a statutory
auditor at the meeting of
shareholders.
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Corporate Governance Practices Followed
Corporate Governance Practices Followed
by NYSE-listed U.S. Companies
by Us
A NYSE-listed U.S. company must have
a compensation committee composed
entirely of independent directors.
We determine the compensation for
our directors and statutory auditors
pursuant to the statutory auditor
system, which we employ. Unless
otherwise provided in our articles
of incorporation, total amounts of
compensation for our directors and
statutory auditors are respectively
proposed to, and voted on, a meeting
of shareholders. Our articles of
incorporation do not provide for
such total amounts. Once the
proposals for the total amounts of
compensation are approved at the
meeting of shareholders, our board
of directors allocates the total
amount for the directors among its
members and among our statutory
auditors, unless there is a
resolution at the shareholders'
meeting or a provision in the
articles of incorporation relating
to allocation of compensation, for
the statutory auditors to allocate
the total amount among themselves.
A NYSE-listed U.S. company must
generally obtain shareholder
approval with respect to any equity
compensation plan.
Under the Corporate Law, new share
subscription rights as stock options
granted to directors and employees
are not deemed to be an issuance of
new share subscription rights with
specifically favorable conditions,
even if the stock options are issued
at no charge, since a company would
receive benefits from the issuance
by enhancing their incentives for
services. While we are not required
to obtain shareholder approval for
any stock option to be issued to our
directors and employees, we must
obtain shareholder approval for
stock options if the options are to
be issued as compensation for our
directors and statutory auditors.
A NYSE-listed U.S. company must have
an internal audit function, which
must be the sole responsibility of
the audit committee and may not be
allocated to a different committee.
As discussed above, we employ the
statutory auditor system. Under
this system, our internal audit
function is maintained by the
Internal Audit Department. The
Internal Audit Department is
separate from the board of
statutory auditors, and reports
directly to our president.
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D. Employees.
Our employees are mainly located in Japan. The following table shows the number of our
full-time, part-time and temporary employees at the end of the each of the years indicated:
As of March 31,
2004
2005
2006
Full-time:
Integrated financial services
(1)
811
759
924
Loan servicing
40
59
74
Sub-total
851
818
998
Part-time
(2)
87
89
101
Temporary
(3)
181
181
198
Total
1,119
1,088
1,297
(1)
Includes the number of full-time employees engaged in other businesses, which was 2 at March
31, 2004, 33 at March 31, 2005 and 23 at March 31, 2006.
(2)
The average number of part-time employees was 94 for the year ended March 31, 2004, 85 for
the year ended March 31, 2005 and 100 for the year ended March 31, 2006.
(3)
Temporary employees are employees dispatched from personnel agencies.
We have never experienced any labor disputes and consider our labor relations to be
excellent. None of our employees are members of a trade union or participate in any collective
bargaining organizations.
We consider our levels of remuneration, fringe benefits, working conditions and other
allowances, which include lump-sum payments, to be generally competitive with those offered in
Japan by other enterprises in our industry. Our employees normally must retire when they reach 60
years of age. We terminated all of our sponsored pension and retirement plans, and now only
participate in the mandatory fully-funded contributory funded plan under the Japanese Welfare
Pension Insurance Law.
E. Share Ownership.
Share Ownership by Directors and Statutory Auditors
The following table provides information about our directors, who include our senior
management, and statutory auditors. The shareholdings of certain directors in the table below
overlap to the extent that multiple individuals may be deemed to share beneficial ownership over
the same shares:
Percentage of
Number of Shares
Common Stock
Beneficially
Outstanding as of
Owned as of
March 31,
Name
Position
Date of Birth
March 31, 2006
(1)
2006
(2)
Directors:
Kunihiko Sakioka
Chairman,
Representative
Director and Co-CEO
January 10, 1962
753,987,732
(3)
27.6%
(3)
Shinsuke Amiya
President,
Representative
Director and Co-CEO
October 3, 1957
—
(5)
—
(5)
Hideo Sakioka
Director and Advisor
May 14, 1928
743,074,044
(4)
27.2
(4)
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Percentage of
Number of Shares
Common Stock
Beneficially
Outstanding as of
Owned as of
March 31,
Name
Position
Date of Birth
March 31, 2006
(1)
2006
(2)
Hitoshi Higaki
Senior Executive
Director and
Executive Officer
December 14, 1959
7,843,128
*
Toshioki Otani
Executive Director
and Executive
Officer
December 22, 1970
3,662,308
*
Akihiro Nojiri
Executive Director
and Executive
Officer
November 15, 1968
682,120
*
Yunwei Chen
Executive Director
and Executive
Officer
January 16, 1969
3,269,116
*
Keishi Ishigaki
Director and
Executive Officer
April 3, 1971
3,003,160
*
Katsutoshi Shimizu
Director and
Executive Officer
April 9, 1954
96,000
*
Akira Imaki
Director and
Executive Officer
February 15, 1949
—
—
Hidenori Nakagawa
Director (Outside)
November 20, 1967
—
—
Statutory Auditors:
Yoshiki Kishimura
Statutory Auditor
(Standing)
August 25, 1944
2,001,664
*
Akio Sakioka
Statutory Auditor
(Standing)
September 22, 1950
24,620,032
*
Isao Narimatsu
Statutory Auditor
(Outside)
July 6, 1949
768,000
*
Katsuhiko Asada
Statutory Auditor
(Outside)
February 10, 1955
144,000
*
(1)
As adjusted for our April 2006 stock split.
(2)
Asterisks indicate beneficial ownership of less than 1%.
(3)
Comprised of 89,610,440 over which Kunihiko Sakioka has sole voting and dispositive power;
335,702,016 shares held by Nissin Building Co., Ltd. ("Nissin Building") over which Kunihiko
Sakioka may be deemed to share beneficial ownership with Hideo Sakioka and voting or
dispositive power with Michimasa Sakioka and Midori Moriyama; and 328,675,276 shares held by
Shuho Ltd. ("Shuho") over which Kunihiko Sakioka may be deemed to share voting or dispositive
power with Hideo Sakioka. Exclude shareholdings of other Sakioka family members. Members of
the Sakioka family, including the ones listed above, directly and indirectly held an aggregate
of 1,022,230,316 shares, or 37.4% of our outstanding shares of common stock, as of March 31,
2006.
(4)
Comprised of 78,696,752 shares over which Hideo Sakioka has sole voting and dispositive
power; 335,702,016 shares held by Nissin Building over which Hideo Sakioka may be deemed to
share voting or dispositive power with Kunihiko Sakioka, Michimasa Sakioka and Midori
Moriyama; and 328,675,276 shares held by Shuho over which Hideo Sakioka may be deemed to share
voting or dispositive power with Kunihiko Sakioka. Exclude shareholding of other Sakioka
family members. Members of the Sakioka family, including the ones listed above, directly and
indirectly held an aggregate of 1,022,230,316 shares, or 37.4% of our outstanding shares of
common stock, as of March 31, 2006.
(5)
In June 2006, Shinsuke Amiya acquired 1,000,000 shares from Shuho. As a result, the number
of shares beneficially owned by Kunihiko Sakioka and Hideo Sakioka decreased by 1,000,000
shares, respectively.
As of March 31, 2006, our directors and statutory auditors, as a group, owned
878,774,012 shares of common stock, if the shares of Nissin Building and Shuho are included,
representing 32.2% of our outstanding common stock. Other than Kunihiko Sakioka and Hideo Sakioka,
whose holdings are disclosed above, no director or statutory auditor owned 1% or more of our
shares.
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Stock Option Plans
We have the following stock option plans, where upon exercise of stock options we grant to
directors and employees a specified number of shares:
•
March 2006 Stock Option Plan
: We granted options exercisable for a total of
1,920,000 shares at a purchase price per share of ¥131 to 28 of our directors and
employees and those of our subsidiaries and affiliates on March 23, 2006. These are
exercisable until March 31, 2009.
•
July 2005 Stock Option Plan
: We granted stock options exercisable for a total of
14,400,000 shares at a purchase price per share of ¥58 to 251 of our directors and
employees and those of our subsidiaries and affiliates on July 15, 2005. These are
exercisable until July 31, 2008.
•
April 2005 Stock Option Plan
: We granted stock options exercisable for a total of
7,142,400 shares at a purchase price per share of ¥67 to 120 of our employees and those
of our subsidiaries and affiliates on April 21, 2005. These are exercisable until
April 30, 2008.
•
January 2005 Stock Option Plan
: We granted stock options exercisable for a total of
768,000 shares at a purchase price per share of ¥55 to 9 of our employees on January
20, 2005. These are exercisable until January 31, 2008.
•
July 2004 Stock Option Plan
: We granted stock options exercisable for a total of
63,936,000 shares at a purchase price per share of ¥53 to 1,149 of our directors and
employees and those of our subsidiaries and affiliates on July 15, 2004. These are
exercisable until July 31, 2007.
•
July 2003 Stock Option Plan
: We granted stock options exercisable for a total of
25,920,000 shares at a purchase price per share of ¥28 to 183 of our directors and
employees and those of our subsidiaries and affiliates on July 16, 2003. These are
exercisable until July 31, 2006.
Under the Corporate Law, we are not required to obtain shareholder approval for issuance of
stock options to our directors and employees; however, we must obtain shareholder approval for
issuance of stock options to our directors as compensation for their services. A resolution
adopted at our general shareholders' meeting on June 24, 2006 allowed us to issue stock options for
up to a maximum annual total of 30,000,000 shares to our directors as compensation, separately from
the revised amount of directors' compensation.
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The following table shows the stock options exercisable by our directors and statutory
auditors as of March 31, 2006:
Number of shares
issuable upon exercise
of stock options as of
Name
Position
March 31, 2006
Directors:
Kunihiko Sakioka
Chairman, Representative Director and Co-CEO
160,000
Shinsuke Amiya
President, Representative Director and Co-CEO
—
Hideo Sakioka
Director and Advisor
—
Hitoshi Higaki
Senior Executive Director and Executive Officer
—
Toshioki Otani
Executive Director and Executive Officer
160,000
Akihiro Nojiri
Executive Director and Executive Officer
544,000
Yunwei Chen
Executive Director and Executive Officer
544,000
Keishi Ishigaki
Director and Executive Officer
—
Katsutoshi Shimizu
Director and Executive Officer
424,000
Akira Imaki
Director and Executive Officer
120,000
Hidenori Nakagawa
Director
—
Statutory Auditors:
Yoshiki Kishimura
Statutory Auditor
544,000
Akio Sakioka
Statutory Auditor
—
Isao Narimatsu
Statutory Auditor
160,000
Katsuhiko Asada
Statutory Auditor
448,000
3,104,000
Employee Stock Purchase Plan
Our full-time employees are eligible to participate in our employee shareholders' association,
which purchases our shares with contributions from our employees deducted from their salaries. As
of March 31, 2006, the association owned 26,482,212 shares of common stock. We provide a 10%
subsidy in cash on top of the contribution of any employee who has participated in the association
for less than a year and 13% subsidy for those who have participated for one year or longer. The
board of our employee shareholders' association makes decisions as to how to vote all of its
shares.
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Item 7. Major Shareholders and Related Party Transactions.
A. Major Shareholders.
To our knowledge, the persons in the following table are the only owners or beneficial owners
or holders of 5% or more of our outstanding common stock as of March 31, 2006. We are not required
by Japanese law to disclose beneficial ownership of our common stock. As explained in "Reporting
Requirements of Shareholders — Report of Substantial Shareholdings" in Item 10.B of this annual
report on Form 20-F, any person who becomes, beneficially and solely or jointly, a holder of more
than 5% of our outstanding common stock must file a report with the relevant local finance bureau
of the Ministry of Finance. The information in this table is based upon our shareholders of record
and reports filed with the Financial Services Agency and U.S. Securities and Exchange Commission.
The shareholdings of the major shareholders in the table below overlap to the extent that multiple
individuals may be deemed to share beneficial ownership over the same shares:
Number of Shares
Percentage of
of Common Stock
Common Stock
Owned as of
Outstanding as of
Shareholders
March 31, 2006
(5)
March 31, 2006
(5)
Kunihiko Sakioka
(1) (5) (6)
753,987,732
27.6
%
Hideo Sakioka
(2) (5) (6)
743,074,044
27.2
Midori Moriyama
(3) (5)
375,476,120
13.7
Michimasa Sakioka
(4) (5)
371,956,836
13.6
(1)
Comprised of 89,610,440 shares over which Kunihiko Sakioka has sole voting and dispositive
power; 335,702,016 shares held by Nissin Building over which Kunihiko Sakioka may be deemed to
share beneficial ownership with Hideo Sakioka and voting or dispositive power with Michimasa
Sakioka and Midori Moriyama; and 328,675,276 shares held by Shuho, over which Kunihiko Sakioka
may be deemed to share voting and dispositive power with Hideo Sakioka.
(2)
Comprised of 78,696,752 shares over which Hideo Sakioka has sole voting and dispositive
power; 335,702,016 shares held by Nissin Building over which Hideo Sakioka may be deemed to
share voting and dispositive power with Kunihiko Sakioka, Michimasa Sakioka and Midori
Moriyama; and 328,675,276 shares held by Shuho, over which Hideo Sakioka may be deemed to
share voting and dispositive power with Kunihiko Sakioka.
(3)
Comprised of 39,774,104 shares over which Midori Moriyama has sole voting and dispositive
power; and 335,702,016 shares held by Nissin Building over which Midori Moriyama may be deemed
to share voting and dispositive power with Hideo Sakioka, Kunihiko Sakioka and Michimasa
Sakioka.
(4)
Comprised of 36,254,820 shares over which Michimasa Sakioka has sole voting and dispositive
power; and 335,702,016 shares held by Nissin Building over which Michimasa Sakioka may be
deemed to share voting and dispositive power with Hideo Sakioka, Kunihiko Sakioka and Midori
Moriyama.
(5)
Exclude shareholding of other Sakioka family members. Members of the Sakioka family,
including the ones listed above, directly and indirectly held an aggregate of 1,022,230,316
shares, or 37.4% of our outstanding shares of common stock, as of March 31, 2006.
(6)
In June 2006, Shinsuke Amiya, our president, representative director and Co-CEO, acquired
1,000,000 shares from Shuho. As a result, the number of shares beneficially owned by Kunihiko
Sakioka and Hideo Sakioka decreased by 1,000,000 shares, respectively.
According to our register of shareholders, as of March 31, 2006, 31 shareholders of
record with addresses in the United States held 1.95% of our outstanding common stock.
To our knowledge, we are not directly or indirectly owned or controlled by any government. We
know of no arrangements the operation of which may at a later time result in a change of control of
us. Our major shareholders have the same voting rights as other holders of our common stock.
There were no major changes in our major shareholders between March 31, 2004 and March 31, 2006.
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B. Related Party Transactions.
Except as described below, during the period beginning April 1, 2003 through the date of this
annual report on Form 20-F, there has been no material transaction with or loan between us or any
of our subsidiaries and:
•
any enterprise that directly or indirectly controls, is controlled
by, or is in common control with us or any of our subsidiary;
•
any director, officer, statutory auditor or family member of any
of the preceding or any enterprise over which such person directly
or indirectly is able to exercise significant influence;
•
any individual shareholder directly or indirectly having
significant influence over us or any of our subsidiary or a family
member of such individual or any enterprise over which such person
directly or indirectly is able to exercise significant influence,
or their respective family members or enterprises over which they
exercise significant influence, or
•
any unconsolidated enterprise in which we have a significant
influence or which has a significant influence over us.
Transactions with Our Directors, Corporate Officers, Statutory Auditors or Companies with Whom They
Have a Relationship
Transactions with Shuho
As of March 31, 2006, members of the Sakioka family owned 100% of Shuho. We received
insurance agency services from this entity prior to the year ended March 31, 2005. We also lease
office space to this entity. The following table shows transactions with this entity for the years
ended March 31, 2004, 2005 and 2006.
Year ended March 31,
2004
2005
2006
(in millions)
Insurance paid
¥
1
¥
—
¥
—
Rent income received
1
1
1
The terms of these transactions were determined in reference to equivalent transactions
with unrelated parties, and the prices for these transactions were equivalent to those set for the
equivalent transactions. Following the establishment in April 2003 of Nissin Insurance Co., Ltd.,
a wholly-owned subsidiary, that provides insurance agency services to us, we no longer receive
insurance agency services from Shuho, and do not intend to engage in any insurance transaction with
Shuho in the future.
Transactions with Nissin Building
As of March 31, 2006, members of the Sakioka family owned 93.3% of Nissin Building. We lease
office space and parking lots to this entity. The following table shows transactions with this
entity for the years ended March 31, 2004, 2005 and 2006.
Year ended March 31,
2004
2005
2006
(in millions)
Rent income received
¥
2
¥
2
¥
1
The terms of these transactions were determined in reference to equivalent transactions
with unrelated parties, and the prices for these transactions were equivalent to those set for the
equivalent transactions.
Transactions with Susumu Sakioka
Susumu Sakioka is the cousin of Kunihiko Sakioka, our chairman, representative director and
Co-CEO. On March 18, 2004, we received ¥117 million from Susumu Sakioka in connection with his
purchase of a 90% equity interest in Big Apple, our subsidiary. The purchase price was determined
based on a third-party market value assessment.
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Transactions with Our Principal Shareholders or Affiliates
Transactions with Ascot
We paid commissions on customer referrals of ¥35 million to Ascot during the year ended March
31, 2004. We formerly held 25% of Ascot, previously an affiliate. The terms of these transactions
were determined in reference to equivalent transactions with unrelated parties, and the prices for
these transactions were equivalent to those set for the equivalent transactions.
Transactions with Shinsei Business Finance
As of March 31, 2006, we owned 25% of Shinsei Business Finance; however, our interest in
Shinsei Business Finance became less than 20% as of April 14, 2006. The following table shows
transactions with this entity for the years ended March 31, 2004, 2005 and 2006:
Year ended March 31,
2004
2005
2006
(in millions)
Commissions on customers referral paid
¥
11
¥
32
¥
13
Agency commissions received
16
13
4
Loan guarantee fees received
90
316
467
Bank loan guarantee fees received
6
34
9
The terms of these transactions were determined in reference to equivalent transactions
with unrelated parties, and the prices for these transactions were equivalent to those set for the
equivalent transactions.
Transactions with Webcashing.com
As of March 31, 2006, we owned 38% of Webcashing.com.
We subsequently sold our entire interest in Webcashing.com on
September 5, 2006. The following table shows transactions
with this entity for the years ended March 31, 2004, 2005 and 2006:
Year ended March 31,
2004
2005
2006
(in millions)
Commissions on customers referral paid
¥
291
¥
205
¥
151
Advertising expenses and other fees paid
10
175
518
Proceeds from sale of equipment and software
22
—
—
The terms of these transactions were determined in reference to equivalent transactions
with unrelated parties, and the prices for these transactions were equivalent to those set for the
equivalent transactions.
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Transactions with Chuo Mitsui Finance Service
As of March 31, 2006, we owned 30% of Chuo Mitsui Finance Service. The following table shows
transactions with this entity for the years ended March 31, 2005 and 2006:
Year ended March 31,
2005
2006
(in millions)
Commissions on customers referral paid
¥
—
¥
9
Loan guarantee fees received
—
26
Bank loan guarantee fees received
—
11
In addition, for the year ended March 31, 2005, we paid commissions on customers referral
of ¥6 thousand, and received loan guarantee fees of ¥6 thousand and bank loan guarantee fees of ¥29
thousand. The terms of these transactions were determined in reference to equivalent transactions
with unrelated parties, and the prices for these transactions were equivalent to those set for the
equivalent transactions.
C. Interests of Experts and Counsel.
Not applicable.
Item 8. Financial Information.
A. Consolidated Statements and Other Financial Information.
Financial Statements
The consolidated financial statements required by this item begin on page F-1 in this annual
report on Form 20-F.
Legal or Arbitration Proceedings
The information on legal or arbitration proceedings required by this item is set forth in Item
4.B. of this annual report on Form 20-F.
Dividend Policy
Cash Dividends
Historically we have paid cash dividends twice per year. Our board of directors recommends
the year-end dividend to be paid following the end of each fiscal year, subject to approval by
shareholders at the general meeting of shareholders held in June of each year. Our articles of
incorporation now provide that the Board of Directors is authorized to decide distribution of
dividends without shareholders' approval pursuant to the requirement of the Corporate Law.
Following the approval by resolution of our Board of Directors, we pay the year-end dividend to
shareholders of record as of March 31 and semi-annual dividends to our shareholders of record as of
September 30 in each year. In addition to these annual and semi-annual dividends, our Board of
Directors may resolve the record date for interim dividends and distribute the profits to our
shareholders as further explained in Item 10.B, Memorandum and Article of Association, "Rights of
Our Shareholders — Rights with Respect to Distribution of Surplus, Stock Repurchase and Stock
Splits — Dividends" below.
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The following table shows the year-end and interim dividends paid to shareholders of record of
our common stock. "Dividends per share (As adjusted)" presents each dividend payments as adjusted
to reflect the 2-for-1 stock split that took effect on May 21, 2002, the 2-for-1 stock split that
took effect on May 20, 2003, the 2-for-1 stock split that took effect on May 20, 2004, the 2-for-1 stock
split that took effect on November 19, 2004, the 1.2-for-1 stock split that took effect on May 20,
2005, the 2-for-1 stock split that took effect on November 18, 2005, and the 2-for-1 stock split
that took effect on April 1, 2006:
Dividends per
Dividends per
share
share
Record Date
(Actual)
(As adjusted)
September 30, 2001 (interim)
¥
12.50
¥
0.16
March 31, 2002
12.50
0.16
September 30, 2002 (interim)
6.50
0.17
March 31, 2003
8.50
0.22
September 30, 2003 (interim)
3.75
0.20
March 31, 2004
4.75
0.25
September 30, 2004 (interim)
1.375
(1)
0.29
March 31, 2005
2.50
0.52
September 30, 2005 (interim)
1.00
(2)
0.50
March 31, 2006
1.10
0.55
(1)
Adjusted to reflect the 2-for-1 stock split that took effect on November 19, 2004. The actual
interim dividend payment per share was ¥2.75.
(2)
Adjusted to reflect the 2-for-1 stock split that took effect on November 18, 2005. The actual
interim dividend payment per share was ¥2.00.
We presently intend to continue to pay cash dividends, generally on a semi-annual basis,
and to provide a stable level of dividends to our shareholders. Since the year ended March 31,
2005, in order to reflect consolidated results as an indicator for our business performance, we
have a dividend policy to maintain a dividend payout ratio of 30% on a consolidated net income
basis. The declaration and payment of dividends, however, depend on our future earnings, financial
condition and other factors, including statutory and other restrictions on the payment of
dividends.
Dividends paid to shareholders outside Japan on shares of our common stock, including shares
represented by ADSs, are generally subject to a Japanese withholding tax at the maximum rate of
20%. Reduced rates for withholding apply to shareholders in some countries that have income tax
treaties with Japan. The withholding rate for U.S. holders is generally 10%, subject to a
temporary measurement. See "Japanese Tax Considerations" in Item 10.E of this annual report on
Form 20-F.
There are generally no U.S. or Japanese governmental restrictions on the distribution of
dividends to our shareholders.
Stock Repurchases
The following table shows information about our repurchases, net of distributions in the past:
Number of
Aggregate
Number of
Net aggregate
repurchased
repurchase
Number of
Aggregate
repurchased
purchase
Year ended/ending March 31,
shares
price
shares sold
sale price
shares, net
price
(in million)
(in million)
(in million)
2002
15,409,304
¥
347
—
¥
—
15,409,304
¥
347
2003
103,710,180
2,493
768,000
20
102,942,180
2,473
2004
57,671,212
1,209
12,867,840
338
44,803,372
871
2005
28,096
1
30,291,840
909
(30,263,744
)
(908
)
2006
37,502
2
52,833,762
2,209
(52,796,260
)
(2,207
)
2007
(through August 31, 2006)
1,291
—
9,245,120
362
(9,243,829
)
(362
)
Our article of incorporation permits us to repurchase our shares by resolution of our
Board of Directors. The repurchased shares are sold to directors and employees upon exercises of
their new share subscription rights as stock options.
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B. Significant Changes.
Except as otherwise disclosed in this annual report on Form 20-F, there has been no
significant change since March 31, 2006, the date of our last audited financial statements.
Item 9. The Offer and Listing.
A. Offer and Listing Details.
Tokyo Stock Exchange
The following table shows the reported high and low trading prices and the average daily
trading volume of our common stock on the Tokyo Stock Exchange as adjusted to reflect the 2-for-1
stock split that took effect on May 21, 2002, the 2-for-1 stock split that took effect on May 20,
2003, the 2-for-1 stock split that took effect on May 20, 2004, the 2-for-1 stock split that took
effect on November 19, 2004, the 1.2-for-1 stock split that took effect on May 20, 2005, the
2-for-1 stock split that took effect on November 18, 2005, and the 2-for-1 stock split that took
effect on April 1, 2006:
Average Daily
Trading
Price Per Share
Volume
Year ended/ending March 31,
High
Low
(in shares)
2002
¥
38
¥
19
5,053,996
2003
30
19
4,838,764
2004
48
20
6,692,160
2005
69
34
9,489,400
First Quarter
47
34
10,660,076
Second Quarter
53
45
9,501,044
Third Quarter
54
44
7,326,084
Fourth Quarter
69
51
10,486,356
2006
154
50
31,057,455
First Quarter
64
50
8,539,338
Second Quarter
83
52
15,323,019
Third Quarter
154
70
62,482,161
Fourth Quarter
145
100
38,401,184
2007
131
77
19,311,997
First Quarter
131
77
19,311,997
Average Daily
Trading
Price Per Share
Volume
Calendar month
High
Low
(in shares)
January 2006
¥
145
¥
109
48,724,011
February 2006
139
100
35,189,920
March 2006
135
105
32,405,345
April 2006
131
107
18,603,805
May 2006
117
88
20,342,990
June 2006
98
77
19,018,541
July 2006
91
52
36,152,225
August 2006
82
62
27,902,736
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Share prices on Japanese stock exchanges are determined on a real-time basis by the
equilibrium between bids and offers. These exchanges set daily price limits, which limit the
maximum range of fluctuation within a single trading day. Daily price limits are set according to
the previous day's closing price or special quote. Although transactions may continue at the
upward or downward limit price if the limit price is reached on a particular trading day, no
transactions may take place outside these limits. Consequently, an investor wishing to sell at a
price above or below the relevant daily limit may not be able to sell his shares at such price on a
particular trading day, or at all.
On
September 27, 2006, the closing price of our shares on the Tokyo
Stock Exchange was ¥75 per
share. The following table shows selected daily price limits for a stock on the Tokyo Stock
Exchange:
Maximum daily
Previous day's closing price or special quote
price movement
Less than
¥
100
¥
30
Over
¥
100
Less than
200
50
Over
200
Less than
500
80
Over
500
Less than
1,000
100
New York Stock Exchange
The current ADS/share ratio is one ADS per ten shares of our common stock. The following
table indicates the trading price of our American Depositary Shares on the New York Stock Exchange:
Average Daily
Trading
New York Stock Exchange price
Volume of
per ADS
ADSs
Year ended/ending March 31,
High
Low
2003(since August 2, 2002)
$
1.89
$
1.56
14,089
2004
4.76
1.66
6,202
2005
4.33
3.03
4,629
First Quarter
4.33
3.03
8,504
Second Quarter
4.81
4.14
2,880
Third Quarter
5.41
4.09
3,550
Fourth Quarter
6.29
4.85
5,167
2006
14.69
4.50
10,345
First Quarter
5.74
4.51
2,555
Second Quarter
7.50
4.50
2,971
Third Quarter
14.69
6.13
15,596
Fourth Quarter
12.72
8.69
20,661
2007
11.00
6.64
5,589
First Quarter
11.00
6.64
5,589
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Average Daily
Trading
New York Stock Exchange price
Volume of
per ADS
ADSs
High
Low
Calendar Month
January 2006
$
12.72
$
9.86
40,900
February 2006
11.71
9.00
14,347
March 2006
11.20
8.69
8,278
April 2006
11.00
9.35
4,547
May 2006
10.05
7.77
5,736
June 2006
8.58
6.64
6,341
July 2006
7.39
4.88
6,605
August 2006
7.38
5.41
12,417
The table above has been adjusted to reflect the 2-for-1 stock split that took effect on
May 20, 2004, the 2-for-1 stock split that took effect on November 19, 2004, the 1.2-for-1 stock
split that took effect on May 20, 2005, the 2-for-1 stock split that took effect on November 18,
2005, and the 2-for-1 stock split that took effect on April 1, 2006.
B. Plan of Distribution.
Not applicable.
C. Markets.
In Japan, our common stock has been listed on the First Section of the Tokyo Stock Exchange
since September 1999. In September 2002, we delisted our shares from the Osaka Securities
Exchange, where our shares had been traded since September 1999. Our common stock began trading on
the Japan Securities Dealers Association's over-the-counter market in April 1994.
In August 2002, we listed our common stock on the New York Stock Exchange in the form of ADSs
evidenced by ADRs. For further information regarding our American Depositary Receipt program,
see our registration statement filed with the Securities and Exchange Commission on Form F-1
(File No. 333-97229) declared effective on August 1, 2002.
D. Selling Shareholders.
Not applicable.
E. Dilution.
Not applicable.
F. Expenses of the Issue.
Not applicable.
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Item 10. Additional Information.
A. Share Capital.
Not required.
B. Memorandum and Articles of Association.
Purposes in Our Article of Incorporation
Article 2 of the Article of Incorporation states our purposes as follows:
•
Consumer credit business, enterprise credit business, and financial mediation,
guarantee and agency of these;
•
Credit management and collection business;
•
The business of leasing, rental , buying and purchasing (including buying and
purchasing by installments), and managing all types of movable estate;
•
The buying and selling, exchange, rental, mediation, appraisement, management,
possession and operation of real estate;
•
Civil engineering, building work and contracting business;
•
The buying and selling, mediation, commissioning or agency of securities;
•
Non-life insurance agent business, business related to the offering of life
insurance, and insurance agent business based on the Automobile Liability Security Law;
•
Investment and management consultancy business for enterprises;
•
Business agency for rental contracts for corporate housing, offices and parking
space and sales contracts;
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•
The business of supplying temporary labor;
•
Importing and exporting products and distribution business;
•
Collection agency business;
•
Computing work agency business;
•
Contracting for advertising and publicity;
•
Factoring business;
•
Development and distribution of computer software;
•
Distribution of computers and peripherals devices;
•
Management and rental of sports facilities;
•
Office work agency business such as enterprise accounting or labor services
•
Internet provider business;
•
Internet advertising and publicity business;
•
Mediation of money borrowing and lending using the Internet;
•
Business related to the planning and development of Internet software and the
commissioning of its production, as well as consulting business related to these;
•
Business related to general bridal services;
•
Business related to the planning, management and coordination of all types of events;
•
Business related to all types of training and courses for the acquisition of all
types of licenses;
•
Planning and production of advertising and publicity, as well as advertising agency
business;
•
Business of offering automobile inspection services; and
•
All business that is ancillary to each of the preceding items.
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Provisions Regarding Our Directors
There is no provision in our articles of incorporation as to our directors' power to vote on a
proposal, arrangement or contract in which a director is materially interested. The Corporate Law
of Japan, however, requires such director to refrain from voting on such matters at meetings of the
board of directors.
The Corporate Law provides that compensation for directors be determined at a general meeting
of shareholders. Our board of directors will determine the compensation for each director without
exceeding the upper limit on the aggregate amount of compensation for directors as a group approved
by the shareholders' meeting. Our board of directors may, by its resolution, leave this decision
to the discretion of our president.
The Corporate Law provides that the board of directors must approve significant loans from any
third party to the company. Our regulations of the board of directors have adopted this policy.
Neither the Corporate Law nor our articles of incorporation set a mandatory retirement age for
our directors.
There is no requirement concerning the number of shares an individual must hold to qualify as
a director under the Corporate Law or our articles of incorporation.
Rights of Our Shareholders
The Corporate Law which came into effect on May 1, 2006 allows (and the former Commercial Code
allowed) a change in the number of authorized shares, or total number of shares issuable, in
correspond to the ratio of a stock split upon approval by the Board of Directors. Pursuant to the
Commercial Code, then in effect, on April 1, 2006 in accordance with a partial amendment of our
articles of incorporation upon approval by the Board of Directors on December 20, 2005, the number
of authorized shares was increased from 3,840 million shares to 7,680 million shares.
Rights with Respect to Distribution of Surplus, Stock Repurchases and Stock Splits
Dividends
Under the Corporate Law, distributions of cash or other assets by joint stock corporations to
their shareholders, so called "dividends", are referred to as "distributions of Surplus" ("Surplus"
is defined in "Restriction on Distributions of Surplus" below). The Japanese Corporate Law
permits a joint stock corporation to distribute Surplus to its shareholders any number of times per
fiscal year, subject to certain limitations on the distributable profits as described in
"Restriction on Distributions of Surplus". Under the Corporate Law, distributions of Surplus are
required to be authorized by a resolution of a general meeting of shareholders, or by the Board of
Directors if its articles of incorporations so provide and the following requirements are met:
(a)
The company employs independent certified public accountant and corporate
governance system based on a board of statutory auditors or committees, and the normal
term of office of directors is not longer than one year; and
(b)
non-consolidated annual financial statements and certain documents for the last
fiscal year present fairly our assets and profit or loss, as required by the ordinances
of the Ministry of Justice.
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After the latest amendment of our articles of incorporation approved by the ordinary general
meeting of shareholders held on June 24, 2006, our articles of incorporation provide that our Board
of Directors is authorized to decide distributions of Surplus and we meet the relevant corporate
governance requirements including one-year office term of directors. Therefore, our Board of
Directors has the authority to decide to make future distributions of Surplus upon meeting the
financial statements requirement of (b) above. When we distribute Surplus to shareholders, we have
to set a record date so as to identify the shareholders (or pledgees) who are entitled for the dividends by way of the
public announcement unless we set fixed record dates in our articles of incorporation. Our
articles of incorporation provides that March 31 of each year shall be a fixed record date for the
year-end dividends and September 30 of each year shall be a fixed record date for the semi-annual
dividends, therefore we may distribute dividends to shareholders (or pledgees) appearing in the
register of shareholders as of March 31 and September 30 of each year, respectively, pursuant to a
resolution of our Board of Directors. Under our articles of incorporation, we are not obligated to
pay any dividends left unclaimed for a period of three years after the date on which they first
became payable. For information as to Japanese taxes on dividends, see "Japanese Tax
Considerations" in Item 10.E of this annual report on Form 20-F.
Dividends may be distributed in cash or in kind in proportion to the number of shares held by
each shareholder. A resolution of our Board of Directors (or, if shareholder has no option to
receive cash, a special resolution of shareholders meeting) authorizing a distribution of Surplus
must specify the kind and aggregate book value of the assets to be distributed, the manner of
allocation of such assets to shareholders, and the effective date of the distribution. In case that
a distribution in kind is authorized by a resolution of our Board of Directors, the approval by a
special resolution of a general meeting of shareholders is required unless we grant a right to
shareholders to receive such distribution in cash instead of in kind.
Restriction on Distributions of Surplus
When we make a distribution of Surplus, we must, until the aggregate amount of our additional
paid-in capital and legal reserve reaches one-quarter of our stated capital, set aside in our
additional paid-in capital and/or legal reserve an amount equal to one-tenth of the amount of
Surplus so distributed.
The amount of Surplus at any given time must be calculated in accordance with the following
formula:
A + B + C + D – (E + F + G)
In the above formula:
"A"=
the total amount of 'other additional paid-in capital (other than general
additional paid-in capital)' and 'other retained earnings (other than legal
reserve)', each such amount being that appearing on our non-consolidated balance
sheet as of the end of the last fiscal year;
"B"=
(if we have disposed of our treasury stock after the end of the last
fiscal year) the amount of the consideration for such treasury stock received by us
less the book value thereof;
"C"=
(if we have reduced our stated capital after the end of the last fiscal
year) the amount of such reduction less the portion thereof that has been transferred
to additional paid-in capital or legal reserve (if any);
"D"=
(if we have reduced our additional paid-in capital or legal reserve after
the end of the last fiscal year) the amount of such reduction less the portion
thereof that has been transferred to stated capital (if any);
"E"=
(if we have cancelled our treasury stock after the end of the last fiscal
year) the book value of such treasury stock;
"F"=
(if we have distributed Surplus to our shareholders after the end of the
last fiscal year) the total book value of the Surplus so distributed;
"G"=
certain other amounts set forth in the ordinances of the Ministry of
Justice, including (if we have reduced Surplus and increased our stated capital,
additional paid-in capital or legal reserve after the end of the last fiscal year)
the amount of such reduction and (if we have distributed Surplus to our shareholders after the end of the last fiscal year)
the amount set aside in our additional paid-in capital or legal reserve (if any) as
required by the ordinances of the Ministry of Justice.
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The amount of Surplus distributed by us may not exceed a prescribed distributable amount (the
"Distributable Amount"), as calculated on the effective date of such distribution. The
Distributable Amount at any given time shall be equal to the amount of Surplus less the aggregate
of the followings:
(a)
the book value of our treasury stock;
(b)
the amount of consideration for our treasury stock disposed of by us
after the end of the last fiscal year; and
(c)
certain other amounts set forth in the ordinances of the Ministry of
Justice, including (if the sum of one-half of good will and the deferred assets
exceeds the total of stated capital, additional paid-in capital and legal reserve,
each such amount being that appearing on our non-consolidate balance sheet as of the
end of the last fiscal year) all or certain part of such exceeding amount as
calculated in accordance with the ordinances of the Ministry of Justice.
If we have become at our option a company with respect to which consolidated balance sheets
should also be taken into consideration in the calculation of the Distributable Amount (
renketsu
haito kisei tekiyo kaisha
), it will be required to further deduct from the amount of Surplus the
excess amount (if the amount is zero or below zero, zero) of (x) the total amount of shareholders'
equity appearing on our non-consolidated balance sheet as at the end of last fiscal year and
certain other amounts set forth in the ordinances of the Ministry of Justice over (y) the total
amount of shareholders' equity and certain other amounts set forth in the ordinances of the
Ministry of Justice appearing on our consolidated balance sheet as at the end of the last fiscal
year.
If we have prepared interim financial statements as described below, and if such interim
financial statements have been approved by (unless exempted by the Corporate Law) a general meeting
of shareholders, the Distributable Amount must be adjusted to take into account the amount of
profit or loss, and the amount of consideration for our treasury stock disposed of by us, during
the period in respect of which such interim financial statements have been prepared. We may
prepare non-consolidated interim financial statements consisting of a balance sheet as of any date
subsequent to the end of the last fiscal year and an income statement for the period from the first
day of the current fiscal year to the date of such balance sheet. Interim financial statements so
prepared by us must be approved by the Board of Directors and audited by our independent auditors,
as required by the ordinances of the Ministry of Justice.
Repurchase of Our Shares
Under the Corporate Law and our articles of incorporation, we may, pursuant to the same
requirement as the authorization of distribution of the Surplus, upon approval by the Board of
Directors, flexibly acquire our own shares during a fiscal year and may determine the amount and
timing of the purchase of our shares without having pre-approval at a shareholders meeting of the
total number of shares or aggregate price of shares to be acquired. In such case, we may acquire
our shares (i) by way of purchase on any Japanese stock exchange on which our shares are listed or
by way of take over bids (TOB), (ii) by soliciting all our shareholders to offer to sell our shares
held by them (on a pro-rata basis), or (iii) from any of our subsidiaries.
In addition, we may also acquire our shares from a specific shareholder other than any of our
subsidiaries pursuant to a special resolution of a general meeting of shareholders. In such case,
any other shareholder may make a request to the Board of Directors that such other shareholder be
included as a seller in the proposed purchase, provided that no such right will be available if the
purchase price or any other consideration to be received by the relevant specific shareholder will
not exceed the last trading price of the shares on the Tokyo Stock Exchange on the day immediately
preceding the date on which the resolution was adopted (or, if there is no trading in the shares on
the Tokyo Stock Exchange or if the Tokyo Stock Exchange is not open on such day, the price at which
the shares are first traded on the Tokyo Stock Exchange thereafter).
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However, under the Corporate Law, any acquisition of our shares pursuant to articles of
incorporation must satisfy the requirement that the total purchase price (the amount of the cash or
the book value of the consideration in kind) should not exceed the Distributable Amount as at the
effective date of such acquisition (as described in "
Distribution of Surplus
" above).
Further, in the event such acquisition of our shares cause a deficit of the Surplus a the end
of the fiscal year, the directors shall be liable to compensate the deficit of the company.
In addition, subsequent to the acquisition of these shares, the company is required to provide
certain disclosure pursuant to the Securities and Exchange Law and the relevant Stock Exchange
regulations.
We may hold our own shares acquired in compliance with the Corporate Law and may generally
cancel or dispose those shares by a resolution of our board of directors.
In addition, we may acquire our shares by:
•
repurchasing those that constitute less than one unit upon the request of their holder,
•
repurchasing those from our subsidiary company,
•
redeeming redeemable shares (
shutoku jyo-kou-tsuki kabusiki
) or shares with
redemption right (
shutoku seikyu-ken-tsuki kabushiki
), or
•
a business transfer, merger or spin-off.
Stock Splits
We may at any time split our issued shares by resolution of our board of directors. When our
board of directors approves a stock split, we may amend our articles of incorporation without
shareholder approval to increase the total number of shares issuable in proportion to the stock
split if we have only one class of outstanding shares.
Generally, shareholders do not need to exchange share certificates for new ones following a
stock split, but certificates representing the additional shares resulting from the stock split
will be issued to shareholders. Before a stock split, we must give public notice of the stock
split, specifying the record date for the stock split, not less than two weeks prior to the record
date.
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Voting Rights
A shareholder is generally entitled to one vote per one unit of our shares. In general, under
the Japanese Corporate Law, a general meeting of shareholders may adopt a resolution by a majority
of voting rights held by shareholders with exercisable voting rights at the meeting. The
Japanese Corporate Law and our articles of incorporation require a quorum for the election of
directors and statutory auditors of no less than one-third of the total number of voting rights
held by shareholders with exercisable voting rights. Our shareholders are not entitled to
cumulative voting in the election of directors. A corporate shareholder, having no less than
one-quarter of its voting rights directly or indirectly held by us, does not have voting rights.
We have no voting rights with respect to our own common stock. Shareholders may exercise their
voting rights through proxies, provided that those proxies are also shareholders who have voting
rights. Our shareholders also may cast their votes in writing. Our board of directors may entitle
our shareholders to cast their votes by electronic devices.
The Corporate Law provides that certain important matters shall be approved by a "special
resolution" of general meeting of shareholders. Our articles of incorporation provide for a quorum
of one-third of voting rights and approval of two-thirds of the voting rights held by shareholders
with exercisable voting rights presented at the meeting of any material corporate actions such as:
•
a reduction of the stated capital,
•
amendment of the articles of incorporation (except amendments that the board of
directors are authorized to make under the Corporate Law as described in "—
Rights with
Respect to Distribution of Surplus, Stock Repurchases and Stock Splits
" above and
"Limitations Affecting Security Holders —
Japanese Unit Share System
" below),
•
the removal of a statutory auditor,
•
establishment of a 100% parent-subsidiary relationship through a share exchange or
share transfer requiring shareholders' approval,
•
a dissolution, merger or consolidation requiring shareholders' approval,
•
a company spin-off requiring shareholders' approval,
•
a transfer of the whole or an important part of our business,
•
the taking over of the whole of the business of any other corporation requiring
shareholders' approval,
•
any issuance of new shares or transfer of existing shares as treasury stock to
persons other than the shareholders at a "specifically favorable" price; and
•
any issuance of stock acquisition rights (as defined in "
Stock Acquisition Rights
"
below) (including those incorporated in bonds with stock acquisition rights) to persons
other than the shareholders under "specifically favorable" conditions.
The depositary will endeavor to vote deposited shares based in accordance with instructions
from ADR holders. With respect to voting by holders of ADRs, see Exhibit 2.2 to this annual report
on Form 20-F for a form of our deposit agreement.
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New Share Subscription Rights
Holders of our shares have no preemptive rights under our articles of incorporation. Under
the Corporate Law, the board of directors may determine that shareholders receive new share
subscription rights in connection with a particular issue of new shares. In this case, we must
give the rights on uniform terms to all of our shareholders as of a specified record date by at
least two weeks' prior public notice to shareholders of the record date. Each of these
shareholders must receive an individual notice at least two weeks prior to the date of expiration
of the new share subscription rights.
The board of directors may make rights to subscribe for new shares at or substantially below
the market price of shares. Accordingly, rights offerings can result in substantial dilution or
prevent rights holders from realizing the economic value of those rights.
Liquidation Rights
In the event of liquidation, our assets remaining after payment of all debts, liquidation
expenses and taxes will be distributed among our shareholders in proportion to the number of shares
they own.
Liability to Further Calls or Assessments
All of our currently outstanding shares are fully paid and nonassessable.
Shareholders' Rights to Bring Actions Against Directors
The Japanese Corporate Law contains clauses that allow shareholders who have held our shares
for six months to claim proposals for pursuing directors' management responsibilities. Derivative
actions may be brought in situations including where the company lends money to directors, engages
in self-interested transactions or violates any law, ordinance or the articles of incorporation.
If our board of directors has not instituted an action within sixty days of the shareholder's
demand, the shareholder may initiate a lawsuit as a derivative action. The Corporate Law also
provides an exception to the sixty day waiting period, when a wait of sixty days might cause the
company irreparable damage. In these cases, the shareholder may institute the action immediately,
but must notify the company without delay. For example, if we could suffer irreparable damage from
an illegal act of our director, a shareholder who has owned a share continuously for the previous
six months may seek a provisional injunction prohibiting the director from performing the illegal
act. In addition, pursuant to the Corporate Law, shareholders have a right to institute a direct
lawsuit for recovery of monetary damages against directors, statutory auditors, accounting
auditors, and others if any such officer causes damage to a third party, such as shareholders, by
their gross negligence or willful conduct.
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Limitations Affecting Security Holders
Japanese Unit Share System
Our articles of incorporation provide that 100 shares constitute one "unit". The Corporate
Law permits our board of directors by itself to reduce, but not to increase, the number of new unit
or abolish the new unit share system entirely by a board resolution. An increase in the number of
shares that constitute a unit requires an amendment of the articles of incorporation by a special
resolution at the shareholders' meeting. In any case, the number of shares constituting a new unit
may not exceed 1,000 shares.
Under the Corporate Law, shareholders have one voting right for each unit of shares they hold.
Any number of shares less than a full unit will carry no voting rights and be excluded for the
purposes of calculating the quorum for voting purposes. Moreover, in accordance with the Corporate
Law, our articles of incorporation provide that a holder of shares constituting less than one unit
does not have any other rights of a shareholder in respect of those shares, other than those
provided by our articles of incorporation including the following rights:
•
to receive distributions of Surplus,
•
to receive cash or other assets in case of consolidation or split of
shares, exchange or transfer of shares or corporate merger,
•
to be allotted rights to subscribe for free for new shares and stock
acquisition rights when such rights are granted to shareholders, and
•
to participate in any distribution of surplus assets upon liquidation.
Our articles of incorporation provide that no share certificates will be issued with respect
to any number of shares constituting less than one unit. As the transfer of shares normally
requires delivery of share certificates, any fraction of a unit for which no share certificates are
issued is non-transferable.
Right of a Holder of Shares Representing Less Than One Unit to Require Us to Purchase Its
Shares
A holder of our shares representing less than one unit may at any time require us (through a
participating institution in the case of a beneficial shareholder under the central clearing
system) to purchase them at the last selling price as reported by the Tokyo Stock Exchange on the
day of the request. Alternatively, if the stock exchange does not report any sale of our shares on
the day of the request, the holder of these shares may require us to purchase them at their first
subsequent trading price on the stock exchange, less any applicable brokerage commission. Because
holders of our ADRs representing less than one unit cannot withdraw the underlying shares from
depositary institution, however, these holders will not be able to exercise this right as a
practical matter.
Voting Rights of a Holder of Shares Representing Less Than One Unit
A holder of our shares representing less than one unit cannot exercise any voting rights
pertaining to those shares. For calculation of the quorum for various voting purposes, we will
exclude the aggregate number of shares representing less than one unit from the number of voting
rights. A holder of shares representing one or more units will have one vote for each one unit of
shares except as stated in "Rights of Our Shareholders — Voting Rights" above.
Rights of Foreign Investors
Other than the Japanese unit share system described above, the laws of Japan, our articles of
incorporation and our other constituent documents do not limit the rights of non-residents or
foreign shareholders to hold or exercise voting rights on our shares.
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Reporting Requirements of Shareholders
Report of Substantial Shareholdings
The Securities and Exchange Law of Japan requires any holder of shares, including in the form
of ADRs, who has become a holder of more than 5% of the total issued shares of a company listed on
any Japanese stock exchange to file with the relevant local finance bureau of the Ministry of
Finance, within five business days, a report concerning those shareholdings. A holder must file a
similar report to reflect any change of 1% or more in any shareholding. Copies of any reports must
also be furnished to us and to all Japanese stock exchanges on which our shares are listed. For
this purpose, shares issuable upon exercise of share subscription options are taken into account in
determining both the number of shares held by that holder and our total issued share capital. As a
result, the above reporting requirements will apply to holders of more than 5% of our total issued
shares including such subscription options and bonds with share subscription options.
Acquisition or Disposition of Shares or ADSs
In general, non-residents of Japan and corporations whose principal offices are located
outside Japan may acquire shares of stock of a Japanese company listed on any Japanese stock
exchange from resident of Japan without any restriction but subject to the requirement under the
foreign exchange regulations and securities law as described below. Under the Foreign Exchange and
Foreign Trade Law, foreign exchange and foreign trade transactions are, with minor exceptions
relating to inward direct investments generally inapplicable to our shares, only subject to post
transaction reporting requirements. Non-residents of Japan, including foreign corporations not
resident in Japan, who acquire or dispose of shares of common stock or ADSs, are generally not
required to submit post transaction reports. The Minister of Finance, however, has the power to
impose a licensing requirement for transactions in limited circumstances.
If a foreign investor:
•
acquires shares of a Japanese company listed on a Japanese stock exchange; and
•
as a result of this acquisition, directly or indirectly holds, aggregated with
existing holdings, 10% or more of the issued shares of the company,
the foreign investor is, in general, required to report the acquisition to the Minister of Finance
and any other competent ministers via the Bank of Japan within 15 days from and including the date
of acquisition. In exceptional cases, a prior notification is required in respect of the
acquisition.
Ordinary General Meeting of Shareholders
We normally hold our ordinary general meeting of shareholders in June of each year in
Matsuyama, or in a neighboring area, or Shinjuku, Tokyo. In addition, we may hold an extraordinary
general meeting of shareholders whenever necessary by giving at least two weeks' advance notice
stating the place, time, and purpose of the meeting. Under the Corporate Law, notice of any
shareholders' meeting must be given to each shareholder having voting rights or, in the case of a
non-resident shareholder, to its resident proxy or mailing address in Japan in accordance with our
share handling regulations, at least two weeks prior to the date of the meeting.
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Clearing System for Our Shares
A holder of our shares may choose to participate, directly or indirectly, in the central
clearing system for share certificates under the Law Concerning Central Clearing of Share
Certificates and Other Securities of Japan. Participating shareholders must deposit certificates
representing all of their shares with the Japan Securities Depository Center, or JASDEC, the
depositary under the clearing system. If a holder is not a participating institution such as a
securities company or bank having a clearing account with the clearing system, it must participate
through a participating institution. All shares deposited with the clearing system will be
registered in the name of the clearing system on our register of shareholders. Each participating
shareholder will in turn be registered on our register of beneficial shareholders and be treated in
the same way as shareholders registered on our register of shareholders. Delivery of share
certificates is not necessary for transfer of deposited shares. Entry of the share transfer in the
books maintained by the clearing system for participating institutions, or in the book maintained
by a participating institution for its customers, has the same effect as delivery of share
certificates. The registered beneficial owners may exercise the rights attached to their shares,
such as voting rights, and will receive dividends (if any) and notices to shareholders directly
from us. The shares held by a person as a registered shareholder and those held by the same person
as a registered beneficial owner are aggregated for these purposes. Beneficial owners may at any
time withdraw their deposited shares and receive share certificates.
Settlement for Our Shares
Settlement of a transaction concerning shares listed on any of the stock exchanges in Japan
will normally occur on the fourth dealing day after the transaction. Settlement in Japan is made
by physical delivery of share certificates or through JASDEC as described above.
As described above, shareholders not resident in Japan are required to provide a mailing
address within Japan or to appoint a standing proxy in Japan. A local standing proxy can usually
handle the transfer of shares and registration of purchases and the application for reduced
withholding tax. See "Japanese Tax Considerations" in Item 10.E of this annual report on Form
20-F.
Share Registrar for Our Shares
The Chuo Mitsui Trust and Banking Co., Ltd. replace The Mitsubishi Trust and Banking
Corporation as the share registrar for our shares from June 23, 2005. Its office is located at
33-1, Shiba 3-chome, Minato-ku, Tokyo 168-0063, Japan. The Chuo Mitsui Trust and Banking Co., Ltd.
maintains our register of shareholders and records transfers of record ownership upon presentation
of share certificates.
Record Date for Our Shares
March 31 is the record date for our year-end dividends, if paid, and September 30 is the
record date for our half-year dividends, if paid. We set March 31 as the record date for
determining shareholders entitled to vote at the ordinary general meeting of shareholders. In
addition, we may set a record date for determining the shareholders entitled to other rights and
for other purposes by giving at least two weeks' prior public notice.
Our shares are generally traded ex-dividend or ex-rights in the Japanese stock exchanges on
the third business day before a record date (or if the record date is not a business day, the
fourth business day prior thereto), for the purpose of dividends or rights offerings.
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C. Material Contracts.
We have not been a party to any material contract, other than contracts entered into in the
ordinary course of business, during the period beginning April 1, 2004 through the date of this
annual report on Form 20-F.
D. Exchange Controls.
There are no laws, decrees, regulations or other legislation that affect our ability to import
or export capital for our use or our ability to pay dividends to nonresident holders of our shares.
E. Taxation.
United States Tax Considerations
This section, "United States Tax Considerations," describes the material U.S. federal income
tax consequences of owning shares or ADSs. This section applies to you only if you hold your
shares or ADSs as capital assets for tax purposes. This section does not apply to you if you are a
member of a special class of holders subject to special rules, including:
•
a dealer in securities,
•
a trader in securities that elects to use a mark-to-market method of accounting for
your securities holdings,
•
a tax-exempt organization,
•
a life insurance company,
•
a person liable for alternative minimum tax,
•
a person that actually or constructively owns 10% or more of our voting stock,
•
a person that holds shares or ADSs as part of a straddle or a hedging or conversion
transaction, or
•
a person whose functional currency is not the dollar.
This section is based on the U.S. Internal Revenue Code of 1986, as amended, its legislative
history, existing and proposed regulations, published rulings and court decisions, all as currently
in effect, as well as on the Convention Between the Government of the United States of America and
the Government of Japan for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion
with Respect to Taxes on Income (the "Treaty"). These laws are subject to change, possibly on a
retroactive basis. In addition, this section is based in part upon the representations of the
depositary and the assumption that each obligation in the deposit agreement and any related
agreement will be performed in accordance with its terms.
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You are a U.S. holder if you are a beneficial owner of shares or ADSs and you are:
•
a citizen or resident of the United States,
•
a corporation created or organized under the laws of the United States or any of its
political subdivisions,
•
an estate whose income is subject to U.S. federal income tax regardless of its
source, or
•
a trust if a U.S. court can exercise primary supervision over the trust's
administration and one or more U.S. persons are authorized to control all substantial
decisions of the trust.
You should consult your own tax advisor regarding the United States federal, state and local
and other tax consequences of owning and disposing of shares and ADSs in your particular
circumstances.
In general, and taking into account the earlier assumptions, for U.S. federal income tax
purposes, if you hold ADRs evidencing ADSs, you will be treated as the owner of the shares
represented by those ADRs. Exchanges of shares for ADRs, and ADRs for shares, generally will not
be subject to U.S. federal income tax.
Passive Foreign Investment Company Rules
As we expect 50% or more of our gross asset value will constitute passive assets, generally
meaning assets not constituting part of a trade or business, as determined for passive foreign
investment company purposes, we expect that our shares and ADSs will be treated as stock of a
passive foreign investment company, or PFIC, for U.S. federal income tax purposes, and except as
otherwise stated, the remainder of this discussion so assumes. This conclusion is a factual
determination made annually, which we will update in our future reports on Form 20-F. In addition,
we expect that our subsidiaries will be treated as PFICs for U.S. federal income tax purposes. You
will be treated as an indirect shareholder of your proportionate interest in the shares of such
subsidiaries.
U.S. holders of shares or ADSs of a PFIC must file U.S. Internal Revenue Service Form 8621
every year in which they continue to hold such shares.
If you are a U.S. holder you will be subject to the special PFIC tax rules or, if you make a
mark-to-market election, the mark-to-market rules.
Special PFIC Tax Rules
This subsection applies to you if you are a U.S. holder and do not make a mark-to-market
election. You will be subject to special PFIC tax rules with respect to:
•
any gain you realize on the sale or other disposition of your shares or ADSs
(including the pledging of your shares or ADSs as security for a loan) and
•
any excess distribution that we make to you (generally, any distributions to you
during a single taxable year that are greater than 125% of the average annual
distributions received by you in respect of the shares or ADSs during the three
preceding taxable years or, if shorter, your holding period for the shares or ADSs).
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In addition, if any of our subsidiaries are deemed a PFIC, a distribution from that subsidiary
to us, a disposition of that subsidiary by us, or a transaction through which your indirect
ownership of such subsidiary is decreased (including additional offerings of our shares or ADSs)
will be treated as a distribution or disposition subject to the special PFIC tax rules. You will be entitled,
however, to increase your basis in the shares or ADSs you directly own to reflect the gain realized
upon such distributions, or dispositions. Moreover, you will not be taxed when we distribute to
you the income that you already included in income for tax purposes.
Under these special PFIC tax rules:
•
the gain or excess distribution will be allocated ratably over your holding period
for the shares or ADSs,
•
the amount allocated to the taxable year in which you realized the gain or excess
distribution will be taxed as ordinary income,
•
the amount allocated to each prior year, with certain exceptions, will be taxed at
the highest tax rate in effect for that year, and
•
the interest charge generally applicable to underpayments of tax will be imposed in
respect of the tax attributable to each such prior year.
Amounts subject to these special PFIC tax rules will not be eligible for the
dividends-received deduction generally allowed to U.S. corporations in respect of dividends
received from other U.S. corporations. In addition, dividends that you receive from us will not
constitute qualified dividend income to you if we are a PFIC either in the taxable year of the
distribution or the preceding taxable year. Dividends that you receive that do not constitute
qualified dividend income are not eligible for taxation at the 15% maximum rate applicable to
qualified dividend income even if the dividend does not constitute an excess distribution.
Instead, you must include the gross amount of any such dividend paid by us out of our accumulated
earnings and profits (as determined for United States federal income tax purposes) in your gross
income, and it will be subject to tax at rates applicable to ordinary income.
If you receive distributions that are not subject to the special PFIC tax rules, you must
include in your gross income the gross amount of any dividend paid by us out of our current or
accumulated earnings and profits (as determined for U.S. federal income tax purposes). You must
include any Japanese tax withheld from the dividend payment in this gross amount even though you do
not in fact receive it. The dividend is ordinary income that you must include in income at the
ordinary income tax rate when you, in the case of shares, or the depositary, in the case of ADSs,
receive the dividend, actually or constructively. The dividend will not be eligible for the
dividends-received deduction generally allowed to U.S. corporations in respect of dividends
received from other U.S. corporations. The amount of any distribution that you must include in your
income as a U.S. holder will be the dollar value of the yen payments made, determined at the spot
yen/dollar rate on the date the distribution is includible in your income, regardless of whether
the payment is in fact converted into dollars. Generally, any gain or loss resulting from currency
exchange fluctuations during the period from the date you include the dividend payment in income to
the date you convert the payment into dollars will be treated as ordinary income or loss and will
not be eligible for the special tax rate applicable to qualified dividend income. The gain or loss
generally will be income or loss from sources within the United States for foreign tax credit
limitation purposes. If you receive distributions that are not subject to the special PFIC tax
rules and that are in excess of current and accumulated earnings and profits, as determined for
U.S. federal income tax purposes, you will be treated as having received a non-taxable return of
capital to the extent of your basis in the shares or ADSs and thereafter you will recognize capital
gain, which will be taxed in accordance with the special PFIC tax rules described above.
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Mark-to-market Rules
The special PFIC tax rules described above will not apply to you if you make an effective
mark-to-market election, that is, you elect to mark-to-market annually the gains and losses in our
shares or ADSs and our shares or ADSs are treated as "marketable stock." We believe that our
common stock is and will continue to be "marketable stock" as long as it continues to be traded on
the New York Stock Exchange, other than in de minimis quantities, on at least 15 days during each
calendar quarter. Under the mark-to-market rules, you will include as ordinary income each year
the excess, if any, of the fair market value of your shares or ADSs at the end of the taxable year
over your adjusted basis in your shares or ADSs. These amounts of ordinary income will not be
eligible for the favorable tax rates applicable to qualified dividend income or long-term capital
gains. You may also take an ordinary loss in respect of the excess, if any, of the adjusted basis
of your shares or ADSs over their fair market value at the end of the taxable year (but only to the
extent of the net amount of previously included income as a result of the mark-to-market election).
Your basis in the shares or ADSs will be adjusted to reflect any such income or loss amounts. In
addition, notwithstanding any election you make with regard to the shares or ADSs, dividends that
you receive from us will not constitute qualified dividend income to you if we are a PFIC either in
the taxable year of the distribution or the preceding taxable year and such dividends will
therefore not be eligible for taxation at the 15% maximum rate applicable to qualified dividend
income. It is unclear how the mark-to-market rules apply to a PFIC whose shares are "marketable
stock," but owns subsidiary PFICs whose shares are not "marketable stock."
Please consult your tax advisor as to the availability and tax consequences of a
mark-to-market election.
Foreign Tax Credit
Subject to the general limitations that apply to the creditability of foreign income taxes,
the Japanese tax withheld in accordance with the Treaty and paid over to Japan will be creditable
against your U.S. federal income tax liability. To the extent a refund of the tax withheld is
available to you under Japanese law or under the Treaty, the amount of tax withheld that is
refundable will not be eligible for credit against your U.S. federal income tax liability.
Special rules apply for calculating the amount of the foreign tax credit with respect to
excess distributions if you are governed by the special PFIC tax rules described above. For
example, if you did not make a mark-to-market election, the section 904 tax credit limitation would
be applied separately with respect to the amount of excess distribution allocable to each such
taxable year and carryovers, if any, are not allowed.
Dividends that are not excess distributions will generally be "passive income" which is
treated separately from other types of income for purposes of computing the foreign tax credit
allowable to you. Such dividends will be income from sources outside the United States.
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Japanese Tax Considerations
This section, "Japanese Tax Considerations," is a summary of the principal Japanese tax
consequences to owners of our shares or ADSs who are non-resident individuals or non-Japanese
corporations without a permanent establishment in Japan to which the relevant income is
attributable. As tax laws are frequently revised, the statements regarding Japanese tax laws below
are subject to changes in the applicable Japanese laws or tax treaties, conventions or agreements,
or in their interpretation, occurring after the date of this prospectus. This summary is not
exhaustive of all possible tax considerations that may apply to specific investors under particular circumstances. Potential
investors should satisfy themselves as to:
•
the overall tax consequences of the acquisition, ownership and disposition of our
shares or ADSs, including specifically the tax consequences under Japanese law,
•
the laws of the jurisdiction of which they are resident, and
•
any tax treaty between Japan and their country of residence, by consulting with
their own tax advisers.
Generally, a non-resident shareholder is subject to Japanese withholding tax on dividends paid
on our shares. Stock splits are generally not subject to Japanese income or corporation tax, as it
is characterized merely as an increase of number of shares, as opposed to an increase of value of
shares, from Japanese tax perspectives. Due to the 2001 Japanese tax legislation effective from
April 1, 2001, a conversion of retained earnings or legal reserve (but, in general, other than
additional paid-in capital) into stated capital on a non-consolidated basis is not characterized as
a deemed dividend for Japanese tax purposes, and therefore such a conversion does not trigger
Japanese withholding taxation (Article 2 (16) of the Japanese Corporation Tax Law and Article 8 (1)
(xv) of the Japanese Corporation Tax Law Enforcement Order).
Under the 2001 tax legislation, if we purchase our listed shares (i) by a tender offer or (ii)
from a specific shareholder other than through a market purchase for the purpose of cancellation
with retained earnings, the selling shareholders, whether individuals or corporations, are in
general required to recognize:
•
the deemed dividend corresponding to a distribution of retained earnings
proportionally computed by a statutory formula on a pro rata basis allocating the
selling price into the repayment of share capital portion, including additional paid-in
capital, and retained earnings portion on a non-consolidated basis under Article 24
(1) (v) of the Japanese Corporation Tax Law, and
•
capital gain or loss computed as a difference between the basis of shares subject to
the tender offer at the shareholders level and the amount of the consideration for the
tender offer, deducting the amount corresponding to the deemed dividend computed as (i)
above under Article 61-2 (1) of the same law.
On the other hand, no deemed dividend is required to recognize if we purchase our shares
at/through the stock market due to the difficulty to identify each shareholder sold our shares
(Articles 24 (1) (iv) and 61-2 (xi) of the Japanese Corporation Tax Law and Article 23 (3) of the
Japanese Corporation Tax Law Enforcement Order). In addition, in the case of individual
shareholders, no deemed dividend is required to be recognized until March 31, 2007 due to the
operation of a temporary measurement (Article 9-6 of the Japanese Special Tax Measurement Law).
Therefore, they are only required to recognize capital gain or loss of the shares subject to the
tender offer. In the meantime, when shares are acquired by us, whether by way of a tender offer or
otherwise, for the purpose of cancellation with retained earnings, the shareholders, whether
individuals or corporations, whose shares are not acquired by us were previously deemed to have
received a dividend corresponding to the notional increase of share value by the share cancellation
under the old tax law before the 2001 tax legislation. However, under the 2001 tax legislation, no
deemed dividend taxation occurs for the remaining shareholders, whether individuals or
corporations, whose shares are not cancelled.
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Unless a tax treaty, convention or agreement reduces the maximum rate of withholding tax, the
rate of Japanese withholding tax applicable to dividends on the listed shares paid by us to
non-resident shareholders is:
•
7% for dividends to be paid between January 1, 2004 and March 31, 2008 as a
temporary measurement; and
•
15% thereafter, except for dividends paid to any individual shareholder who holds 5%
or more of our issued shares, in which case the applicable rate is 20%.
Japan has income tax treaties, conventions or agreements that generally reduce the
above-mentioned withholding tax rate to 15% for portfolio investors with, among others, Australia,
Belgium, Canada, Denmark, Finland, France, Germany, Ireland, Italy, Luxembourg, The Netherlands,
New Zealand, Norway, Singapore, Spain, Sweden, Switzerland, and the United Kingdom. Under the new
tax treaty between United States and Japan, of which withholding tax treatment is applicable
effective from July 1, 2004 to dividends declared thereafter, the withholding tax rate on dividends
is 10% for portfolio investors, if they do not have a permanent establishment in Japan and the
shares with respect to which such dividends are paid are not related in-fact to such permanent
establishment, and if they are qualified U.S. residents eligible to enjoy treaty benefits. Note
that, under the new tax treaty between US and Japan, withholding tax on dividends declared after
July 1, 2004 is exempt from Japanese taxation by way of withholding or otherwise for pension funds
which are qualified US residents eligible to enjoy treaty benefits unless such dividends are
derived from the carrying on of a business, directly or indirectly, by such pension funds. By
virtue of the operation of the preservation doctrine under each tax treaty, if the Japanese
statutory rate is lower than the maximum rate applicable under the Tax Treaty, the Japanese
statutory rate shall apply. In the case where the treaty rare applies, Non-resident shareholders
entitled to a reduced Japanese withholding tax rate on our dividends are required to submit an
Application Form for Income Tax Convention regarding Relief from Japanese Income Tax on Dividends
through us to the relevant tax authority before payment of dividends. A standing proxy for
non-resident shareholders may provide this application service. See "Settlement for Our the
Shares" in Item 10.B of this annual report on Form 20-F. With respect to ADSs, this reduced rate
is applicable if the depositary or its agent submits two Application Forms for Income Tax
Convention—one before payment of dividends and the other within eight months of our fiscal year
end. To claim this reduced rate, a non-resident holder of ADSs will be required to file proof of
taxpayer status, residence and beneficial ownership, as applicable, and to provide other
information or documents as may be required by the depositary. Non-resident holders who do not
submit an application in advance will be entitled to claim the refund of taxes withheld in excess
of the rate of an applicable tax treaty from the relevant Japanese tax authority.
Gains derived from the sale of our shares or ADSs outside Japan, or from the sale of our
shares within Japan by a non-resident shareholder as a portfolio investor, are generally not
subject to Japanese income or corporation taxes.
Japanese inheritance and gift taxes may be assessed against an individual who has acquired our
shares or ADSs as a legatee, heir or donee, even if the individual is not a Japanese resident.
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F. Dividends and Paying Agents.
Not required.
G. Statement by Experts.
Not required.
H. Documents on Display.
We file periodic reports and other information with the Securities and Exchange Commission.
The Securities and Exchange Commission maintains an Internet site at www.sec.gov that contains
reports and other information regarding issuers that file electronically with the SEC. You may
read and copy any document that we file with the Securities and Exchange Commission at the
Securities and Exchange Commission's public reference room at
100 F Street, N.E., Washington, D.C. 20549. Please call the Securities and Exchange Commission at 1-800-SEC-0330 for further
information on the operation of its public reference room. You may also inspect our reports filed
with the Securities and Exchange Commission and other information at the New York Stock Exchange,
Inc., 20 Broad Street, New York, New York 10005. Some of this information may also be found on our
website at www.nisgroup.jp/english. This information is not incorporated by reference into this
annual report on Form 20-F. Also, as a foreign private issuer, we are exempt from the rules under
the Securities Act of 1934 prescribing the furnishing and content of proxy statements to
shareholders.
I. Subsidiary Information.
Not applicable.
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Item 11. Quantitative and Qualitative Disclosures About Market Risk
We are exposed to the market risks of interest rate changes and changes in the market values
of our investments. We do not have any significant exposures to fluctuations in foreign exchange
rates since we conduct substantially all of our business activities in Japanese yen.
Interest Rate Risk
Liability–side Risk
Our exposure to changes in interest rates arises primarily from our long-term borrowings that
bear interest at variable rates and our cash and cash equivalents. As discussed in "Capital
Requirements" in Item 5.B of this annual report on Form 20-F, we require a significant amount of
borrowings to fund our lending activities.
The following table shows the repayment schedule for our outstanding bonds and other long-term
borrowings and the average interest rates on these borrowings.
As of
March 31,
Year ending March 31,
2006
2007
2008
2009
2010
2011
Thereafter
Total
Fair value
(in millions except percentage)
Bonds
¥
2,682
¥
8,360
¥
17,930
¥
—
¥
—
¥
—
¥
28,972
¥
30,395
Average interest rate
1.23
%
1.15
%
1.12
%
—
—
—
1.14
%
Variable
(1)
38,049
28,973
10,927
1,460
5,385
—
84,794
84,794
Average interest rate
1.39
%
1.31
%
1.12
%
0.60
%
1.22
%
—
1.31
%
Fixed
33,144
32,415
14,099
2,849
2,651
—
85,158
85,298
Average interest rate
1.65
%
1.57
%
1.38
%
2.21
%
2.47
%
—
1.62
%
(1)
Variable interest rate borrowings include asset-backed securities.
Our debt obligations mature at various times through March 2011 and carry interest rates
ranging between 0.3% and 5.1%. Our borrowings bear either a fixed rate or a variable rate indexed
to the Tokyo Inter-Bank Offered Rate (TIBOR), or the London Inter-Bank Offered Rate (LIBOR), or the
short-term or long-term prime rates in Japan. In order to reduce our exposure to fluctuations in
interest rates on variable rate borrowings, we utilize derivative instruments such as interest rate
swap contracts. As of March 31, 2006, we had one outstanding interest rate swap agreement with
notional principal amount of ¥97 million, which matures in August 2006. Under this agreement, we
receive payments at TIBOR plus 1.25% and make payments at an interest rate of 2.19%.
The weighted average interest rate on our short-term borrowings was 1.3% at March 31, 2004
1.2% at March 31, 2005, and 1.0% at March 31, 2006, and our weighted average long-term borrowing
rate on variable-rate borrowings was 2.2% at March 31, 2004, 1.9% at March 31, 2005 and 1.3% at
March 31, 2006.
The following table illustrates the after tax impact of a hypothetical increase in our average
borrowing rates on our short-term borrowings and variable-rate long-term borrowings:
Assumed weighted average interest rate
2%
3%
4%
(in millions)
Net income as reported
¥
8,455
¥
8,455
¥
8,455
Net income as adjusted for hypothetical increase in interest rates
8,126
7,640
7,154
We believe that the likelihood of hypothetical increases in our average borrowing rates
is significantly greater than that of hypothetical decreases, as the weighted average interest rate
on our own borrowings have been extremely low in recent years. In addition, in July 2006, the Bank
of Japan has changed the interest rate policy, and the official discount rate offered by the Bank
of Japan, which has remained at 0.1% since September 2001, was increased to 0.4%.
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Asset-side Risk
Integrated Financial Services
As we lend at fixed rates, interest rates on our currently outstanding balances are not
typically subject to fluctuation other than for regulatory reasons. However, the interest rates we
charge to new customers or existing customers who pay off their outstanding loans and enter into new
contracts with us are subject to any downward pressure caused by competitive, regulatory or other
reasons.
The following table indicates the weighted-average contractual maturity of each of our loan
categories at the end of each of the years indicated:
As of March 31,
2004
2005
2006
(years)
Small business owner loans
4.8
4.3
3.9
Business Timely loans
(1)
3.0
3.0
3.0
Secured loans
5.9
1.6
1.5
Wide loans
4.9
5.0
5.1
Consumer loans
(1)
3.0
3.0
3.0
Other loans
—
(2)
3.5
4.3
(1)
The average maturity of 3.0 years for Business Timely loans and consumer loans is based on
the three-year term of the loan contract, which is automatically renewable.
(2)
The average maturity for other loans as of March 31, 2004 was inapplicable.
The following table indicates the average actual interest rate of each of our loan
categories for each of the years indicated:
Year ended March 31,
2004
2005
2006
Small business owner loans
20.4
%
19.5
%
17.7
%
Business Timely loans
25.6
25.0
24.2
Secured loans
9.2
9.6
7.3
Wide loans
20.8
19.7
19.4
Consumer loans
25.3
37.1
(1)
24.7
Other loans
13.4
12.0
10.7
(1)
Reflecting the sale of most of the outstanding balance of our consumer loans to Orient Credit
in June 2004.
Our average actual lending rate per year on loans receivable was 22.0% for the year ended
March 31, 2004, 20.1% for the year ended March 31, 2005 and 16.4% for the year ended March 31,
2006. The following table illustrates the after tax impact of a hypothetical decrease in our
average lending rates on our loans receivable:
Assumed average actual interest rate per year
16.0%
15.5%
15.0%
(in millions)
Net income as reported
¥
8,455
¥
8,455
¥
8,455
Net income as adjusted for hypothetical decrease in interest rates
7,966
7,418
6,871
Based on the average actual lending rate of 16.4% per year for the year ended March 31,
2006 and rate of change in our average actual lending rate on loans receivable in the past few
years, we believe the above range of 16.0% to 15.0% per year reasonably captures the likely changes
in the weighted average lending rate on loans receivable during the fiscal year ending March 31,
2007.
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We have been focusing our efforts on acquisition of prime customers with low credit risk
responding to diversification of customers' need, especially small and medium-sized businesses, by
promoting alliance businesses with various companies. We have been strategically shifting our
resources away from our consumer loan business, and in line with this strategic shift, we sold most
of the outstanding balance of our consumer loans to a third party in June 2004, and concentrated on
extending loans to small and medium-sized business owners, centering on real estate financing.
These movements have caused our lending rates on loans receivable to decrease as our consumer loans
have a typically higher average lending rate than our small business owner loans and secured loans.
Since our consumer loans also have a higher charge-off ratio than all of our other loan products,
particularly our small business owner loans and secured loans, we expected an improvement in our
profit margin as the decreased net provision for loan losses would have been mitigated the negative
impact from our reduced average actual lending rate. However, due to a recognition of reserves for
estimated losses on excess interest payments to provide for the increasing borrowers' demand for
refund of excess interest reflecting recent Supreme Court decisions concerning excess interest, our
net interest income after provision for loan losses as a percentage of our total interest income
fell to 62.9% for the year ended March 31, 2006 compared to 64.0% for the previous fiscal year.
Although we expect our average lending rate on loans receivable to continue declining in the short
to medium term, we believe that our ongoing efforts to shift our resources to our non-consumer loan
businesses and acquisition of high profile receivables will have a positive effect on our net
income growth by offsetting to a certain extent the downward pressure on our net income created by
the reduced lending rate.
Loan Servicing
The interest rates we charge on our purchased loans are heavily negotiated and vary
significantly, depending primarily on the quality of the loan. To the extent that the Japanese
economy continues to improve and the amount of non-performing loans in Japan declines, the interest
rates we charge on our purchased loans may decline as a result of improvement in the quality of the
loans we purchase.
Investment Price Risk
We invest in marketable and non-marketable equity securities for business and strategic
purposes. The book carrying value of these equity securities, including warrants, was ¥21,444
million as of March 31, 2005, of which ¥2,800 million were non-marketable, and ¥28,143 million as
of March 31, 2006, of which ¥4,747 million were non-marketable. We also have non-equity
investments amounted to ¥6,999 million as of March 31, 2005, of which ¥6,812 million were
investment funds, ¥155 million were debt securities and ¥32 million were other, and ¥13,928 million
as of March 31, 2006, of which ¥13,734 million were investment funds, ¥114 million were debt
securities and ¥80 million were other.
We are exposed to changes in the market value of our investments. We have realized gains and
losses from both sales of investments, as well as from impairment as a result of other than
temporary declines in market value. With respect to our sales of investments, our gross realized
gains were, ¥645 million for the year ended March 31, 2004, ¥939 million for the year ended March
31, 2005 and ¥4,185 million for the year ended March 31, 2006, and our gross realized losses were,
¥46 million for the year ended March 31 2004, ¥5 million for the year ended March 31, 2005 and ¥2
million for the year ended March 31, 2006. We experienced realized losses of ¥867 million on
impairment of investment securities, for the year ended March 31, 2004, ¥1,447 million for the year
ended March 31, 2005 and ¥475 million for the year ended March 31, 2006.
Item 12. Description of Securities Other than Equity Securities.
Not required.
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PART II
Item 13. Defaults, Dividend Arrearages and Delinquencies.
None.
Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds.
None.
Item 15. Controls and Procedures.
Disclosure Controls and Procedures
As of the end of the year ended March 31, 2006, our management, with the participation of
Kunihiko Sakioka, our president, representative director and principal executive officer (currently
our chairman, representative director and co-chief executive officer), and Akihiro Nojiri, our
executive director and principal financial officer, performed an evaluation of our disclosure
controls and procedures.
Under Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, disclosure
controls and procedures means controls and other procedures that are designed to ensure that
information required to be disclosed by us in the reports that we file or submit under the
Securities Exchange Act of 1934 is recorded, processed, summarized and reported, within the time
periods specified in the Securities and Exchange Commission's rules and forms. Disclosure controls
and procedures include, without limitation, controls and procedures designed to ensure that
information required to be disclosed by us in the reports that we file or submit under the
Securities Exchange Act of 1934 is accumulated and communicated to our management, including our
principal executive officer and principal financial officer, as appropriate to allow timely
decisions regarding required disclosure.
Based on that evaluation, our principal executive officer and principal financial officer
concluded that our disclosure controls and procedures were effective as of the date of the
evaluation.
Changes in Internal Control Over Financial Reporting
With the participation of our principal executive officer and principal financial officer, we
also evaluated any change in our internal control over financial reporting that occurred during the
year ended March 31, 2006.
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Under Rules 13a-15(f) and 15d-15(f) of the Securities Exchange Act of 1934, internal control
over financial reporting means a process designed by, or under the supervision of, our principal
executive officer and principal financial officer and effected by our board of directors,
management and other personnel, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external purposes in accordance
with generally accepted accounting principles and includes those policies and procedures that:
•
pertain to the maintenance of records that in reasonable detail accurately and
fairly reflect the transactions and dispositions of our assets;
•
provide reasonable assurance that transactions are recorded as necessary to permit
preparation of our financial statements in accordance with generally accepted
accounting principles, and that our receipts and expenditures are being made only in
accordance with authorizations of our management and directors; and
•
provide reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use or disposition of our assets that could have a material
effect on our financial statements.
Based on that evaluation, our principal executive officer and principal financial officer
concluded that no changes were made in our internal control over financial reporting that occurred
during the year ended March 31, 2006 that has materially affected, or is reasonably likely to
materially affect, our internal control over financial reporting.
Item 16A. Audit Committee Financial Expert.
Our board of statutory auditors has determined that we do not have an "audit committee
financial expert" as defined in Item 16A of Form 20-F serving on the board of statutory auditors.
We believe that the combined knowledge, skills and experience of our statutory auditors enable
them, as a group, to act effectively in the fulfillment of their tasks and responsibilities,
including those under the Sarbanes-Oxley Act of 2002, as amended. In addition, our statutory
auditors have the power and authority to engage outside experts as they deem appropriate to provide
them with advice on matters related to their responsibilities.
Item 16B. Code of Ethics.
We currently do not have a code of ethics that meets the requirements of this Item 16.B,
because we believe that the combination of our various internal regulations and guidelines are
effective in guiding our directors, statutory auditors and employees toward good business conduct.
However, we are currently considering whether or not to establish a code of ethics that meets the
requirements of the Item 16B.
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Item 16C. Principal Accountant Fees and Services.
The following table shows information about fees paid by us to BDO Sanyu & Co., our principal
accountants. All services performed by BDO Sanyu & Co were approved by our board of statutory
auditors:
Year ended March 31,
2004
2005
2006
(millions)
Audit fees
(1)
¥
47
¥
45
¥
54
Audit-related fees
(2)
6
17
6
Tax fees
(3)
—
—
—
All other fees
(4)
—
—
—
(1)
These are the aggregate fees billed for the fiscal year for professional services rendered by
our principal accountants for the audit of our annual financial statements and services that
are normally provided in connection with statutory and regulatory filings or engagements for
those years.
(2)
These are the aggregate fees billed for the fiscal year for assurance and related services by
our principal accountants that are reasonably related to the performance of the audit of our
financial statements other than those reported under "Audit Fees" above. These services
include due diligence and preparation of comfort letters in connection with bond offerings.
(3)
These are the aggregate fees billed for the fiscal year for professional services rendered
by our principle accountants for tax compliance, tax advice and tax planning.
(4)
These are the aggregate fees billed for the fiscal year for products and services provided
by our principle accountants other than those included above.
Our board of statutory auditors currently approves every engagement by us of BDO Sanyu &
Co. or any of its affiliates for audit or non-audit services prior to the provision of these
services. We are considering whether or not to establish pre-approval policies and procedures to
facilitate the responsibility of our board of statutory auditors to monitor the independence of BDO
Sanyu & Co.
Item 16D. Exemptions from the Listing Standards for Audit Committees.
With respect to the requirements of Rule 10A-3 under the Securities Exchange Act of 1934
relating to listed company audit committees, which apply to us through Section 303A.06 of the New
York Stock Exchange's Listed Company Manual, we rely on an exemption provided by paragraph (c)(3)
of that Rule available to foreign private issuers with boards of corporate auditors meeting certain
requirements. For a New York Stock Exchange-listed Japanese company with a board of corporate
auditors, the requirements for relying on paragraph (c)(3) of Rule 10A-3 are as follows:
•
The board of corporate auditors must be established, and its members must be
selected, pursuant to Japanese law expressly requiring such a board for Japanese
companies that elect to have a corporate governance system with corporate auditors.
•
Japanese law must and does require the board of corporate auditors to be separate
from the board of directors.
•
None of the members of the board of corporate auditors may be elected by management,
and none of the listed company's executive officers may be a member of the board of
corporate auditors.
•
Japanese law must and does set forth standards for the independence of the members
of the board of corporate auditors from the listed company or its management.
•
The board of corporate auditors, in accordance with Japanese law or the registrant's
governing documents, must be responsible, to the extent permitted by Japanese law, for
the appointment, retention and oversight of the work of any registered public
accounting firm engaged (including, to the extent permitted by Japanese law, the
resolution of disagreements between management and the auditor regarding financial
reporting) for the purpose of preparing or issuing an audit report or performing other
audit, review or attest services for the listed company, including its principal
accountant which audits its consolidated financial statements included in its annual
reports on Form 20-F.
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•
To the extent permitted by Japanese law:
•
the board of corporate auditors must establish procedures for (i) the
receipt, retention and treatment of complaints received by us regarding
accounting, internal accounting controls, or auditing matters, and (ii) the
confidential, anonymous submission by our employees of concerns regarding questionable
accounting or auditing matters;
•
the board of corporate auditors must have the authority to engage
independent counsel and other advisers, as it determines necessary to carry
out its duties; and
•
the listed company must provide for appropriate funding, as determined by
its board of corporate auditors, for payment of (i) compensation to any
registered public accounting firm engaged for the purpose of preparing or
issuing an audit report or performing other audit, review or attest services
for us, (ii) compensation to any advisers employed by the board of corporate
auditors, and (iii) ordinary administrative expenses of the board of
corporate auditors that are necessary or appropriate in carrying out its
duties.
In our assessment, our Board of Corporate Auditors, which meets the requirements for reliance
on the exemption in paragraph (c)(3) of Rule 10A-3 described above, is not materially less
effective than an audit committee meeting all the requirements of paragraph (b) of Rule 10A-3
(without relying on any exemption provided by that Rule) at acting independently of management and
performing the functions of an audit committee as contemplated therein.
Item 16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers.
The following table shows the purchases made by us of our shares during the year ended March
31, 2006:
Total Number of
Maximum Number
Shares Purchased as
of Shares that May
Part of Publicly
Yet Be purchased
Total Number of
Average Price Paid
Announced Plans or
Under the Plans or
Period
Shares Purchased
per Share
Program
Programs
April 2005
960
¥
63
N/A
N/A
May 2005
8,956
53
N/A
N/A
June 2005
7,316
52
N/A
N/A
July 2005
3,532
56
N/A
N/A
August 2005
4,232
60
N/A
N/A
September 2005
4,552
66
N/A
N/A
October 2005
1,442
72
N/A
N/A
November 2005
828
92
N/A
N/A
December 2005
3,172
108
N/A
N/A
January 2006
808
139
N/A
N/A
February 2006
580
125
N/A
N/A
March 2006
1,124
113
N/A
N/A
Total
37,502
¥
67
N/A
N/A
Under the Corporate Law of Japan, a holder of shares constituting less than one full unit
may require us to purchase such shares at their market value (See "Item 10B—Rights of Our
Shareholders—Rights with Respect to Distribution of Surplus, Stock Repurchases and Stock Splits").
During the year ended March 31, 2006, we purchased 37,502 shares for a total purchase price of ¥2
million upon such requests from holders of shares constituting less than one full unit.
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PART III
Item 17. Financial Statements.
Not applicable.
Item 18. Financial Statements.
The information required by this item begins on page F-1 of this annual report on Form 20-F.
Item 19. Exhibits.
Exhibit
Number
Description
1.1
—
Our Articles of Incorporation (English Translation)
1.2
—
Our Share Handling Regulations (English Translation)
1.3
—
Our Regulations of the Board of Directors (English Translation)
1.4
—
Our Regulations of the Board of Statutory Auditors (English Translation)
2.1
—
Our Specimen Common Stock Certificate (English Translation) (incorporated by
reference to the corresponding exhibit to our Registration Statement Form F-1 (File
No. 333-97229) declared effective on August 1, 2002)
2.2
—
Form of Deposit Agreement Among Nissin Co., Ltd., The Bank of New York as Depositary
and All Owners and Holders from Time to Time of American Depositary Receipts,
Including the Form of American Depositary Receipt (incorporated by reference to the
Registration Statement on Form F-6 (File No. 333-97133) filed on July 24, 2002)
8.1
—
List of Our Subsidiaries
12.1
—
Certification of principal executive officer required by 17 C.F.R. 240. 13a-14(a)
12.2
—
Certification of principal executive officer required by 17 C.F.R. 240. 13a-14(a)
12.3
—
Certification of principal financial officer required by 17 C.F.R. 240. 13a-14(a)
13.1
—
Certification of chief executive officer required by 18 U.S.C. Section 1350
13.2
—
Certification of chief executive officer required by 18 U.S.C. Section 1350
13.3
—
Certification of chief financial officer required by 18 U.S.C. Section 1350
We have not included as exhibits certain instruments with respect to our long-term debt, the
amount of debt authorized under each of which does not exceed 10% of our total assets, and we agree
to furnish a copy of any such instrument to the Commission upon request.
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SIGNATURES
The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F
and that it has duly caused and authorized the undersigned to sign this annual report on its
behalf.
NISSIN CO., LTD.
By
/s/ Shinsuke Amiya
Name:
Shinsuke Amiya
Title:
President,
Representative Director and
Co-Chief Executive Officer
September
27, 2006
S-1
NISSIN CO., LTD.
INDEX TO FINANCIAL STATEMENTS
Page
Annual Financial Statements
Report of Independent Registered Public Accounting Firm
F-2
Consolidated Balance Sheets as of March 31, 2005 and 2006
F-3
Consolidated Statements of Income for the Years Ended March 31, 2004, 2005 and 2006
F-4
Consolidated
Statements of Shareholders' Equity for the Years Ended March 31, 2004, 2005 and 2006
F-6
Consolidated Statements of Cash Flows for the Years Ended March 31, 2004, 2005 and 2006
F-8
Notes to the Consolidated Financial Statements
F-10
F-1
Table of Contents
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Shareholders of
NISSIN CO., LTD.:
We have audited the accompanying consolidated balance sheets of NISSIN CO., LTD. and its
subsidiaries as of March 31, 2005 and 2006, and the related consolidated statements of income,
shareholders' equity, and cash flows for each of the three years in the period ended March 31,
2006. These financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight
Board (United States). Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material misstatement. The
Company is not required to have, nor were we engaged to perform, an audit of its internal control
over financial reporting. Our audits included consideration of internal control over financial
reporting as a basis for designing audit procedures that are appropriate in the circumstances, but
not for the purpose of expressing an opinion on the effectiveness of the Company's internal control
over financial reporting. Accordingly, we express no such opinion. An audit also includes
examining, on a test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates made by management,
as well as evaluating the overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the accompanying consolidated financial statements referred to above present
fairly, in all material respects, the financial position of the Company as of March 31, 2005 and
2006, and the results of its operations and its cash flows for each of the three years in the
period ended March 31, 2006, in conformity with accounting principles generally accepted in the
United States of America.
Also, in our opinion, the U.S. dollar amounts in the accompanying consolidated financial statements
have been translated from Japanese yen on the basis set forth in Note 1 to the consolidated
financial statements.
BDO Sanyu & Co.
Osaka, Japan
June 24, 2006
F-2
Table of Contents
CONSOLIDATED BALANCE SHEETS
NISSIN CO., LTD. AND SUBSIDIARIES
March 31, 2005 and 2006
Thousands of
Millions of Yen
U.S. Dollars (Note 1)
2005
2006
2006
Assets
Cash and cash equivalents
¥
25,709
¥
22,860
$   194,603
Restricted cash
846
3,417
29,088
Loans receivable, net
146,119
225,947
1,923,444
Purchased loans receivable, net
13,581
24,155
205,627
Interest receivable
831
1,021
8,692
Investment securities
28,443
42,071
358,143
Real estate for sale
1,136
20,792
176,998
Property and equipment, net
5,285
11,169
95,078
Investment in affiliates
514
617
5,252
Deferred income taxes
333
721
6,138
Other assets
5,604
7,173
61,064
Total assets
¥
228,401
¥
359,943
$3,064,127
Liabilities and Shareholders' Equity
Short-term borrowings
¥
12,600
¥
60,411
$   514,267
Accrued income taxes
716
6,089
51,835
Accrued expenses
497
702
5,976
Long-term borrowings
136,844
198,924
1,693,403
Capital lease obligations
1,683
1,337
11,382
Accrued retirement benefits
330
647
5,508
Deferred income taxes
4,439
1,382
11,765
Other liabilities
3,175
7,514
63,964
Total liabilities
160,284
277,006
2,358,100
Minority interests
1,146
2,433
20,712
Commitments and contingencies (Notes 12, 13 and 16)
Shareholders' equity (Note 17):
Common stock — designated value
Authorized
— 1,920,000,000 and 7,680,000,000 shares at
March 31, 2005 and 2006, respectively
Issued         — 2,614,408,468 and 2,812,941,288 shares at
March 31, 2005 and 2006, respectively
7,779
11,849
100,868
Additional paid-in capital
9,836
14,808
126,058
Retained earnings
44,313
50,197
427,318
Cumulative other comprehensive income
8,086
5,485
46,693
Less treasury stock, at cost:
132,898,332 shares and 80,102,074 shares at March 31,
2005 and 2006, respectively
(3,043
)
(1,835
)
(15,622
)
Total shareholders' equity
66,971
80,504
685,315
Total liabilities and shareholders' equity
¥
228,401
¥
359,943
$3,064,127
See accompanying summary of significant accounting policies and other notes to consolidated
financial statements.
F-3
Table of Contents
CONSOLIDATED STATEMENTS OF INCOME
NISSIN CO., LTD. AND SUBSIDIARIES
For the Years Ended March 31, 2004, 2005 and 2006
Thousands of
Millions of Yen
U.S. Dollars (Note 1)
2004
2005
2006
2006
Interest income:
Loans
¥
38,036
¥
29,298
¥
28,849
$245,586
Purchased loans
2,069
3,255
4,960
42,224
Other
2
2
92
783
Total interest income
40,107
32,555
33,901
288,593
Interest expense:
Borrowings
3,611
2,972
2,608
22,201
Other
113
187
497
4,231
Total interest expense
3,724
3,159
3,105
26,432
Net interest income
36,383
29,396
30,796
262,161
Provision for loan losses, net
13,461
8,576
9,463
80,557
Net interest income after provision for loan
losses
22,922
20,820
21,333
181,604
Non-interest income:
Gain on sale of loans receivable
—
3,327
—
—
(Losses) gain on sale and impairment of investment
securities, net
(268
)
(513
)
3,708
31,566
Gain (losses) on sale of subsidiaries and affiliates, net
670
1,339
(43
)
(366
)
Guarantee fees received, net
113
317
508
4,325
Equity losses in affiliates, net
(183
)
(92
)
(61
)
(519
)
Rents, dividends and other
398
1,606
5,822
49,561
Total non-interest income
730
5,984
9,934
84,567
Non-interest expense:
Salaries and employee benefits
6,735
6,521
7,181
61,131
Occupancy, furniture and equipment
2,060
2,395
2,654
22,593
Advertising
218
332
629
5,355
Other general and administrative expenses
3,349
4,869
5,060
43,075
Losses on sale, disposal and impairment of long-lived
assets, net
530
94
16
136
Other
97
493
456
3,881
Minority interests
4
192
602
5,125
Total non-interest expense
12,993
14,896
16,598
141,296
Income before income taxes
10,659
11,908
14,669
124,875
Income taxes
4,582
4,646
6,214
52,899
Net income
¥
6,077
¥
7,262
¥
8,455
$ 71,976
F-4
Table of Contents
CONSOLIDATED STATEMENTS OF INCOME
NISSIN CO., LTD. AND SUBSIDIARIES
For the Years Ended March 31, 2004, 2005 and 2006
U.S. Dollars
Yen
(Note 1)
Per share data:
2004
2005
2006
2006
Net income — basic
¥2.54
¥2.98
¥3.27
$0.028
— diluted
2.34
2.70
3.08
0.026
Cash dividends paid
0.42
0.53
1.02
0.009
Weighted average shares outstanding
:
Thousands of Shares
2004
2005
2006
Basic
2,393,856
2,441,656
2,584,935
Diluted
2,640,788
2,703,868
2,758,832
See accompanying summary of significant accounting policies and other notes to consolidated
financial statements.
F-5
Table of Contents
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
NISSIN CO., LTD. AND SUBSIDIARIES
For the Years Ended March 31, 2004, 2005 and 2006
Number of Shares
Millions of Yen
of Common Stock
Cumulative Other
Total
Issued
Common
Additional
Retained
Comprehensive
Treasury Stock,
Shareholders'
(Thousands)
Stock
Paid-in Capital
Earnings
Income
at Cost
Equity
Balance as of March 31, 2003
2,546,380
¥6,611
¥8,462
¥33,275
¥     70
¥(2,821
)
¥45,597
Exercise of stock warrants
40,364
607
607
1,214
Stock issuance costs
(13
)
(13
)
Comprehensive income:
Net income
6,077
6,077
Other comprehensive
income, net of tax
Change in net
unrealized gains on
investment securities
3,304
3,304
Change in net
unrealized losses on
derivative instruments
(3
)
(3
)
Total comprehensive income
9,378
Cash dividends paid
(1,001
)
(1,001
)
Repurchases of warrants
(7
)
(7
)
Purchases of treasury stock
(1,209
)
(1,209
)
Sales of treasury stock
43
295
338
Balance as of March 31, 2004
2,586,744
7,218
9,092
38,351
3,371
(3,735
)
54,297
Exercise of stock warrants
and convertible bonds
27,664
561
551
1,112
Stock issuance costs
(23
)
(23
)
Comprehensive income:
Net income
7,262
7,262
Other comprehensive
income, net of tax
Change in net
unrealized gains on
investment securities
4,725
4,725
Change in net
unrealized losses on
derivative instruments
(1
)
(1
)
Change in foreign
currency adjustments
(9
)
(9
)
Total comprehensive income
11,977
Cash dividends paid
(1,300
)
(1,300
)
Purchases of treasury stock
(1
)
(1
)
Sales of treasury stock
216
693
909
Balance as of March 31, 2005
2,614,408
7,779
9,836
44,313
8,086
(3,043
)
66,971
(Continued)
F-6
Table of Contents
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
NISSIN CO., LTD. AND SUBSIDIARIES
For the Years Ended March 31, 2004, 2005 and 2006
Number of Shares
Millions of Yen
of Common Stock
Cumulative Other
Total
Issued
Common
Additional
Retained
Comprehensive
Treasury Stock,
Shareholders'
(Thousands)
Stock
Paid-in Capital
Earnings
Income
at Cost
Equity
(Continued)
Balance as of March 31, 2005
2,614,408
7,779
9,836
44,313
8,086
(3,043
)
66,971
Conversion
of convertible bonds
198,533
4,070
4,050
8,120
Stock issuance costs
(77
)
(77
)
Comprehensive income:
Net income
8,455
8,455
Other comprehensive
income, net of tax
Change in net
unrealized gains on investment securities
(2,765
)
(2,765
)
Change in net
unrealized losses on derivative instruments
4
4
Change in foreign
currency adjustments
160
160
Total comprehensive income
5,854
Cash dividends paid
(2,571
)
(2,571
)
Purchases of treasury stock
(2
)
(2
)
Sales of treasury stock
999
1,210
2,209
Balance as of March 31, 2006
2,812,941
¥
11,849
¥14,808
¥
50,197
¥5,485
¥(1,835
)
¥80,504
Number of Shares
Thousands of U.S. Dollars (Note 1)
of Common Stock
Cumulative Other
Total
Issued
Common
Additional
Retained
Comprehensive
Treasury Stock,
Shareholders'
(Thousands)
Stock
Paid-in Capital
Earnings
Income
at Cost
Equity
Balance as of March 31, 2005
2,614,408
$
66,221
$  83,732
$
377,228
$ 68,835
$(25,904
)
$570,112
Conversion
of convertible bonds
198,533
34,647
34,477
69,124
Stock issuance costs
(655
)
(655
)
Comprehensive income:
Net income
71,976
71,976
Other comprehensive
income, net of tax
Change in net
unrealized gains on investment securities
(23,538
)
(23,538
)
Change in net
unrealized losses on derivative instruments
34
34
Change in foreign
currency adjustments
1,362
1,362
Total comprehensive income
49,834
Cash dividends paid
(21,886
)
(21,886
)
Purchases of treasury stock
(18
)
(18
)
Sales of treasury stock
8,504
10,300
18,804
Balance as of March 31, 2006
2,812,941
$
100,868
$126,058
$
427,318
$ 46,693
$(15,622
)
$685,315
See accompanying summary of significant accounting policies and other notes to consolidated financial statements.
F-7
Table of Contents
CONSOLIDATED STATEMENTS OF CASH FLOWS
NISSIN CO., LTD. AND SUBSIDIARIES
For the Years Ended March 31, 2004, 2005 and 2006
Thousands of
Millions of Yen
U.S. Dollars (Note 1)
2004
2005
2006
2006
Operating Activities
Net income
¥     6,077
¥     7,262
¥      8,455
$    71,976
Adjustments to reconcile net income to net cash provided
by operating activities:
Provision for loan losses, net
13,461
8,576
9,463
80,557
Depreciation and amortization
884
1,175
1,333
11,348
Amortization of debt issuance costs
221
239
184
1,566
Amortization of loan origination costs
751
540
431
3,669
Gain on sale of loans receivable
—
(3,327
)
—
—
Losses (gain) on sale and impairment of investment
securities, net
268
513
(3,708
)
(31,566
)
Losses on sale, disposal and impairment of long-lived
assets, net
530
94
16
136
(Gain) losses on sale of subsidiaries and affiliates, net
(670
)
(1,339
)
43
366
Equity losses in affiliates, net
183
92
61
519
Deferred income taxes
(633
)
1,427
(1,460
)
(12,429
)
Minority interests
4
192
602
5,125
Changes in assets and liabilities:
Interest receivable
117
229
(166
)
(1,413
)
Accrued income taxes and expenses
(58
)
(2,181
)
5,521
46,999
Other liabilities
807
1,194
3,495
29,753
Net cash provided by operating activities
21,942
14,686
24,270
206,606
Investing Activities
Proceeds from sales of loans receivable
—
32,697
—
—
Loans receivable, net of principal collections
(13,764
)
(17,615
)
(82,347
)
(701,005
)
Purchases of distressed loans
(4,502
)
(16,896
)
(19,779
)
(168,375
)
Proceeds from principal collections of distressed loans
2,469
6,840
6,956
59,215
Proceeds from sales of distressed loans
—
—
711
6,053
Purchases of investment securities
(3,605
)
(16,508
)
(26,794
)
(228,092
)
Proceeds from sales of investment securities
2,173
5,125
12,707
108,172
Purchases of
real estate for sale
—
(1,958
)
(24,699
)
(210,258
)
Proceeds
from sales of real estate
20
974
5,395
45,927
Purchases of property and equipment
(880
)
(1,754
)
(6,368
)
(54,210
)
Proceeds from sales of property and equipment
382
16
3
26
Investment in affiliates
(450
)
(160
)
(46
)
(392
)
Proceeds from sales of affiliates
504
—
—
—
Acquisition of a new subsidiary, net of cash acquired
—
(764
)
(554
)
(4,716
)
Proceeds from sales of subsidiaries, net of cash decreased
78
—
—
—
Other changes in other assets
(726
)
(2,543
)
(1,161
)
(9,883
)
Net cash used in investing activities
(18,301
)
(12,546
)
(135,976
)
(1,157,538
)
(Continued)
F-8
Table of Contents
CONSOLIDATED STATEMENTS OF CASH FLOWS
NISSIN CO., LTD. AND SUBSIDIARIES
For the Years Ended March 31, 2004, 2005 and 2006
Thousands of
Millions of Yen
U.S. Dollars (Note 1)
2004
2005
2006
2006
(Continued)
Financing Activities
Deposit of restricted cash
(212
)
(411
)
(2,571
)
(21,886
)
Issuance of commercial paper
13,000
15,100
65,900
560,994
Repayments of commercial paper
(12,200
)
(14,800
)
(39,400
)
(335,405
)
Proceeds from short-term borrowings
3,539
20,851
107,472
914,889
Repayments of short-term borrowings
(4,100
)
(13,483
)
(87,144
)
(741,840
)
Proceeds from long-term borrowings
56,564
83,685
141,918
1,208,121
Repayments of long-term borrowings
(62,686
)
(88,555
)
(76,425
)
(650,592
)
Payments of capital lease obligations
(762
)
(823
)
(614
)
(5,227
)
Repurchases of stock warrants
(7
)
—
—
—
Proceeds from exercise of stock warrants
1,214
54
—
—
Stock issuance costs
(13
)
(23
)
(77
)
(655
)
Purchases of treasury stock
(1,209
)
(1
)
(2
)
(18
)
Proceeds from sales of treasury stock
338
909
2,209
18,805
Dividends paid
(1,001
)
(1,300
)
(2,571
)
(21,886
)
Dividends
paid to minority interests
—
—
(99
)
(843
)
Proceeds from issuance of new shares by subsidiaries
525
2,132
79
673
Net cash (used in) provided by financing activities
(7,010
)
3,335
108,675
925,130
Effect of exchange rate changes on cash and cash equivalents
—
(9
)
182
1,549
Net (decrease) increase in cash and cash equivalents
(3,369
)
5,466
(2,849
)
(24,253
)
Cash and cash equivalents at beginning of year
23,612
20,243
25,709
218,856
Cash and cash equivalents at end of year
¥ 20,243
¥ 25,709
¥   22,860
$   194,603
See accompanying summary of significant accounting policies and other notes to consolidated financial statements.
F-9
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. Business Organization and Basis of Presentation
(a) Description of Business
NISSIN
CO., LTD. (hereinafter referred to as the "Company") was incorporated in May 1960 in Ehime Prefecture in western Japan, and
has expanded nationwide. The Company and its subsidiaries operate
mainly in Japan. The Company currently
maintains head offices in Tokyo and in the City of Matsuyama, Ehime Prefecture, Japan. Because of
its concentration on lending and funding in Japan, the Company is exposed to negative changes in the
Japanese economy and in the stability of its borrowing base in Japan.
The
Company is a non-bank financial institution providing integrated financial services as its main
business, specializing in providing loan products to owners of small to medium-sized enterprises,
sole proprietors, and consumers. The Company and certain subsidiaries provide the following products by
using a variety of channels:
Small business owner loans
: Loans designed for small business owners. The small business
owner loan is an unsecured loan that, in the Company's case, requires one or more guarantees from
third-party individuals with an income source separate from the customer. It can be used
without any restrictions to repay existing loans or to obtain working capital. These loans
are payable monthly in arrears at fixed interest rates.
Business Timely loans
: Unsecured revolving loans designed for small business owners.
Business Timely loans are marketed to more creditworthy owners of businesses and sole
proprietors and do not require a guarantor. These loans are payable monthly in arrears at
fixed interest rates.
Secured loans
: Primarily loans secured by real property designed for property developers.
The interest rates for these loans are determined on an individual basis. These loans turn
to cash quickly as they typically mature in one month to two years.
Wide loans
: Debt-consolidation loans for consumers who already have a high level of
outstanding debt with several consumer finance lenders. The borrower must supply one or
more guarantors with a separate income source. These loans are payable monthly in arrears
at fixed interest rates.
Consumer loans
: Unsecured revolving loans to consumers at fixed interest rates, payable
monthly in arrears.
Other loans
: Collateralized lease financing, installment credits, notes discounting, and
other lending services.
Other products
: Credit enhancements through guarantees, investments in real estate
properties, securities and other businesses.
On
June 1, 2004, the Company sold most of its consumer loans receivable to Orient Credit Co., Ltd. for
¥32,697 million. The decision to make this sale was made pursuant to the basic strategy of
concentrating on the markets for small to medium-sized businesses owners.
Nissin Servicer Co., Ltd. ("SVC"), a 74.6% owned subsidiary, was incorporated in July 2001, and
started its loan servicing business in October 2001. SVC mainly purchases distressed loans from
financial institutions and services these loans for its own portfolio. In September 2004, SVC
listed its stock on the Mothers market of the Tokyo Stock Exchange and became Japan's first loan
servicing company to go public.
F-10
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(b)
Basis of Presentation
The
Company and its domestic subsidiaries maintain their books and records in accordance with accounting
principles generally accepted in Japan ("Japanese GAAP"), and its foreign subsidiaries in
conformity with those of the country of their domicile. Certain adjustments and reclassifications
have been made in the accompanying consolidated financial statements to conform with accounting
principles generally accepted in the United States of America ("U.S. GAAP"). These adjustments
were not recorded in the statutory Japanese GAAP books of account.
(c) Principles of Consolidation
The
consolidated financial statements include the accounts of the Company and its majority-owned
subsidiaries and those variable interest entities (hereinafter
collectively referred to as the "Group") in which the
Group is deemed to be the primary
beneficiary in accordance with the Financial Accounting Standards Board ("FASB") Interpretation
("FIN") No. 46(R), "Consolidation of Variable
Interest Entities". All significant inter-company accounts, transactions and profits and losses have been eliminated in
the consolidated financial statements.
(d) Use of Estimates
The preparation of the consolidated financial statements in conformity with U.S. GAAP requires
management to make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the reporting period.
Significant estimates are made regarding the Group's allowance for loan losses and guarantees,
collections for purchased loans and valuation of collateral assets. Actual results could differ
from those estimates, resulting in material charges to income.
(e) Reclassification
Certain reclassifications have been made to conform to the current fiscal year presentation. These
reclassifications have no effects on previously reported net income and shareholders' equity.
Principal reclassifications include interest income from purchased loans, real estate for sale and
cash flow changes of real estate for sale.
(f) Financial Statements Presentation in U.S. Dollars
The consolidated financial statements are stated in Japanese yen. The translations of the Japanese
yen amounts into U.S. dollars are included solely for the convenience of the readers, using the
prevailing exchange rate on March 31, 2006, which was ¥117.47 to $1.00. The convenience
translations should not be construed as representations that the Japanese yen amounts have been,
could have been, or could in the future be, converted into U.S. dollars at this or any other rate
of exchange.
2. Summary of Significant Accounting Policies
(a) Cash and Cash Equivalents
The Group considers all highly liquid investments, including time deposits, with an original
maturity of three months or less at the time of purchase to be cash equivalents. These investments
are recorded at cost, which approximates market value.
F-11
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(b) Foreign Currencies Translation
The Group
operates principally in Japan but also has subsidiaries in China. The
Company and its
subsidiaries maintain their accounting records in their functional currency. Foreign currency
transactions are translated into the functional currency using the prevailing exchange rates at the
dates of the transactions.
Assets and liabilities of foreign subsidiaries with functional currencies other than Japanese yen
are translated into Japanese yen at exchange rates in effect at the balance sheet date. Income and
expense items are translated at average rates for the period. Resulting exchange differences are
accumulated as a component of "Cumulative other comprehensive income (losses)" in the accompanying
consolidated balance sheets.
(c) Interest Income from Loans Receivable and Loan Origination Costs
Interest income from loans except for purchased loans is recognized on an accrual basis based on
the principal amount outstanding. In Japan, the maximum interest rates are set by law at two
general levels: an absolute maximum rate (legal limit) and a lower interest rate based on the
principal amount of the loan (restricted rate). The Group's contractual loan interest rates do
not exceed the legal limit but may exceed the restricted rate. The
Group may charge interest
rates in excess of the restricted rate as long as it meets specified requirements. Borrowers have
a right to refuse to pay interest in excess of the restricted rate,
and the Group cannot legally
require borrowers to pay the excess interest. However, once a borrower has paid interest in excess
of the restricted rate, and provided the Group has complied with specified legal documentation
and notification procedures, the Group has no legal or contractual obligation to refund or
otherwise reimburse the excess interest payments.
The Group recognizes accrued interest income on loans receivable outstanding as of the balance
sheet date at the lower of the restricted rate or the contractual interest rate. Contractual
interest in excess of the restricted rate is recognized as interest income when collected, provided
there are no remaining legal obligations to refund this excess portion. Accrual of interest income
is suspended when loan principal is charged off or is wholly or partially reserved. The accrued
interest portion of a charged-off loan balance is deducted from the current period interest income
and the principal amount is charged off against the allowance for loan losses.
The Group maintains reserves for estimated losses from the above-mentioned excess interest
repayments at a level that, in management's judgment, is adequate to provide for estimated probable
refund claims of excess interest previously paid by borrowers. Provisions to the reserve are
deducted from interest income. In evaluating the adequacy of the reserve, management considers
various factors, including recent conditions on repayments of excess interest and historical loss
experience.
The Group capitalizes direct origination costs and defers fees on successful loan originations.
Loan origination costs, net of loan origination fees, are deferred and amortized over the
contractual life of loans, which averages approximately 49 months as of March 31, 2006.
(d) Loans Receivable and Allowance for Loan Losses
Loans receivable are reported at the principal amount less an allowance for loan losses. The
allowance for loan losses is maintained at a level that, in management's judgment, is adequate to
provide for estimated probable uncollectible loan losses from known and inherent risks in the
Group's loan portfolios. Increases to the allowance are made by charges to the provision for
loan losses. Recoveries of previously charged-off amounts are deducted from the provision for loan
losses. Allowances are reviewed both on an individual loan and portfolio basis. In evaluating the
adequacy of the allowance, management considers various factors, including current economic
conditions, such as unemployment rates, corporate insolvencies and personal bankruptcy cases, and
historical loss experience.
F-12
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Restructured loans include any loans for which interest, principal or term is restructured.
Allowances for restructured loans are based on the collection history or legal classification of
the borrowers.
The
Group's policy is generally to charge off loan balances and cease accrual of interest as
follows:
Small business owner loans and Wide loans:
Loan balances are charged off when the Group
believes the likelihood of any future collection is minimal. Events triggering charge-offs
include bankruptcy of both the borrower and guarantor. In the case that loans are restructured,
the Group charges off the amount of the recorded loan balance less the restructured loan
balance. Interest accrual is terminated at the earlier of the date when contractual payments are
97 days delinquent or the date when all or a part of loan principal is deemed uncollectible.
Business Timely loans and Consumer loans:
Loan balances are charged off and interest accrual is
terminated when a loan's contractual payment becomes 67 days delinquent or upon the occurrence of
other events such as the bankruptcy of the borrower.
Secured loans:
Loan balances are charged off when the Group believes the likelihood of any
future collection is minimal. The Group considers the availability and value of collateral in
determining the level of charge-off. Interest accrual is terminated at the earlier of the date
when contractual payments are 97 days delinquent or the date when all or a part of loan principal
is deemed uncollectible.
(e) Investment in Leases and Revenue Recognition
Investment in direct financing leases consists of leases for various equipment types, including
office equipment, industrial machinery and transportation equipment (aircraft, vessels and
automobiles). The net investment in the leases, included in "Loans receivable, net" on the
consolidated balance sheets, is the gross investment in the leases plus any unamortized initial
direct costs less unearned lease income. Gross investment in the leases is the sum of lease
payments and estimated unguaranteed residual values. The estimated residual values represent
estimated proceeds from the disposition of equipment at the time the lease is terminated. Initial
direct costs are certain direct lease origination costs, which are being deferred and amortized
over the lease term as a yield adjustment. Unearned lease income is the difference between gross
investment in the leases and cost or carrying amount of the leased equipment. These are being
deferred and taken into income over the lease term. Amortization of unearned lease income is
computed using the interest method. For the year ended March 31,
2005 and 2006, the amount of initial
direct costs is insignificant. As of March 31, 2005 and 2006,
the Group recorded ¥2,168 million and ¥2,979 million ($25,360
thousand), respectively, in book value for its investment in direct financing leases, which are recorded in "Loans
receivable, net" in the accompanying consolidated balance sheets.
Investment in operating leases represent the underlying tangible and intangible assets and are
carried at cost and depreciated over their estimated useful lives on a straight-line basis.
Revenues from operating leases are recognized over the lease term as it becomes receivable
according to the provisions of the lease. Revenues from re-leases are recognized when received.
As of March 31, 2005 and 2006, the Group had
¥287 million and ¥1,552 million ($13,212
thousand), respectively, in net investment in
operating leases, which are recorded in "Property and equipment" in the accompanying consolidated
balance sheets.
(f) Purchased Loans Receivable and Revenue Recognition
Purchased loans represent loans purchased from third party originators and are reported at
purchased cost. The Group then establishes an allowance for estimated loan losses on reduced
credit quality subsequent to acquisition. Due to the non-performing status of these loans when
initially purchased and lack of history with the borrowers, subsequent to acquisition, the Group
initially recognizes revenue from these loans using the cost recovery method. Under this method,
payments from a borrower are first applied to loan principal.
F-13
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Once the purchased cost is fully recovered, subsequent receipts are recognized as interest income. If
the Group determines that it cannot recover its cost, an allowance for the expected uncollectible
portion is established. The loan is written off once the Group deems the loan uncollectible. As
of March 31, 2005 and 2006, ¥12,745 million and ¥23,228 million ($197,736 thousand) in carrying
value of loans was accounted for under the cost recovery method, respectively.
However, for those purchased loans for which the Group can reasonably estimate the expected
timing and amount of cash flows, the Group uses those expected future cash flows to record the
loans receivable and amortize the implied interest into revenue using the level yield method. The
Group will adjust the future yield rate for expected changes in interest rates or collections.
However, if the carrying amounts of those loans are greater than the present value of expected
future cash flows from those loans due to delinquency in payment or use of legal means by the
borrower, the difference is recorded as an allowance for the uncollectible portion. As of March
31, 2005 and 2006, ¥836 million and ¥927 million ($7,891 thousand) in carrying value of loans was
accounted for under the level yield method, respectively.
(g) Investment Securities
The
Group's investment securities consist of marketable securities
and other investments.
All
marketable securities are classified as
"available-for-sale" in accordance with Statement of
Financial Accounting Standards ("SFAS") No. 115, "Accounting for Certain Investments in Debt and Equity Securities", and consist of
marketable equity securities and debt securities.
Marketable equity securities are carried at fair value with unrealized gains and losses, net of
tax, reported as cumulative other comprehensive income in the shareholders' equity. Fair value is
determined by the market price at end of year. In accordance with SFAS No. 115, an "other than
temporary" decline in fair value below the amortized cost basis is recorded as a loss in the
statement of income in the period the decline was determined to be other than temporary. The
Group reviews investment securities that have declined in market value by approximately 10% or
more from their cost bases each period to determine whether an impairment has occurred. For these
securities, an "other than temporary" decline in market value is presumed to have occurred unless
there is sufficient evidence indicating that the decline is temporary. Such evidence is considered
only when there has been a subsequent recovery in market value and the evidence includes a recent
improvement in financial condition, a positive prevailing business and industry outlook, and other
factors that are deemed to be relevant indicators.
Debt securities are accounted for on an amortized cost basis and adjusted only for
other-than-temporary declines in fair value resulting from company-specific events, industry
developments, general economic conditions or other reasons.
Non-marketable
equity securities, which is included in other investments, consist of investments in which the Group has a less than
20% interest and for which the Group does not have the ability to exercise significant influence,
are accounted for on a cost basis and adjusted only for other-than-temporary declines in fair value
resulting from company-specific events, industry developments, general economic conditions or other
reasons.
Costs of securities sold are determined using the weighted average cost method.
(h) Real Estate for Sale
Real estate for sale, including real estate acquired upon foreclosure, is carried at the lower of
cost or fair value less estimated costs to sell. If an asset's fair value less cost to sell, based
on discounted cash flows or market comparisons, is less than its
carrying amount, an impairment is
recorded against the asset. Determining an asset's fair value
and the related impairment to record
requires the Group to utilize judgment and estimates.
When
acquiring real estate assets, the Group capitalizes costs in accordance with  SFAS No. 67, "Accounting for Costs and the Initial Rental
Operations of Real Estate Properties". Costs capitalized under SFAS No. 67 include pursuit costs,
or pre-acquisition costs, taxes and insurance, development and construction costs and costs of
incidental operations on successful acquisitions.
As of
March 31, 2006, real estate for sale amounted to
¥20,792 million ($176,998 thousand), of which
¥14,950 million ($127,267 thousand) were acquired
through general market, ¥283 million ($2,408 thousand)
were acquired through foreclosure due to borrower's delinquency
and ¥5,559 million ($47,323 thousand) were acquired
through entities which are consolidated by the Group in accordance
with the FIN No. 46(R).
F-14
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(i) Long-lived Assets
Property
and equipment, including investment in operating leases, are stated at cost, except for land, and are depreciated on a straight-line
basis over their estimated useful lives, approximately 22 to 50 years (weighted average life of 37
years) for buildings, 3 to 18 years (weighted average life of 14 years) for building improvements,
10 to 43 years (weighted average life of 20 years) for structures and 2 to 20 years (weighted
average life of 8 years) for equipment. Software is amortized on a straight-line basis over 5
years.
Leased property and equipment under capital leases as lessee including software is amortized over
the period of the lease or the life of the property and equipment, whichever is shorter. Repairs
and maintenance are charged to expense when incurred.
The Group applies SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets",
to recognize and measure impairment of property and equipment owned or under capital lease. The
Group reviews its long-lived assets for impairment whenever events or circumstances indicate that
the carrying amount of an asset group may not be recoverable. Long-lived assets under certain
circumstances are reported at the lower of carrying amount or fair value. Assets to be disposed of
and assets not expected to provide any future service potential to the Group are recorded at the
lower of carrying amount or fair value less costs to sell. During the year ended March 31, 2004,
the Group wrote down investments in rental real property to its fair value, recording ¥591
million in losses for the year. These losses are included in "Losses on sale, disposal and
impairment of long-lived assets, net" in the accompanying consolidated statements of income. The
Group did not recognize any impairment of long-lived assets during the years ended March 31, 2005
and 2006.
(j) Investments in Affiliates
Investments
in 20% to 50% owned affiliates in which the Company has the ability to exercise significant
influence over operating and financial policies are accounted for under the equity method. Under
the equity method, the Group will recognize its annual share of income or losses in the current
period statement of income and as an adjustment to investment.
(k) Goodwill and Other Intangible Assets
Goodwill reflects the excess of purchase price and related costs over the fair value of
specifically identified net assets purchased. In accordance with SFAS No. 142, "Goodwill and Other
Intangible Assets", goodwill and intangible assets deemed to have indefinite lives are not
amortized but are subject to impairment tests annually, on March 31, or whenever events or changes
in business circumstances indicate the carrying value of the assets may not be recoverable. These
impairment tests are based on the comparison of the fair value of each of the Group's reporting
units to the carrying value of such unit. If the fair value of the reporting unit falls below its
carrying value, goodwill and intangible assets is deemed to be impaired and a writedown of goodwill
is recognized. During the years March 31, 2005 and 2006, the Group has performed the required
impairment tests under SFAS No. 142 to determine the recoverability of its goodwill and intangible
assets, and concluded that there were no impairments in the carrying value of its goodwill and
intangible assets.
See Note 11 for detail of goodwill and other intangible assets.
F-15
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(l) Derivative Financial Instruments
The Group accounts for derivatives instruments in accordance with SFAS No. 133, "Accounting for
Derivative Instruments and Hedging Activities", SFAS No. 138, "Accounting for Certain Derivative
Instruments and Certain Hedging Activities — an amendment of FASB Statement No. 133" and SFAS No.
149, "Amendment of Statement 133 on Derivative Instruments and Hedging Activities" which requires
that all derivative instruments be recorded on the balance sheet at fair value. Changes in the
fair value of derivatives are recorded each period either in current results of operations or other
comprehensive income (loss). For a derivative designated as part of a hedge transaction, where it
is recorded is dependent on whether it is a fair value hedge or a cash flow hedge. For a
derivative designated as a fair value hedge, the gains or losses of the derivative in the period of
change and the offsetting losses or gains of the hedged item attributed to the hedged risk are
recognized in results of operations. For a derivative designated as a cash flow hedge, the
effective portion of the derivative's gains or losses is initially reported as a component of other
comprehensive income (loss) and subsequently reclassified into results of operations when the
hedged exposure affects results of operations. The ineffective portion of the gains or losses of a
cash flow hedge is recognized currently in results of operations. For a derivative not designated
as a hedging instrument, the gains or losses is recognized currently in results of operations.
The Group uses both variable and fixed rate debts to finance its operations. The variable rate
debt obligations expose the Group to variability in interest payments due to changes in interest
rates. The Group continuously monitors changes in interest rate exposures and evaluates hedging
opportunities.
The Group's objective is to limit the impact of interest rate changes on earnings and cash flows.
The Group achieves this by entering into interest rate swap agreements to convert a portion of
its debt from variable to fixed rates, and interest rate cap agreements, which limit the impact of
increases in interest rates. Under the interest rate swap contracts, the Group agrees to pay an
amount equal to a specified fixed-rate of interest times a notional principal amount, and to
receive in return an amount equal to a specified variable-rate of interest times a notional amount.
The notional amounts are not exchanged. No other cash payments are made unless the contract is
terminated prior to maturity, in which case the amount paid or received in settlement is
established by agreement at the time of the termination and usually represents the net present
value, at current rates of interest, of the remaining obligations to exchange payments under the
term of the contract. The Group accounts for its interest rate swap and cap agreements as cash
flow hedges. Interest rate swap and cap agreements are entered into with major international
financial institutions with favorable credit ratings. The Group is exposed to credit losses in
the event of counter-party non-performance to these interest rate swap agreements. The Group
believes counter-party credit risk is minimal. The Group does not issue or hold derivative
contracts for speculative purposes.
The Group formally documents all relationships between hedging instruments and hedged items, as
well as its risk-management objective and strategy for undertaking various hedge transactions prior
to consummating the hedge. This process includes linking all derivatives that are designated as
cash flow hedges to
(1)
specific assets and liabilities on the balance sheet, or
(2)
specific firm commitments or forecasted transactions.
The Group also formally assesses (both at the hedge's inception and on an ongoing basis) whether
the derivatives that are used in hedging transactions have been highly effective in offsetting
changes in the cash flows of hedged items and whether those derivatives may be expected to remain
highly effective in the future periods. When it is determined that a derivative is not (or has
ceased to be) highly effective as a hedge, the Group discontinues hedge accounting prospectively,
as discussed below.
The underlying debt instruments being hedged bear interest based on the Long-term Prime Rate in
Japan ("LTPR"), while the hedge instruments are based on the Tokyo Inter-bank Offer Rate ("TIBOR").
When the hedge instrument is based on TIBOR, ineffectiveness results from differences in the
movements of these interest rates. The Group records the ineffective portion as a component of
interest expense in current earnings.
F-16
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
The Group discontinues hedge accounting prospectively when
(1)
it determines that the derivative is no longer effective in offsetting changes in the
cash flows of a hedged item;
(2)
the derivative expires or is sold, terminated, or exercised;
(3)
it is no longer probable that the forecasted transaction will occur; or
(4)
management determines that designating the derivative as a hedging instrument is no
longer appropriate.
In the
event hedge accounting is discontinued and the derivative remains outstanding, the Group
will carry the derivative at its fair value on the balance sheet, recognizing changes in the fair
value in current-period earnings.
For purposes of the cash flow statement, cash flows from derivative instruments are classified with
the cash flows from the hedged item.
See Note 15 for detail of the derivative instruments.
(m) Guarantees
The Group accounts for guarantees in accordance with the Financial Accounting Standards Board
("FASB") Interpretation ("FIN") No. 45, "Guarantor's Accounting and Disclosure Requirements for
Guarantees, Including Indirect Guarantees of Indebtedness of Others." The Group provides
guarantees to several affiliated and non-affiliated companies for a fee, which is recognized on an
accrual basis based on the amount of underlying loans outstanding.
The Group maintains reserves for estimated losses from these
guarantee transactions at a level that, in management's judgment, is
adequate to provide for estimated probable losses from known and
inherent risks in these transactions. Provisions to the reserve are
deducted from guarantee fees received. In evaluating the adequacy of
the reserve, management considers various factors, including current
economic conditions and historical loss experience for similar
products. The Group recognized reserves for guarantee losses of ¥371 million and ¥629
million ($5,355 thousand) at March 31, 2005 and 2006, respectively, which are included in "Other
liabilities" on the accompanying consolidated balance sheets. Generally, the underlying loan which
is guaranteed by the Group has a term or normal contractual life up to 5 years except for
revolving loan which are indefinite. These loans under guarantee have an average actual
outstanding period of approximately 12 months.
Moreover, in the event of borrower's delinquency, the Group is required to pay out on its
guarantees for the outstanding balance of the specified borrowings. Upon payment of any
guarantees, the Group will record a corresponding receivable from the counterparty company,
offset by an allowance for deemed uncollectible amounts which
generally approximates 100% of the amount outstanding. The Group protects against risk for
guarantees through its underwriting and monthly evaluation process. The Group is able to agree
to take or decline the guarantee at the time of the loan underwriting process. Payments on
guarantees are approximately 2.5%, 3.5% and 4.7% of total contractual guarantees for the years
ended March 31, 2004, 2005 and 2006, respectively.
Additionally, in the normal course of its business, the Group may guarantee or indemnify
directors and service providers against litigation or claims. These claims are expected to be
fully covered by company insurance policies.
(n) Treasury Stock
Treasury
stock is recorded at the Group's cost basis. Pursuant to its Articles of Incorporation,
the Group may purchase treasury stock with the Board of Directors' approval and can retire
treasury stock by reducing retained earnings or additional paid-in capital.
(o) Advertising Costs
Advertising costs are expensed as incurred, except for costs for advertising requiring upfront
payment for a series of advertisements, which are deferred and expensed as the individual
communications occur. Advertising expenses recognized for the years ended March 31, 2004, 2005 and
2006 were ¥218 million, ¥332 million and ¥629 million ($5,355 thousand), respectively.
F-17
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(p) Income Taxes
The Group uses the asset and liability method to account for income taxes. Deferred tax assets
and liabilities are recognized for the future tax consequences attributable to differences between
the financial statement carrying amounts of existing assets and liabilities and their respective
tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are
measured using enacted tax rates expected to apply to taxable income in the years in which those
temporary differences are expected to be recovered or settled. The effect on deferred tax assets
and liabilities from a change in tax rates is recognized in income in the period the change is
enacted. A valuation allowance is established when it is determined that deferred tax assets are
no longer more likely than not to be realized.
(q) Net Income Per Share ("EPS")
Basic EPS is computed based on the average number of shares of common stock outstanding during each
period. Diluted EPS further includes the dilution that could occur if securities or other
contracts to issue common stock were exercised or converted into common stock or resulted in the
issuance of common stock.
The
Company completed a 2-for-1 stock split on each of May 20, 2003, May 20, 2004, November 19, 2004,
November 18, 2005, and April 1, 2006, respectively, and completed a 1.2-for-1 stock split on May
20, 2005. All share information disclosed has been retroactively adjusted to reflect such stock
splits.
(r) Stock-based Compensation
As permitted by SFAS No. 123 "Accounting for Stock-based Compensation", the Group has reflected
to account for its stock-based compensation arrangements in accordance with Accounting Principles
Board Opinion ("APB") No. 25, "Accounting for Stock Issued to Employees". Under this method, the
excess, if any, of the quoted market price of the stock at the grant date of the award or other
measurement date over the stated exercise price of the award is recognized as deferred stock-based
compensation cost which is amortized over the period in which the employee performs the service.
The following table reflects stock-based employee compensation cost for the years ended
March 31, 2004, 2005 and 2006. In addition, the following table also reflects on a pro forma basis
the Group's net income and net income per common share with and without dilution, as if
compensation costs for stock options had been recorded based on the fair value at the date of grant
under the Group's stock-based compensation plans, consistent with the provisions of SFAS No. 123.
The pro forma compensation expense reflects compensation expense over the vesting period of the
grant, which is generally three years. The stock-based compensation plan disclosure requirements
required by SFAS No. 123 are provided in Note 23 to the Consolidated Financial Statements.
F-18
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Thousands of
Millions of Yen
U.S. Dollars
2004
2005
2006
2006
Net income, as reported
¥6,077
¥7,262
¥8,455
$71,976
Add back: Stock-based
compensation expense
determined under intrinsic
value method, net of tax
—
—
—
—
Deduct: Pro forma
stock-based compensation
expense determined under
fair value method, net of
tax
121
129
346
2,946
Pro forma net income
¥5,956
¥7,133
¥8,109
$69,030
Yen
U.S. Dollars
2004
2005
2006
2006
Net income per common share:
As reported — basic
¥2.54
¥2.98
¥3.27
$0.028
As reported — diluted
2.34
2.70
3.08
0.026
Yen
U.S. Dollars
2004
2005
2006
2006
Net income per common share:
Pro forma — basic
¥2.49
¥2.92
¥3.14
$0.027
Pro forma — diluted
2.30
2.64
2.94
0.025
The fair value of stock options and warrants granted is estimated using the Black-Scholes
option-pricing model with the following weighted-average assumptions:
2004
2005
2006
Weighted-average assumptions:
Risk-free interest rate
0.3
%
0.3
%
1.5
%
Expected lives
3.0 years
3.0 years
3.2 years
Expected volatility
38
%
33
%
31
%
Dividend yield
1.7
%
1.1
%
1.3
%
Weighted-average fair value of grant per share
¥3.30
¥6.47
¥7.79
(s) Issuance of Stock by Subsidiaries or Affiliates
The
change in the Group's proportionate interest in a subsidiary or an affiliate resulting from
issuance of stock by the subsidiary or affiliate is recognized as earnings.
(t) Comprehensive Income
The Group accounts for comprehensive income in accordance with SFAS No. 130 "Reporting
Comprehensive Income". SFAS No. 130 establishes standards for the reporting and presentation of
comprehensive income and its components (revenues, expenses, gains, and losses) in the financial
statements. The Group presents comprehensive income in its consolidated statement of
shareholders' equity, net of related income taxes.
F-19
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
3. Recently Issued Accounting Pronouncements
In December 2004, the FASB issued SFAS No. 123-R (revised 2004) "Share-Based Payment," a revision
of SFAS No. 123 "Accounting for Stock-Based Compensation." SFAS No. 123-R requires a public entity
to measure the cost of employee services received in exchange for an award of equity instruments
based on the grant-date fair value of the award. In April 2005, the Securities and Exchange
Commission ("SEC") delayed the effective date of FASB Statement No. 123-R to the annual reporting
period that began after June 15, 2005, and for the Group, this date is April 1, 2006. The
Group expects the adoption of this statement will reduce the
Group's reported net income and earnings per share. The effect
of adopting this statement on the Group's historical
consolidated financial statements is reflected on the Group's
proforma in Note 2(r) to the consolidated financial statements.
4. Loans Receivable and Allowance for Loan Losses
The following is a summary of loans outstanding as of March 31, 2005 and 2006:
Thousands of
Millions of Yen
U.S. Dollars
2005
2006
2006
Small business owner loans
¥
58,961
¥
65,447
$
557,138
Business Timely loans
20,862
25,282
215,221
Secured loans
18,812
91,610
779,859
Wide loans
47,604
41,163
350,413
Consumer loans
2,827
2,995
25,496
Other loans
6,296
10,681
90,924
Total loans outstanding
155,362
237,178
2,019,051
Allowance for loan losses
(10,034
)
(11,003
)
(93,666
)
Deferred origination costs (fee income)
791
(228
)
(1,941
)
Loans receivable, net
¥
146,119
¥
225,947
$
1,923,444
The following is a summary of changes in the allowance for loan losses for the years ended
March 31, 2004, 2005 and 2006:
Thousands of
Millions of Yen
U.S. Dollars
2004
2005
2006
2006
Balance at beginning of year
¥
11,827
¥
13,528
¥
10,034
$
85,418
Provision for loans receivable on sold loans
—
(3,327
)
—
—
Provision for loan losses
12,824
7,759
8,277
70,461
Charge-offs, net of recoveries, and other
(11,123
)
(7,926
)
(7,308
)
(62,213
)
Balance at end of year
¥
13,528
¥
10,034
¥
11,003
$
93,666
F-20
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
The components of the allowance for loan losses as of March 31, 2005 and 2006 are as follows:
Millions of Yen
2005
Small
Business
Business
Owner
Timely
Secured
Consumer
Loans
Loans
Loans
Wide Loans
Loans
Other Loans
Total
Historical Loss Components
- Current
Current
¥
50,825
¥
20,295
¥
18,405
¥
39,542
¥
2,719
¥
6,149
¥
137,935
Restructured
6,371
567
71
6,758
108
—
13,875
Loans outstanding
57,196
20,862
18,476
46,300
2,827
6,149
151,810
Allowance
1,993
2,231
582
1,698
308
120
6,932
- 67 to 96 days
Loans outstanding
206
—
14
103
—
97
420
Allowance
144
—
10
72
—
61
287
- 97 to 120 days
Loans outstanding
113
—
5
82
—
20
220
Allowance
113
—
5
82
—
20
220
- Over 120 days
Loans outstanding
841
—
9
585
—
18
1,453
Allowance
841
—
9
585
—
18
1,453
Loans outstanding
58,356
20,862
18,504
47,070
2,827
6,284
153,903
Allowance
3,091
2,231
606
2,437
308
219
8,892
Other Components:
- Bankrupt loans
Loans outstanding
441
—
4
404
—
12
861
Allowance
431
—
3
394
—
12
840
- Loans under legal process
Loans outstanding
164
—
304
130
—
—
598
Allowance
84
—
152
66
—
—
302
Loans outstanding
605
—
308
534
—
12
1,459
Allowance
515
—
155
460
—
12
1,142
Total loans outstanding
¥
58,961
¥
20,862
¥
18,812
¥
47,604
¥
2,827
¥
6,296
¥
155,362
Total allowance
3,606
2,231
761
2,897
308
231
10,034
F-21
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Millions of Yen
2006
Small
Business
Business
Owner
Timely
Secured
Consumer
Loans
Loans
Loans
Wide Loans
Loans
Other Loans
Total
Historical Loss Components
- Current
Current
¥
55,604
¥
24,503
¥
90,905
¥
34,259
¥
2,892
¥
10,375
¥
218,538
Restructured
6,917
779
665
5,934
103
12
14,410
Loans outstanding
62,521
25,282
91,570
40,193
2,995
10,387
232,948
Allowance
2,049
2,694
532
1,481
213
197
7,166
- 67 to 96 days
Loans outstanding
339
—
2
83
—
87
511
Allowance
238
—
2
58
—
61
359
- 97 to 120 days
Loans outstanding
73
—
—
32
—
141
246
Allowance
73
—
—
32
—
141
246
- Over 120 days
Loans outstanding
1,452
—
15
499
—
16
1,982
Allowance
1,452
—
15
499
—
16
1,982
Loans outstanding
64,385
25,282
91,587
40,807
2,995
10,631
235,687
Allowance
3,812
2,694
549
2,070
213
415
9,753
Other Components:
- Bankrupt loans
Loans outstanding
833
—
19
264
—
40
1,156
Allowance
785
—
7
256
—
36
1,084
- Loans under legal process
Loans outstanding
229
—
4
92
—
10
335
Allowance
114
—
2
46
—
4
166
Loans outstanding
1,062
—
23
356
—
50
1,491
Allowance
899
—
9
302
—
40
1,250
Total loans outstanding
¥
65,447
¥
25,282
¥
91,610
¥
41,163
¥
2,995
¥
10,681
¥
237,178
Total allowance
4,711
2,694
558
2,372
213
455
11,003
F-22
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Thousands of U.S. Dollars
2006
Small
Business
Business
Owner
Timely
Secured
Consumer
Loans
Loans
Loans
Wide Loans
Loans
Other Loans
Total
Historical Loss Components:
- Current
Current
$
473,346
$
208,589
$
773,857
$
291,640
$
24,619
$
88,320
$
1,860,371
Restructured
58,883
6,632
5,661
50,515
877
102
122,670
Loans outstanding
532,229
215,221
779,518
342,155
25,496
88,422
1,983,041
Allowance
17,443
22,934
4,529
12,607
1,813
1,677
61,003
- 67 to 96 days
Loans outstanding
2,886
—
17
707
—
740
4,350
Allowance
2,026
—
17
494
—
520
3,057
- 97 to 120 days
Loans outstanding
621
—
—
272
—
1,200
2,093
Allowance
621
—
—
272
—
1,200
2,093
- Over 120 days
Loans outstanding
12,361
—
128
4,248
—
136
16,873
Allowance
12,361
—
128
4,248
—
136
16,873
Loans outstanding
548,097
215,221
779,663
347,382
25,496
90,498
2,006,357
Allowance
32,451
22,934
4,674
17,621
1,813
3,533
83,026
Other Components:
- Bankrupt loans
Loans outstanding
7,091
—
162
2,247
—
341
9,841
Allowance
6,683
—
60
2,179
—
306
9,228
- Loans under legal process
Loans outstanding
1,950
—
34
784
—
85
2,853
Allowance
969
—
17
392
—
34
1,412
Loans outstanding
9,041
—
196
3,031
—
426
12,694
Allowance
7,652
—
77
2,571
—
340
10,640
Total loans outstanding
$
557,138
$
215,221
$
779,859
$
350,413
$
25,496
$
90,924
$
2,019,051
Total allowance
40,103
22,934
4,751
20,192
1,813
3,873
93,666
The Group's allowance for loan losses is the sum of specific reserves under SFAS No.114,
"Accounting by Creditors for Impairment of a Loan", and a general reserve of groups of loans with
similar risk characteristics under SFAS No. 5, "Accounting for Contingencies". The components used
in determining the allowance level include:
(1)
a component estimated based on historical loss by payment status;
(2)
components based on legal status including bankruptcy or death; and
(3)
other components based on loan attributes.
Historical loss experience is adjusted for observable data on bankruptcies and unemployment.
F-23
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
The aggregate loans outstanding due in each of the next five years and thereafter are as
follows:
Thousands of
Millions of Yen
U.S. Dollars
Year ending March 31,
2007
¥
134,936
$
1,148,685
2008
44,032
374,836
2009
33,737
287,197
2010
14,706
125,189
2011 and thereafter
9,767
83,144
Total loans outstanding
¥
237,178
$
2,019,051
In addition, NIS Lease Co., Ltd. ("NISL"), a 100% owned subsidiary, was incorporated on
November 10, 2003, and started its business on February 1, 2004. NISL acquires equipment and
related assets for lease and provides leasing operations in Japan, including direct financing
leases. Investment in direct financing leases, included in "Other loans" of "Loans receivable,
net", at March 31, 2005 and 2006 is as follows:
Thousands of
Millions of Yen
U.S. Dollars
2005
2006
2006
Aggregate lease payments receivable
¥
3,000
¥
4,002
$
34,068
Initial direct costs
—
—
—
Unearned lease income
(751
)
(901
)
(7,670
)
Investment in direct financing leases
2,249
3,101
26,398
Allowance for loan and lease losses
(81
)
(122
)
(1,038
)
Investment in direct financing leases, net
¥
2,168
¥
2,979
$
25,360
The presentation of initial direct costs associated with investment in direct financing leases
for the year ended March 31, 2005 and 2006 are omitted as their respective figures are
insignificant.
Aggregate lease payments receivable are due in periodic installments through December 2011. At
March 31, 2006, the amounts, which are included in the schedule above, due in each of the next five
years and thereafter are as follows:
Thousands of
Millions of Yen
U.S. Dollars
Year ending March 31,
2007
¥
1,098
$
9,347
2008
1,081
9,202
2009
1,002
8,530
2010
643
5,474
2011 and thereafter
178
1,515
Aggregate lease payments receivable
¥
4,002
$
34,068
In addition, losses from the disposition of direct financing lease assets are ¥80 million
($681 thousand) for the year ended March 31, 2006.
F -24
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
5. Purchased Loans Receivable
The Group mainly purchases distressed loans from financial institutions and services these loans
for its own portfolio. The Group's intention is to renegotiate the terms of the loan with the
borrower, carry and service the loan through maturity. These loans are normally collateralized or
carry personal guarantees. The total contracted amounts outstanding for these distressed loans were
¥1,097,289 million and ¥1,643,039 million ($13,986,882 thousand) as of March 31, 2005 and 2006,
respectively.
The following is a summary of the carrying amount of purchased loans receivable as of March 31,
2005 and 2006:
Thousands of
Millions of Yen
U.S. Dollars
2005
2006
2006
Purchased loans outstanding
¥
14,863
¥
25,947
$
220,882
Allowance for loan losses
(1,282
)
(1,792
)
(15,255
)
Purchased loans receivable, net
¥
13,581
¥
24,155
$
205,627
The following is a summary of information with respect to purchased loans receivable for the
years ended March 31, 2004, 2005 and 2006:
Thousands of
Millions of Yen
U.S. Dollars
2004
2005
2006
2006
Purchased loans receivable:
Balance at beginning of year
¥
3,078
¥
5,059
¥
14,863
$
126,527
Purchases
4,502
16,896
19,779
168,375
Principal collections
(A)
(2,469
)
(6,840
)
(7,308
)
(62,212
)
Sales
(B)
—
—
(711
)
(6,053
)
Charge-offs
(52
)
(252
)
(676
)
(5,755
)
Balance at end of year
5,059
14,863
25,947
220,882
Allowance for loan losses:
Balance at beginning of year
132
717
1,282
10,914
Provision for loan losses
637
817
1,186
10,096
Charge-offs
(52
)
(252
)
(676
)
(5,755
)
Balance at end of year
717
1,282
1,792
15,255
Purchased loans receivable, net
¥
4,342
¥
13,581
¥
24,155
$
205,627
(A)
Including non-cash payments such as foreclosed property of ¥352 million ($2,997 thousand) for
the year ended March 31, 2006.
(B)
Sold to an equity-method affiliate at cost. The Group did not recognize any gains or
losses from this transaction.
During the years ended March 31, 2004, 2005 and 2006, interest income from purchased loans
receivable were ¥2,069 million, ¥3,255 million and ¥4,960 million ($42,224 thousand), respectively.
In the event of borrower's delinquency, the Group may foreclose on borrower's loan collateral.
Collateral obtained by the Group is held for sale and included in "Real estate for sale" on the
accompanying consolidated balance sheets.
F -25
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
6. Investment Securities
The Group's investment securities as of March 31, 2005 and 2006 consist of marketable securities,
all of which are classified as "available-for-sale" in accordance with SFAS No.115, and other
investments, as follows:
Thousands of
Millions of Yen
U.S. Dollars
2005
2006
2006
Marketable securities:
Marketable equity securities
¥
18,644
¥
23,396
$
199,166
Debt securities
155
114
970
Other investments
9,644
18,561
158,007
Total investment securities
¥
28,443
¥
42,071
$
358,143
The aggregate cost and fair value of marketable securities as of March 31, 2005 and 2006 is as
follows:
2005:
Millions of Yen
Gross
Gross
Unrealized
Unrealized
Fair
Cost
Gains
Losses
Value
Marketable equity
securities
¥
5,031
¥
13,613
¥
—
¥
18,644
2006:
Millions of Yen
Thousands of U.S. Dollars
Gross
Gross
Gross
Gross
Unrealized
Unrealized
Fair
Unrealized
Unrealized
Fair
Cost
Gains
Losses
Value
Cost
Gains
Losses
Value
Marketable equity
securities
¥
14,424
¥
9,121
¥
149
¥
23,396
$
122,789
$
77,645
$
1,268
$
199,166
As of March 31, 2005 and 2006, there were no marketable equity securities which were in an
unrealized loss position for 12 months or more.
In
addition, the aggregate cost of debt securities approximates fair
value. As of March 31, 2005 and 2006, the Group held six and five debt securities,
respectively, with maturity ranging from October 2005 to July 2009 and August 2006 to March 2010,
respectively.
The aggregate cost of other investments which approximates fair value as of March 31, 2005 and 2006
is as follows:
Thousands of
Millions of Yen
U.S. Dollars
2005
2006
2006
Non-marketable equity securities
¥
2,716
¥
4,594
$
39,108
Investment funds
6,812
13,734
116,915
Other
116
233
1,984
Total other investments
¥
9,644
¥
18,561
$
158,007
During the years ended March 31, 2004, 2005 and 2006, the proceeds from sales of investment
securities were ¥2,173 million, ¥5,125 million and ¥12,707 million ($108,172 thousand), respectively. On those sales, gross
realized gains computed on the average cost basis were ¥645 million, ¥939 million and ¥4,185 million ($35,626 thousand) and
gross realized losses were ¥46 million, ¥5 million and ¥2 million ($17 thousand), respectively.
Management believes that there was a permanent impairment in value of the marketable securities and
other investments during the years ended March 31, 2004, 2005 and 2006 of approximately ¥867 million, ¥1,447 million and ¥475 million ($4,044 thousand),
respectively. These amounts are netted with the gains noted above in the accompanying consolidated statements of income.
F-26
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
7. Property and Equipment
Property and equipment as of March 31, 2005 and 2006 are summarized as follows:
Thousands of
Millions of Yen
U.S. Dollars
2005
2006
2006
Land
¥
356
¥
4,070
$
34,647
Buildings and structures
1,264
4,043
34,417
Equipment and software
5,756
6,587
56,074
Sub-total
7,376
14,700
125,138
Less accumulated depreciation and amortization
(2,091
)
(3,531
)
(30,060
)
Property and equipment, net
¥
5,285
¥
11,169
$
95,078
As discussed in the summary of significant accounting policies, investment in operating leases
is included in the property and equipment presented above. The cost of equipment, building
improvements and related assets leased to customers under operating leases as of March 31, 2005 and
2006 was ¥427 million and ¥1,848 million ($15,732 thousand), respectively. Accumulated
depreciation on equipment, building improvements and related assets under operating leases as of
March 31, 2005 and 2006 was ¥140 million and ¥296 million ($2,520 thousand), respectively.
In addition, the amount of property and equipment held by entities, which are consolidated by the
Group in accordance with the FIN No. 46 (R), are ¥4,522 million ($38,495 thousand) as of March 31, 2006.
8. Acquisitions
On
July 9, 2004, the Company invested $500 thousand to establish Matsuyama Nissin Investment &
Consulting (Shanghai) Co., Ltd., a wholly-owned subsidiary, formerly operated as a business
consultant, in Shanghai, China to expand the Group's businesses into the Chinese market.
Subsequently, the Company increased its investments in Matsuyama Nissin Investment & Consulting
(Shanghai) Co., Ltd. to $20 million from December 27, 2004 through January 26, 2006. On September
14, 2005, Matsuyama Nissin Investment & Consulting (Shanghai) Co., Ltd. obtained a leasing license
in China, and eventually changed its name to Matsuyama Nissin Leasing (Shanghai) Co., Ltd. In
addition, on March 13, 2006, Matsuyama Nissin Leasing (Shanghai) Co., Ltd. changed its name to
Nissin Leasing (China) Co., Ltd. The functional currency of Nissin Leasing (China) Co., Ltd. is
Chinese Yuan Renminbi (CNY).
On
December 3, 2004, the Company invested ¥3,811 million in cash to acquire 100% of the issued shares of
Yamagen Securities Co., Ltd., a wholly-owned subsidiary of Japan Asia Holdings (Japan) Limited.
This acquisition was made for the purpose of commencing securities business operations in Japan to
enable the Group to provide a full line of financial services from procurement to investment, as
well as direct and indirect financing, to all clients and businesses related with the Group.
The Group began consolidating the results of operations of Yamagen Securities Co., Ltd. from
December 3, 2004. The Group accounted for the acquisition as a purchase using the accounting
standards established in Statement of Financial Accounting Standards ("SFAS") No. 141 "Business
Combination", and SFAS No. 142 "Goodwill and Other Intangible Assets". The amount of consideration
paid in excess of the estimated fair value of the net assets acquired was ¥600 million for a
brokerage license and was recorded in "Other assets" in the accompanying consolidated balance
sheets. This license is determined to have an indefinite useful life. On May 1, 2005, Yamagen
Securities Co., Ltd. changed its company's name to NIS Securities Co., Ltd.
F-27
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
A reconciliation of the purchase price of Yamagen Securities Co., Ltd. is as follows:
Millions of Yen
Fair value of assets acquired:
Current assets
¥3,133
Other tangible assets
9
Amortizable intangible assets
4
Unamortizable assets
181
Brokerage license
600
Total assets acquired
3,927
Less: liabilities assumed
(116
)
Total purchase price
¥3,811
As Yamagen Securities Co., Ltd. was not an operating business at the time of the acquisition,
thus, had the Group purchased Yamagen Securities Co., Ltd. at the beginning of the Group's
fiscal year, there would be no significant difference in revenues or net income of the Group.
On
December 2, 2005, the Company invested ¥1,446 million ($12,310 thousand) to acquire 69.3% of the
outstanding shares of Aprek Co., Ltd. ("APREK"), a JASDAQ-listed company, through a cash tender
offer. APREK provides business financing primarily to owners of small to medium-sized enterprises
and sole proprietors in the Japan's Kyushu region. Since both
the Company and APREK are targeting
mainly owners of small to medium-sized enterprises, it is anticipated this acquisition will bring
benefits of synergy to both companies, by providing real estate-related services, corporate
revitalization-related services, and venture enterprise support services, to customers of APREK in
the Kyushu region. The Group began consolidating the results of operations of APREK from
December 2, 2005. The Group accounted for the acquisition as a purchase, using the accounting
standards established in SFAS No. 141 and No. 142. The excess amount between the consideration
paid and the estimated fair value of the acquired tangible and intangible assets was insignificant.
A reconciliation of the purchase price of APREK is as follows:
Millions of Yen
Thousands of
U.S. Dollars
Fair value of assets acquired:
Current assets
¥  7,896
$   67,217
Other tangible assets
619
5,269
Amortizable intangible assets
16
136
Unamortizable assets
196
1,669
Total assets acquired
8,727
74,291
Less: liabilities assumed
(6,624
)
(56,389
)
Less: minority interests
(657
)
(5,592
)
Total purchase price
¥  1,446
$   12,310
In addition, had the Group purchased APREK at the beginning of the Group's fiscal year,
there would be no significant difference in revenues or net income of the Group on either
an individual or an aggregate basis.
F -28
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
9. Variable Interest Entities
The Group invests in a number of trusts, partnerships, corporations or other vehicles that are
established for a limited business purpose. The establishment may involve the transfer of assets
and liabilities in which the transferor may or may not have continued involvement, derive continued
benefit, exhibit control or have recourse. In accordance with FIN No. 46 (R), entities designated as a variable
interest entity ("VIE"), are subject to consolidation by the party deemed to be the primary
beneficiary, if any. A VIE is an entity that does not have sufficient equity at risk to finance
its activities without additional subordinated financial support or in which the equity investors
do not have the characteristics of a controlling financial interest. The primary beneficiary is
the entity that will absorb a majority of the VIE's expected losses, or if there is no such entity,
the entity that will receive a majority of the VIE's expected residual returns, if any.
The Group evaluates its relationships with its investees who are mainly engaged in acquisition
and development of real estate for the Group's real estate-related business and acquisition of
distressed loans for the Group's loan servicing business. The Group may not have a majority or
voting interest but may be required to consolidate because it is deemed to be the primary
beneficiary of that entity in accordance with the FIN No. 46(R). As of March 31, 2006, the Group
determined that it was the primary beneficiary of variable interests in seven entities, since
substantially all such investee's subordinated interests are issued to the Group, and therefore
controlled by and for the benefit of the Group. These investees were consolidated by the
Group.
With respect to such investee's assets, ¥1,908 million ($16,242 thousand) are included in
"Purchased loans receivable", ¥5,559 million
($47,323 thousand) are included in "Real estate for
sale", and ¥4,522 million ($38,495 thousand) are included in "Property and equipment" in the
accompanying consolidated balance sheets.
Certain of our consolidated investees obtain non-recourse loans from financial institutions, for
which ¥10,462 million ($89,061 thousand) of the investee's assets are pledged as collateral for the
non-recourse loans as of March 31, 2006. The creditors to these entities have no recourse to other
assets of the Group.
10. Investment in Affiliates
As of March 31, 2005 and 2006, the aggregate net assets of affiliates owned by the Group are ¥514
million and ¥617 million ($5,252 thousand), respectively. The significant changes in investment in
affiliates for the years ended March 31, 2005 and 2006 are as follows:
2005:
On
November 9, 2004, the Company invested ¥150 million for a 30% interest in Chuo Mitsui Finance
Service Co., Ltd., a private Japanese corporation established as a joint venture with The Chuo
Mitsui Trust and Banking Co., Ltd. for the purpose of providing loans to small and medium-sized
corporations in connection with real estate financing and unsecured card loans.
2006:
On
January 23, 2006, the Company invested ¥20 million ($170 thousand) for a 25% interest in
Nippon Real Estate Rating Services Co., Ltd., a private Japanese corporation established as a joint
venture with Funai Zaisan Consultants Co., Ltd. for the purpose of further enhancing the real
estate market through the standardization of real estate ratings.
F -29
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
11. Goodwill and Other Intangible Assets
Goodwill and other intangible assets as of March 31, 2005 and 2006 comprised the following:
Thousands of
Millions of Yen
U.S. Dollars
2005
2006
2006
Goodwill
¥201
¥201
$1,711
License
600
600
5,108
Other
8
13
110
Total goodwill and other intangible assets
¥809
¥814
$6,929
Goodwill of ¥201 million
($1,711 thousand) resulting from the Group's investment in
Webcashing.com Co., Ltd., which, prior to September 5, 2006 was a 38% owned-equity method investment, is included in "Investment in
affiliates" in the accompanying consolidated balance sheets.
The changes in the carrying amount of goodwill and other intangible assets recognized in a business
combination for the years ended March 31, 2004, 2005 and 2006 are as follows:
Thousands of
Millions of Yen
U.S. Dollars
2004
2005
2006
2006
Balance at beginning of year
¥  —
¥201
¥801
$6,819
Acquired during the year
201
600
—
—
Impairment losses
—
—
—
—
Balance at end of year
¥201
¥801
¥801
$6,819
12. Short-Term and Long-Term Borrowings
Short-term borrowings as of March 31, 2005 and 2006 are comprised of the following:
Thousands of
Millions of Yen
U.S. Dollars
2005
2006
2006
Bank loans
¥
9,017
¥
30,283
$257,793
Commercial paper
3,500
30,000
255,384
Rediscounted notes
83
128
1,090
Total short-term borrowings
¥
12,600
¥
60,411
$514,267
Interest
rates on bank loans as of March 31, 2005 and 2006 under fixed
or variable contracts range
from 0.964% to 2.200% and from 0.993% to 5.022%, with the weighted average interest rates of these
bank loans being 1.567% and 1.374%, respectively. Interest rates on commercial paper as of March
31, 2005 and 2006 ranged from 0.295% to 0.450% and from 0.300% to 1.000%, respectively. The
weighted average interest rates of the commercial paper as of March 31, 2005 and 2006 are 0.384%
and 0.682%, respectively. Interest rates on all discounted notes as of March 31, 2005 and 2006 are
2.375%. All short-term borrowings have terms ranging from approximately 1 month to 12 months and
are usually renewed at maturity subject to renegotiation of interest rates and other factors.
F-30
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Long-term borrowings as of March 31, 2005 and 2006 are comprised of the following:
Thousands of
Millions of Yen
U.S. Dollars
2005
2006
2006
2.35% unsecured bonds, due November 1, 2005
¥
5,000
¥
—
$
—
1.18% unsecured bonds, due February 25, 2008
7,500
7,500
63,846
1.90% unsecured bonds, due July 31, 2006
500
500
4,256
0.75% unsecured bonds, due September 19, 2008
210
150
1,277
0.64% unsecured bonds, due March 26, 2007
500
500
4,256
0.45% unsecured bonds, due September 27, 2006
500
500
4,256
0.67% unsecured bonds, due September 27, 2007
500
500
4,256
1.17% unsecured bonds, due June 20, 2008
—
7,500
63,846
1.08% unsecured bonds, due September 16, 2008
—
10,000
85,128
0.90% unsecured bonds, due March 27, 2009
—
1,000
8,513
1.70% unsecured convertible bonds, due September 29, 2006
(A)
8,942
822
6,999
Total bonds
23,652
28,972
246,633
Loans from banks and other financial institutions
Secured:
Due 2005 to 2009 with fixed interest rates ranging from 1.595% to
2.900% per annum, weighted average actual rate is 2.134%
11,086
—
—
Due 2006 to 2010 with fixed interest rates ranging from 1.300% to
5.100% per annum, weighted average actual rate is 1.994%
—
14,352
122,176
Due 2005 to 2008 with variable interest rates principally based on
Long-term Prime Rate ("LTPR") plus -0.306% to 1.475% per annum,
weighted average actual rate is 1.346%
(B)
14,822
—
—
Due 2006 to 2009 with variable interest rates principally based on
LTPR plus -1.239% to 0.775% per annum, weighted average actual rate
is 0.922%
(B)
—
39,382
335,251
Unsecured:
Due 2005 to 2010 with fixed interest rates ranging from 1.275% to
2.750% per annum, weighted average actual rate is 1.975%
43,224
—
—
Due 2006 to 2011 with fixed interest rates ranging from 1.050% to
2.585% per annum, weighted average actual rate is 1.540%
—
70,806
602,758
Due 2005 to 2009 with variable interest rates based on LTPR plus
-0.100% to 1.425% per annum, weighted average actual rate is 2.080%
44,060
—
—
Due 2006 to 2011 with variable interest rates based on LTPR plus
-1.114% to 1.472% per annum, weighted average actual rate is 1.644%
—
45,412
386,585
Total loans from banks and other financial institutions
113,192
169,952
1,446,770
Total long-term borrowings
¥
136,844
¥
198,924
$
1,693,403
F-31
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(A)
On September 13, 2001, the Company issued ¥10 billion of 1.7% unsecured convertible bonds issued
at par and redeemable on September 29, 2006. The conversion price is ¥40.90 ($0.35) per share
of common stock which was the market value plus 30% premium at the time of issuance. For the
year ended March 31, 2005 and 2006, convertible bonds totaling
¥1,058 million and ¥8,120 million ($69,124 thousand) were
converted to 25,871 thousand shares of common stock and 198,533 thousand shares of common stock, respectively.
(B)
The Company entrusted certain loans outstanding to a trust bank. In order to raise funds, the Company
sold its senior beneficiary interest in these loans outstanding in trust to a third party.
These transactions constitute a legal sale under Japanese law. Since the Company reserves an
option to repurchase the senior beneficiary interest, the Company does not recognize the
extinguishment of the aforementioned interest in the financial statements herein, and the
funds are recognized as a long-term liability. As of March 31, 2005 and 2006, entrusted loans
outstanding included in loans receivable are ¥9,216 million and ¥30,907 million ($263,105
thousand), respectively. The related long-term liability recorded in loans from banks and
other financial institutions are ¥6,673 million and ¥21,670 million ($184,473 thousand),
respectively. In addition, the Company is required to deposit certain amounts with banks as
restricted cash for the purpose of settlement of account. As of March 31, 2005 and 2006,
deposits of restricted cash in banks related to the above borrowings are ¥382 million and ¥491
million ($4,180 thousand), respectively.
As of March 31, 2005 and 2006, the weighted average rates of loans from banks and other
financial institutions were 1.949% and 1.462%, respectively.
In
addition, other than the above, the Group has additional syndicated loans, overdraft
facilities, and loan commitments available from banks totaling ¥5,927 million ($50,455 thousand) as
of March 31, 2006.
The aggregate future annual maturities of bonds, long-term loans from banks and other financial
institutions as of March 31, 2006 are as follows:
Thousands of
Millions of Yen
U.S. Dollars
Year ending March 31,
2007
¥   73,875
$    628,884
2008
69,748
593,752
2009
42,956
365,676
2010
4,309
36,682
2011 and thereafter
8,036
68,409
Total long-term borrowings:
¥198,924
$1,693,403
Under some of its borrowing arrangements, the Group has pledged certain assets as
collateral. The bank may obtain this collateral in the event of financial default. Financial
default includes missed or delinquent payments as provided for in the loan agreements.
As of March 31, 2006, the following assets were pledged for short and long-term borrowings as
collateral.
Thousands of
Millions of Yen
U.S. Dollars
Restricted cash
¥  1,662
$  14,148
Loans receivable
15,510
132,034
Purchased loans receivable
380
3,235
Real estate for sale
6,542
55,691
Total assets pledged as collateral
¥24,094
$205,108
F-32
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Other than the above, as discussed in Note 9, certain consolidated VIEs obtained non-recourse
loans from financial institutions. For these loans, ¥10,462 million ($89,061 thousand) in VIEs
assets are pledged as collateral as of March 31, 2006.
In addition, the Group is subject to financial covenants which require the Group to meet
various operating and liquidity measures. The Group is in compliance with these covenants as of
March 31, 2006.
13. Lease Obligations
The Group leases office space under operating lease agreements. Generally, these agreements are
all cancelable by the Group with six month's advance notice. Total rent under operating lease
agreements was approximately ¥896 million, ¥911 million and ¥965 million ($8,215 thousand) for the
years ended March 31, 2004, 2005 and 2006, respectively.
The minimum rental assuming no cancellation on operating lease payments that have initial lease
terms in excess of one year as of March 31, 2006 are as follows:
Thousands of
Millions of Yen
U.S. Dollars
Year ending March 31,
2007
¥   971
$  8,266
2008
516
4,393
2009
10
85
Total minimum future rentals
¥1,497
$12,744
The Group leases certain equipment, software and vehicles under capital leases.
Acquisition costs and accumulated amortization of leased assets as of March 31, 2005 and 2006 are
as follows:
Thousand of
Millions of Yen
U.S. Dollars
2005
2006
2006
Acquisition costs
¥
2,762
¥
2,875
$ 24,474
Accumulated amortization
(1,101
)
(1,563
)
(13,305
)
Net leased property
¥
1,661
¥
1,312
$ 11,169
F-33
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Future minimum lease payments for the above assets under capital leases as of March 31, 2006
are as follows:
Thousands of
Millions of Yen
U.S. Dollars
Year ending March 31,
2007
¥    641
$   5,457
2008
428
3,643
2009
211
1,796
2010
67
570
2011 and thereafter
25
213
Total minimum lease payments
1,372
11,679
Less: Amount representing interest
(35
)
(297
)
Present value of minimum lease payments
1,337
11,382
Less: Current portion
(621
)
(5,287
)
Long-term capital lease obligations
¥    716
$  6,095
14. Retirement Plans — Employee, Director and Statutory Auditor
In past years, the Group had employee severance plan, and director and statutory auditor
retirement plan. These plans were terminated and described as follows:
Directors and Statutory Auditors:
The
Company's retirement plan for directors and statutory auditors was terminated effective on April 1,
1999 and the retirement liability as of March 31, 1999 shall be
paid on retirement from the Company.
APREK, became a consolidated subsidiary through a cash tender offer on December 2, 2005, adopted a
retirement plan for directors and statutory auditors; however, the plan was terminated effective on
June 1, 2006 and the retirement liability as of May 31, 2006 shall be paid on retirement from
APREK.
Accrued retirement benefits presented in the accompanying consolidated balance sheet as of March
31, 2005 included only the Company's unpaid retirement benefits for directors and statutory auditors.
Employees:
The
Company had no employee retirement plans or liabilities at March 31, 2005 and 2006. APREK adopted a
defined benefit plan for employees. However, the plan was terminated effective on June 1, 2006
with a lump-sum distribution of retirement benefits upon termination of the plan on June 20, 2006.
The components of funded status of the defined benefit plan as of March 31, 2006 are as follows:
Thousand of
Millions of Yen
U.S. Dollars
2006
2006
Accrued retirement benefits
¥265
$2,256
Unrecognized actuarial difference
9
77
Retirement benefit obligation
¥274
$2,333
F-34
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
The status of benefit obligations and plan assets as of March 31, 2005 and 2006 are as
follows:
Thousands of
Millions of Yen
U.S. Dollars
Change in benefit obligation
2005
2006
2006
Benefit obligation at beginning of year
¥334
¥330
$2,809
Increase in obligation due to
acquisition of a subsidiary
—
310
2,639
Service cost
—
6
51
Interest cost
—
1
9
Benefit paid
(4
)
—
—
Benefit obligation at end of year
¥330
¥647
$5,508
Thousands of
Millions of Yen
U.S. Dollars
Total recognized liabilities in the balance sheets
2005
2006
2006
Employees
¥  —
¥265
$2,256
Directors and statutory auditors
330
382
3,252
Obligations in excess of plan assets
¥330
¥647
$5,508
In addition, the Group participates in the mandatory fully-funded contributory plan under
the Japanese Welfare Pension Insurance Law. Under this plan, contributions are made by both the
Group and its employees. Amounts paid by the Group under this plan totaled ¥310 million, ¥358
million and ¥454 million ($3,865 thousand) for the years ended March 31, 2004, 2005 and 2006,
respectively.
15. Derivative Financial Instruments and Risk Management
In order to reduce its exposure to fluctuations in interest rates on variable rate borrowings, the
Group utilizes derivative financial instruments such as interest rate swap contracts. The
counterparties to these instruments are major international financial institutions with favorable
credit ratings, thereby reducing credit risk exposure for non-performance.
Derivative financial instruments outstanding as of March 31, 2005 and 2006 are summarized as
follows:
Interest rate swap:
2005:
Millions of Yen
Millions of Yen
Number of
Notional
Interest Rate
Ultimate
Fair
Deferred
Agreements
Principal
Pay
Receive
Maturity
Value
Amount
1
¥   483
Fixed at 2.190%
TIBOR+1.250%
August 2006
¥(2
)
¥(2
)
1
2,000
Fixed at 1.610%
TIBOR+1.250 %
March 2006
(5
)
(5
)
2
¥2,483
¥(7
)
¥(7
)
F-35
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
2006:
Millions of Yen
Millions of Yen
Number of
Notional
Interest Rate
Ultimate
Fair
Deferred
Agreements
Principal
Pay
Receive
Maturity
Value
Amount
1
¥97
Fixed at 2.190%
TIBOR+1.250%
August 2006
¥(—)
¥(—)
Thousands of
U.S. Dollars
Thousands of U.S. Dollars
Number of
Notional
Interest Rate
Ultimate
Fair
Deferred
Agreements
Principal
Pay
Receive
Maturity
Value
Amount
1
$826
Fixed at 2.190%
TIBOR+1.250%
August 2006
$(—)
$(—)
Applicable
interest rate as of March 31, 2005 is as follows:
¥TIBOR (TIBOR Yen Rate for 3 Months)
0.093
%
Applicable
interest rate as of March 31, 2006 is as follows:
¥TIBOR (TIBOR Yen Rate for 3 Months)
0.128
%
The notional amounts above are the underlying principal amounts used in determining the
interest swapped over the period of the swap agreements and, therefore, are not measures of the
Group's exposure to loss through its use of derivatives. The fair value is estimated based on
quotes from market makers of these instruments and represents the estimated amounts that the
Group would expect to receive and pay if the Group terminated the agreements as of March 31,
2005 and 2006.
16.
Commitments and Contingencies
Under the terms and conditions of the Group's credit line agreements, the Group may, but is not
committed to, lend funds to Business Timely loan, consumer loan and other loan customers. The
Group reviews credit lines and related funding needs based on account usage and customer
creditworthiness.
The Group's unfunded credit lines at March 31, 2005 and 2006 are as follows:
Thousands of
Millions of Yen
U.S. Dollars
2005
2006
2006
Business Timely loans:
Unfunded credit lines with loans outstanding
¥
5,645
¥
9,181
$
78,156
Unfunded credit lines without loans
outstanding
35,075
42,429
361,190
Consumer loans:
Unfunded credit lines with loans outstanding
420
436
3,711
Unfunded credit lines without loans
outstanding
5,345
5,223
44,462
Other:
Unfunded credit lines with loans outstanding
120
25
213
Unfunded credit lines without loans
outstanding
385
385
3,278
Total unfunded credit lines
¥
46,990
¥
57,679
$
491,010
F-36
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
The Group is involved in legal proceedings and claims in the ordinary course of its
business. In the opinion of management, none of these proceedings and claims is expected to
materially impact the Group's financial position or results of operations.
As discussed in the summary of significant accounting policies, the Group may charge interest
rates in excess of the restricted rate. In most cases, where the contractual interest rate exceeds
the restricted rate, borrowers have a right to refuse to pay the excess interest. Accordingly, the
Group does not accrue unpaid excess interest. Once a borrower has paid the excess interest, the
borrower does not have legal rights to obtain a refund of the amounts paid, provided the
appropriate documentation and notification requirements have been met. Borrowers, however, still
do occasionally dispute payments of excess interest. The Group has negotiated refunds of
previously paid excess interest in certain situations primarily involving threatened customer
bankruptcy or threatened litigation. In the past year, the Supreme Court passed decisions
concerning excess interest, and the necessary requirements pertaining to excess interest were
interpreted more exactingly than before, resulting in an increase in borrower demand for refund of
excess interest. During the years ended March 31, 2004, 2005 and 2006, ¥134 million, ¥190 million
and ¥387 million ($3,294 thousand) in interest income was refunded to borrowers, respectively.
Consequently, for the year ended March 31, 2006, the Group recognizes reserves for estimated
losses on excess interest payments to provide for estimated probable refund claims of excess
interest previously paid by borrowers. As of March 31, 2006, ¥590 million ($5,023 thousand) was
reserved and included in "Other liabilities" on the accompanying consolidated balance sheets.
Pursuant to an agreement with Sanyo Club Co., Ltd., in exchange for guaranteeing 40% of the
outstanding balance of specified borrowings, the Company receives 40% of the interest income from the
total borrowings and pays 40% of the related administration expenses and other expenses incurred by
Sanyo Club Co., Ltd. The Company is required to pay out on its guarantees for 40% of the outstanding
loan balance of specified borrowings for which contractual payments are overdue by 120 days or more
as of the end of each month, and distressed loans due to legal processes. Under a loan agreement,
borrowers are neither required to have a guarantor nor to provide collateral.
The Company guarantees borrowings and corresponding interest receivable from customers of Shinsei
Business Finance Co., Ltd. ("SBF"), an affiliate 25% owned by the Company until April 14, 2006, and
receives guarantee fees. The Company receives guarantee fees from the following loan products that SBF
sells:
3S
loans:
The Company guarantees 100% of borrowings and corresponding interest receivable from
customers for 3S loans and receives a guarantee fee at the borrowing contract rate less 4%.
The Company is required to pay out on its guarantees on loans for which contractual payments are
overdue by 14 days or more. 3S loans are unsecured loans that require one or more guarantees from
third party individuals with an income source separate from the customer, and are designed for
small or medium-sized corporations.
Business loans:
The Company guarantees 10% of borrowings and corresponding interest receivable from
customers for Business loans and receives 10% of the interest received from the total borrowings.
The Company is required to pay out on its guarantees on loans for which contractual payments are
overdue by 90 days or more. Business loans are unsecured loans designed for small or medium-sized
corporations.
The Company guarantees borrowings and corresponding interest receivable from customers of Chuo Mitsui
Finance Service Co., Ltd. ("CMFS"), an affiliate 30% owned
by the Company, and receives guarantee fees.
The Company receives guarantee fees from the following loan products that CMFS sells:
Business Card loans
: The Company guarantees 10% of borrowings and corresponding interest receivable
from customers for Business Card loans and receives 10% of the interest received from the total
borrowings. The Company is required to pay out on its guarantees on loans for which contractual payments are overdue by 90 days or more. Business Card loans are
unsecured loans designed for small or medium-sized corporations.
F-37
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Real Estate Finance
: The Company guarantees 10% of borrowings and corresponding interest receivable
from customers for Real Estate Finance and receives 10% of the interest received from the total
borrowings. The Company is required to pay out on its guarantees on loans for which contractual
payments are overdue by 30 days or more.
In addition, NISL guarantees accounts receivable of certain borrowers for a fee determined based on
borrower's creditworthiness and contract duration. As of March 31, 2005 and 2006, the fee rate
ranged from 0.500% to 5.000% and from 0.375% to 21.600%, with weighted average fee rates of 1.95%
and 2.25%, respectively.
The Group maintains reserves for all estimated guarantee losses and includes the amounts in
"Other liabilities" in the accompanying consolidated balance sheets.
Upon payment of any guarantees, the Group records corresponding receivables from the borrower,
which are offset by allowances for deemed uncollectible amounts. As of March 31, 2005 and 2006,
receivables from payment of guarantees were ¥235 million and ¥663 million ($5,644 thousand),
respectively. Those were offset by allowances of ¥208 million and ¥588 million ($5,006 thousand),
respectively, and the resulting amounts are recorded in "Other assets" on the accompanying
consolidated balance sheets.
Also, the
Company was liable as a guarantor for bank loans borrowed by SBF and CMFS, and received
guarantee fees equivalent to an annual interest rate of 1.5% and 1.0%, respectively. However,
during the year ended March 31, 2006, the
Company was released from its obligation as a guarantor for
bank loans borrowed by SBF.
As of
March 31, 2005 and 2006, the Group's guaranteed borrowings, guaranteed accounts receivable,
guarantees for borrowing of other companies and reserve for guarantee losses are as follows:
Thousands of
Millions of Yen
U.S. Dollars
2005
2006
2006
Guaranteed borrowings
¥
7,343
¥
11,886
$
101,183
Guaranteed accounts receivable
358
964
8,206
Guarantees for borrowings of other companies:
Shinsei Business Finance Co., Ltd.
3,645
—
—
Chuo Mitsui Finance Service Co., Ltd.
150
1,920
16,345
Reserve for guarantee losses
371
629
5,355
F-38
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
During
the years ended March 31, 2004, 2005 and 2006, the Group paid the related
administrative and other expenses, as discussed above, and received guarantee fees as follows:
Thousands of
Millions of Yen
U.S. Dollars
2004
2005
2006
2006
Guarantee fees received from:
Guaranteed borrowings and accounts receivable
¥ 362
¥ 845
¥1,386
$11,799
Guarantees for borrowings of other companies
6
34
20
170
Total guarantee fees received
368
879
1,406
11,969
Administrative expenses and other expenses paid
(255
)
(562
)
(898
)
(7,644
)
Guarantee fees received, net
¥ 113
¥ 317
¥  508
$  4,325
During the years ended March 31, 2004, 2005 and 2006, as a result of contractual commitments,
the Group paid ¥89 million, ¥270 million and ¥607 million ($5,167 thousand), respectively, as a
guarantor for the borrowings.
17. Shareholders' Equity
Under Article 445-2 of the Corporate Law, at least one-half of the value of assets which were paid
or provided at share issuance is required to be designated as common stock, and proceeds in excess
of the amount designated as common stock are to be credited to additional paid-in capital in
accordance with Article 454-3 of the Corporate Law. The portion to be designated as common stock
is determined by resolution of the Board of Directors in advance of the issue. Additional paid-in
capital may be transferred to stated capital pursuant to resolution of the Shareholders' Meeting,
in accordance with Article 448-1 of the Corporate Law. In addition, additional paid-in capital may
be used to reduce a deficit or retire treasury stock by resolution of the Shareholders' Meeting but
is not available for dividends payment.
Article 454-4 of the Corporate Law also provides that an amount equal to at least 10% of certain
cash amount which is decreased by dividend distribution of retained earnings be appropriated to
additional paid-in capital or legal reserve until the sum of the additional paid-in capital and
legal reserve equals 25% of paid-in capital. The legal reserve may be transferred to stated
capital pursuant to resolution of the Shareholders' Meeting, in accordance with Article 448-1 of
the Corporate Law. In addition, the legal reserve may be used to reduce a deficit or retire
treasury stock through resolution of the Shareholders' Meeting but is not available for dividend
payment. As of March 31, 2005 and 2006, legal reserves included
in the Company's retained earnings were
¥401 million ($3,414 thousand). Also, as of March 31, 2005 and 2006, legal reserves included in
SVC's retained earnings were ¥2 million ($17 thousand).
According to Article 446 of the Corporate Law, the maximum amount that the Company and each of its
subsidiaries can distribute as dividends at the end of fiscal year is the sum of "Other additional
paid-in capital," which is the amount of additional paid-in capital excluding general additional
paid-in capital, and "Other retained earnings," which is the amount of retained earnings excluding
legal reserve.
On June 22, 2005, at the Annual Shareholders' Meeting, the shareholders authorized an increase in
authorized shares from 1,920 million shares to 3,840 million shares.
On December 20, 2005, the Board of the Directors approved a 2-for-1 split of the common stock for
shareholders of record as of March 31, 2006. The stock split was effective on April 1, 2006. As a
result of the split, the number of issued shares of common stock increased by 1,406,470 thousand
shares. All share and per share amounts in these financial statements have been retroactively
adjusted to reflect
post-split amounts.
F-39
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
In addition, on December 20, 2005, the Board of Directors approved an increase in authorized shares
from 3,840 million shares to 7,680 million shares in accordance with the stock split described
above.
18. Issuance of Stock by Subsidiaries
On November 25, 2003 and February 9, 2004, Nissin Servicer Co., Ltd. ("SVC"), a previously
wholly-owned subsidiary of the Company, completed a sale of additional shares to third parties. The
number of shares newly issued was 8,000 shares and 82,400 shares, and the price per share was
¥1,125 and ¥6,250, respectively. As a result, SVC became an 89.8% subsidiary of the Company. Gain on
change of interest of ¥368 million was included in "Gain (losses) on sale of subsidiaries and
affiliates, net" in the accompanying consolidated statements of income.
Further, SVC listed its stock on the Mothers market of the Tokyo Stock Exchange on September 16,
2004. The number of shares newly issued due to the initial public offering was 100,000 shares, and
the price per share was ¥22,500. During the year ended March 31, 2005 and 2006, SVC issued 63,200
shares and 19,200 shares, respectively, to directors and employees in connection with employee
exercises under its stock option plan, with an average price per share of ¥625 and ¥1,063 ($9.05),
respectively. As a result, the Company's interest in SVC has been diluted to 75.9% and 74.6% as of
March 31, 2005 and 2006, respectively. The Group recognized
net gains of ¥1,339 million for the
year ended March 31, 2005 and losses of ¥47 million ($400 thousand) for the year ended March 31,
2006 in respect of its investment in SVC, which were recorded as "Gain (losses) on sale of
subsidiaries and affiliates, net" in the accompanying consolidated statements of income. The
Group continues to recognize gains or losses from dilution of its interest in SVC.
19. Sale of Subsidiaries
On March 18, 2004, the Company sold a portion of its shares of Big Apple Co., Ltd., a previously
wholly-owned subsidiary of the Company, for ¥117 million and recognized a gain of ¥82 million. As a
result, the Company owns only 10% of Big Apple Co., Ltd. and accounts for its investment under the cost
method.
20. Related Party Transactions
The Group received insurance agency services from an entity 100% owned by the Company's chairman and
his relatives prior to the year ended March 31, 2005. Further,
the Group leases office space to
the same entity.
Since Nissin Insurance Co, Ltd., a wholly owned subsidiary, was established on April 20, 2003, the
Group ceased all insurance transactions with the entity above, and
the Group does not intend to
engage in any insurance transaction with the above entity in the future.
F-40
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
These transactions for the years ended March 31, 2004, 2005 and 2006 are summarized as follows:
Thousands of
Millions of Yen
U.S. Dollars
2004
2005
2006
2006
Insurance paid to related party
¥
1
¥
—
¥
—
$
—
Rent income from related party
1
1
1
9
The Group leases office and parking space to another entity 93.3% owned by the Company's chairman
and his relatives. Total rent received was ¥2 million, ¥2 million and ¥1 million ($9 thousand) for
the years ended March 31, 2004, 2005 and 2006, respectively.
On March 18, 2004, the Group received ¥117 million from a relative of the Company's chairman in
connection with this relative's purchase of a 90% equity interest in Big Apple Co., Ltd., a
subsidiary of the Group.
During the year ended March 31, 2004, the Group paid commissions on business introductions of ¥35
million to Ascot Co., Ltd., a former equity-method affiliate.
During the years ended March 31, 2004, 2005 and 2006, the
Group's transactions with Shinsei
Business Finance Co., Ltd., which, prior to April 14, 2006 was a 25%
owned affiliate, are as follows:
Thousands of
Millions of Yen
U.S. Dollars
2004
2005
2006
2006
Commissions paid
¥
11
¥
32
¥
13
$
111
Commissions received
16
13
4
34
Loan guarantee fees received
90
316
467
3,975
Bank loan guarantee fees received
6
34
9
77
During the years ended March 31, 2004, 2005 and 2006, the Group's transactions with
Webcashing.com Co., Ltd., which, prior to September 5, 2006 was a 38% owned affiliate, are as follows:
Thousands of
Millions of Yen
U.S. Dollars
2004
2005
2006
2006
Commissions paid
¥
291
¥
205
¥
151
$
1,285
Advertising expenses and other fees paid
10
175
518
4,410
Proceeds from sale of equipment and software
22
—
—
—
F-41
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As discussed in Note 10, on November 9, 2004, Chuo Mitsui Finance Service Co., Ltd. became a
30% owned affiliate. During the years ended March 31, 2005 and 2006, the Group's transactions
with Chuo Mitsui Finance Service Co., Ltd. are as follows:
Thousands of
Millions of Yen
U.S. Dollars
2005
2006
2006
Commissions paid
¥
—
¥  9
$  77
Loan guarantee fees received
—
26
221
Bank loan guarantee fees received
—
11
94
Note:
For the year ended March 31, 2005, the Group paid commissions of ¥6 thousand, and
received loan guarantee fees of ¥6 thousand and bank loan guarantee fees of ¥29 thousand.
21. Income Taxes
The components of income tax expense for the years ended March 31, 2004, 2005 and 2006 are as
follows:
Thousands of
Millions of Yen
U.S. Dollars
2004
2005
2006
2006
Current:
National
¥3,353
¥2,132
¥ 5,211
$ 44,360
Local
1,862
1,087
2,463
20,968
5,215
3,219
7,674
65,328
Deferred:
National
(407
)
945
(991
)
(8,436
)
Local
(226
)
482
(469
)
(3,993
)
(633
)
1,427
(1,460
)
(12,429
)
Income taxes
¥4,582
¥4,646
¥ 6,214
$ 52,899
F-42
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
The significant components of deferred tax assets and liabilities as of March 31, 2005 and
2006 are as follows:
Thousands of
Millions of Yen
U.S. Dollars
2005
2006
2006
Deferred tax assets:
Loans receivable charge-offs
¥
16
¥
25
$      213
Allowance for loan losses
649
793
6,751
Reserve for guarantee losses
141
241
2,052
Reserve for losses on interest repayments
—
239
2,035
Accrued local taxes
22
444
3,780
Accrued retirement benefits
134
262
2,230
Accrued salary expenses
407
460
3,916
Impairment of long-lived assets
239
239
2,035
Loan origination costs
—
92
783
Other
173
214
1,820
Total deferred tax assets
1,781
3,009
25,615
Deferred tax liabilities:
Investment securities – difference in basis
5,371
3,418
29,097
Bond issuance costs
104
114
970
Loan origination costs
320
—
—
Accumulated depreciation
57
85
724
Other
35
53
451
Total deferred tax liabilities
5,887
3,670
31,242
Deferred tax assets (liabilities), net
¥
(4,106
)
¥
(661
)
$
(5,627
)
The Group believes that it will fully realize its total deferred tax assets as of March 31,
2006 based on the Group's history of taxable income.
Net deferred tax assets and liabilities as of March 31, 2005 and 2006 are reflected in the
accompanying consolidated balance sheets under the following captions:
Thousands of
Millions of Yen
U.S. Dollars
2005
2006
2006
Deferred tax assets
¥
333
¥
721
$  6,138
Deferred tax liabilities
4,439
1,382
11,765
Deferred tax assets (liabilities), net
¥
(4,106
)
¥
(661
)
$ (5,627
)
The Group is subject to national and local income taxes, which in the aggregate result in a
statutory tax rate of 41.8% for the year ended March 31, 2004 and 40.5% for the years ended March
31, 2005 and 2006. This change is due to the change in Japanese tax regulations enacted on March
24, 2003, which reduced the statutory tax rate from 41.8% to 40.5% effective from the fiscal year
beginning on April 1, 2004.
F-43
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Reconciliation of the differences between the statutory tax rate and the effective income tax rate
for the years ended March 31, 2004, 2005 and 2006 are as follows:
2004
2005
2006
Statutory tax rate
41.8
%
40.5
%
40.5
%
Increase (reduction) in taxes resulting from:
Expenses not deductible for tax purpose
0.4
0.3
0.3
Per capita levy
0.6
0.4
0.3
Special tax credit upon application of
IT Investment Promotion Tax Incentive
(0.1
)
(1.9
)
(0.1
)
Effect of tax rate change
—
—
—
Other
0.3
(0.9
)
(0.3
)
Effective income tax rate
43.0
%
38.4
%
40.7
%
22. Reconciliation of the Differences Between Basic and Diluted Net Income Per Share
Basic and diluted EPS as well as the number of shares in the following table have been
retroactively adjusted to reflect 2-for-1 stock splits completed on May 20, 2004, November 19,
2004, November 18, 2005 and April 1, 2006, and a 1.2-for-1 stock split completed on May 20, 2005,.
Reconciliation of the differences between basic and diluted EPS for the years ended March 31, 2004,
2005 and 2006 is as follows:
Thousands of
Millions of Yen
U.S. Dollars
2004
2005
2006
2006
Net income
¥
6,077
¥
7,262
¥
8,455
$71,976
After–tax
equivalent of
interest expense on
1.7% convertible
bond
101
100
57
485
Loss on change of
equity interest as
a result of
exercise of stock
options of a
subsidiary
—
(53
)
(28
)
(238
)
Income for purpose
of computing
diluted net income
per share
¥
6,178
¥
7,309
¥
8,484
$72,223
Thousands of Shares
2004
2005
2006
Weighted-average shares outstanding– basic
2,393,856
2,441,656
2,584,935
Effect of dilutive securities:
Warrants and options
2,344
19,948
35,873
Convertible bond
244,588
242,264
138,024
Weighted-average shares outstanding for
diluted EPS computation
2,640,788
2,703,868
2,758,832
Yen
U.S. Dollars
2004
2005
2006
2006
Basic EPS
¥
2.54
¥
2.98
¥
3.27
$0.028
Diluted EPS
2.34
2.70
3.08
0.026
Stock options subjected to 1,920 thousand shares were excluded from the computations of
diluted EPS for the year ended March 31, 2006 as their exercise
price was higher than the Company's
average stock price.
F-44
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
23. Stock-based Compensation
The Company has two types of stock-based compensation plans as incentive plans for selected directors
and employees.
Warrant Plan:
Under the
Company's incentive warrant plans, on April 20, 2001, the
Company issued unsecured bonds with
detachable warrants. These warrants were immediately repurchased at their fair market value and
granted as compensation to directors and selected employees in the
Company. The warrants were
exercisable into approximately 49,864 thousand shares of common stock at an exercise price of
¥30.10 per share. The exercise period of the warrant was from July 2, 2001 through April 19, 2004.
The warrants were immediately exercisable at the time of grant, but expire at the time of
termination of employment with the Group. All warrants matured by March 31, 2005.
Stock Option Plan:
Following
approval of the shareholders at the Company's annual meeting on
June 22, 2002, the Company granted
share subscription rights to directors, statutory auditors, employees, corporate advisors and
temporary employees with tenure of over one year on September 10, 2002. Under this stock option
plan, options to purchase common stock of 57,408 thousand shares were granted at the exercise price
of ¥27.00 per share, which was priced at 110% of the closing price of the day before the approval
of grant, are exercisable from October 1, 2002 and expire on the earlier of September 30, 2005 or
termination of employment with the Group.
Following
approval of the shareholders at the Company's annual meeting on
June 24, 2003, the Company granted
share subscription rights to directors, statutory auditors, corporate advisors and employees,
including employees loaned to other companies, and wholly-owned subsidiary's directors, statutory
auditors and employees on July 16, 2003. Under this stock option plan, options to purchase common
stock of 25,920 thousand shares were granted at the exercise price of ¥28.00 ($0.24) per share,
which was priced at 110% of the average daily closing price of the month immediately before the
month of the issuance date of such subscription rights, are exercisable from August 1, 2003 and
expire on the earlier of July 31, 2006 or termination of employment with the Group.
Following
approval of the shareholders at the Company's annual meeting on
June 22, 2004, the Company granted
share subscription rights to the Group's directors, statutory auditors, corporate advisors and
employees, including employees loaned to other companies and employee of other companies loaned to
the Group, and temporary employees with tenure of over one year on July 15, 2004. Under this
stock option plan, options to purchase common stock of 63,936 thousand shares were granted at the
exercise price of ¥53.00 ($0.45) per share, which was priced at 110% of the average daily closing
price of the month immediately before the month of the issuance date of such subscription rights,
are exercisable from August 1, 2004 and expire on the earlier of July 31, 2007 or termination of
employment with the Group.
Following
approval of the shareholders at the Company's annual meeting on
June 22, 2004, the Company granted
share subscription rights to the Group's directors, statutory auditors, corporate advisors and
employees, including employees loaned to other companies and employee of other companies loaned to
the Group, and temporary employees with tenure of over one year on January 20, 2005. Under this
stock option plan, options to purchase common stock of 768 thousand shares were granted at the
exercise price of ¥55.00 ($0.47) per share, which was priced at 110% of the average daily closing
price of the month immediately before the month of the issuance date of such subscription rights,
are exercisable from February 1, 2005 and expire on the earlier of January 31, 2008 or termination
of employment with the Group.
F-45
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Following approval of the shareholders at the Company's annual meeting on June 22, 2004, the Company
granted share subscription rights to the Group's directors, statutory auditors, corporate advisors and employees, including employees
loaned to other companies and employee of other companies loaned to the Group, and temporary
employees with tenure of over one year on April 21, 2005. Under this stock option plan, options to
purchase common stock of 7,142 thousand shares were granted at the exercise price of ¥67.00 ($0.57)
per share, which was priced at 110% of the average daily closing price of the month immediately
before the month of the issuance date of such subscription rights, are exercisable from May 1, 2005
and expire on the earlier of April 30, 2008 or termination of employment with the Group.
Following approval of the shareholders at the Company's annual meeting on June 22, 2005, the Company granted
share subscription rights to the Group's directors, statutory auditors, corporate advisors and
employees, including employees loaned to other companies and employee of other companies loaned to
the Group on July 15, 2005. Under this stock option plan, options to purchase common stock of
14,400 thousand shares were granted at the exercise price of ¥58.00 ($0.49) per share, which was
priced at 110% of the average daily closing price of the month immediately before the month of the
issuance date of such subscription rights, are exercisable from August 1, 2005 and expire on the
earlier of July 31, 2008 or termination of employment with the Group.
Following approval of the shareholders at the Company's annual meeting on June 22, 2005, the Company granted
share subscription rights to the Group's directors, statutory auditors, corporate advisors and
employees, including employees loaned to other companies and employee of other companies loaned to
the Group on March 23, 2006. Under this stock option plan, options to purchase common stock of
1,920 thousand shares were granted at the exercise price of ¥131.00 ($1.12) per share, which was
priced at 110% of the average daily closing price of the month immediately before the month of the
issuance date of such subscription rights, are exercisable from April 1, 2006 and expire on the
earlier of March 31, 2009 or termination of employment with the Group.
Under APB 25, the Company recognized no compensation expense related to these grants as no options were
granted at a price below the market price on the day of grant. The options automatically vest and
are exercisable upon grant.
A summary of changes in the Company's stock options and warrants during the years ended March 31, 2004,
2005 and 2006 is as follows:
Weighted-average
Weighted-average Exercise
Number of Shares
Remaining Life
Price Per Shares
(Thousands)
(Years)
Yen
U.S. Dollars
Outstanding at March
31, 2003
97,018
1.8
¥28
$0.24
Granted
25,920
3.1
28
0.24
Exercised
(53,232
)
—
30
0.26
Expired or forfeited
(10,880
)
—
28
0.24
Outstanding at March
31, 2004
58,826
1.8
28
0.24
Granted
64,704
3.1
53
0.45
Exercised
(32,020
)
—
31
0.26
Expired or forfeited
(7,441
)
—
46
0.39
Outstanding at March
31, 2005
84,069
1.9
45
0.38
Granted
23,462
3.0
67
0.57
Exercised
(52,688
)
—
43
0.37
Expired or forfeited
(5,184
)
—
58
0.49
Outstanding at March
31, 2006
49,659
1.6
¥56
$0.48
F-46
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
In addition, shares authorized to be grant are fixed at each grant date by the Board of
Directors. Instead of an issuance of new share, the Company sold to the grantee its treasury stock
of 12,868 thousand shares, 30,292 thousand shares and 52,834 thousand shares
upon exercise of stock options for the years ended March 31, 2004, 2005 and 2006, respectively. Consequently, additional paid-in
capital increased by ¥43 million, ¥216 million and ¥999 million ($8,504 thousand) for the years
ended March 31, 2004, 2005 and 2006, respectively, as a result of gains from these transactions.
A summary
of the Company's stock options outstanding as of March 31, 2006 is as follows:
Weighted-average
Number of Shares Outstanding
Remaining Life
Exercise Prices (Yen)
(Thousands)
(Years)
¥28
5,288
0.3
¥53
28,790
1.3
¥55
461
1.8
¥67
3,740
2.1
¥58
9,460
2.3
¥131
1,920
3.0
Total
49,659
1.6
SVC, a
74.6% owned subsidiary of the Company, also has subsidiary stock-based compensation plans as
incentive plans for its directors and selected employees.
Following approval of SVC's shareholders meeting on September 9, 2002, SVC granted share
subscription rights to its directors, statutory auditors and employees on September 26, 2002.
Under this stock option plan, options to purchase common stock of 80,000 shares were granted at the
exercise price of ¥625 ($5.32) per share, which was priced at the initial cost of SVC's common
stock, are exercisable from October 1, 2004 and expire on the earlier of September 30, 2007 or
termination of employment with SVC.
Following approval of SVC's shareholders meeting on June 23, 2003, SVC granted share subscription
rights to its directors and employees on July 29, 2003. Under this stock option plan, options to
purchase common stock of 23,600 shares were granted at the exercise price of ¥1,125 ($9.58) per
share, which was priced at estimated average net assets of SVC for the six months ended September
30, 2003, are exercisable from July 1, 2005 and expire on the earlier of June 30, 2008 or
termination of employment with SVC.
Following approval of SVC's shareholders meeting on March 30, 2004, SVC granted share subscription
rights to its directors, statutory auditors and employees on March 30, 2004. Under this stock
option plan, options to purchase common stock of 14,960 shares were granted at the exercise price
of ¥6,250 ($53.21) per share, which was priced at the fair value of SVC as of September 30, 2003
calculated using the discounted cash flow method, are exercisable from April 1, 2006 and expire on
the earlier of March 31, 2009 or termination of employment with SVC.
Following approval of SVC's annual shareholders meeting on June 21, 2005, SVC granted share
subscription rights to its directors and employees on August 9, 2005. Under this stock option
plan, options to purchase common stock of 2,620 shares were granted at the exercise price of
¥51,549 ($438.83) per share, which was priced at 110% of the average daily closing price of the
month immediately before the month of the issuance date of such subscription rights, are
exercisable from July 1, 2007 and expire on the earlier of June 30, 2010 or termination of
employment with SVC.
Under APB 25, SVC recognized no compensation expense related to these grants as no options were
granted at a price below SVC's fair value or the market price on the day of grant. The options
vest upon approximately two years of services from the day of grant.
F-47
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
A summary of changes in SVC's stock options during the years ended March 31, 2004, 2005 and 2006 is
as follows:
Weighted-average
Weighted-average Exercise
Number of Shares
Remaining Life
Price Per Shares
(Shares)
(Years)
Yen
U.S. Dollars
Outstanding at March 31, 2003
76,400
4.5
¥     625
$    5.32
Granted
38,560
5.0
3,114
26.51
Exercised
—
—
—
—
Expired or forfeited
(14,800
)
—
815
6.94
Outstanding at March 31, 2004
100,160
3.9
1,555
13.24
Granted
—
—
—
—
Exercised
(63,200
)
—
625
5.32
Expired or forfeited
(2,160
)
—
3,403
28.97
Outstanding at March 31, 2005
34,800
3.5
3,130
26.65
Granted
2,620
4.9
51,549
438.83
Exercised
(19,200
)
—
1,063
9.05
Expired or forfeited
(600
)
—
21,350
181.75
Outstanding at March 31, 2006
17,620
3.0
¥11,961
$101.82
A summary of SVC's stock options outstanding as of March 31, 2006 is as follows:
Weighted-average
Number of Shares Outstanding
Remaining Life
Exercise Prices (Yen)
(Thousands)
(Years)
¥625
1,600
1.5
¥6,250
13,600
3.0
¥51,549
2,420
4.3
Total
17,620
3.0
F-48
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
24. Cumulative Other Comprehensive Income
Cumulative other comprehensive income and related tax effects for the years ended March 31, 2004,
2005 and 2006, are as follows:
Millions of Yen
Other
Cumulative
Comprehensive
Other
Income
Tax (Expense)
Comprehensive
Before Tax
or Benefit
Income
March 31, 2003
¥     118
¥      (48
)
¥        70
Unrealized gains on investment securities:
Unrealized holding gains (losses) during the period
5,276
(2,132
)
3,144
Reclassification adjustment for realized (gains) losses
included in net income
268
(108
)
160
Net unrealized holding gains (losses) during the period
5,544
(2,240
)
3,304
Unrealized losses on derivative instruments:
Unrealized holding gains (losses) during the period
(5
)
2
(3
)
Reclassification adjustment for realized (gains) losses
included in net income
—
—
—
March 31, 2004
5,657
(2,286
)
3,371
Unrealized gains on investment securities:
Unrealized holding gains (losses) during the period
7,428
(3,008
)
4,420
Reclassification adjustment for realized (gains) losses
included in net income
513
(208
)
305
Net unrealized holding gains (losses) during the period
7,941
(3,216
)
4,725
Unrealized losses on derivative instruments:
Unrealized holding gains (losses) during the period
(2
)
1
(1
)
Reclassification adjustment for realized (gains) losses
included in net income
—
—
—
Foreign currency translation adjustments:
Unrealized gains (losses) arising during the period
(9
)
—
(9
)
Reclassification adjustment for realized (gains) losses
included in net income
—
—
—
March 31, 2005
13,587
(5,501
)
8,086
Unrealized gains on investment securities:
Unrealized holding gains (losses) gains during the period
(864
)
336
(528
)
Reclassification adjustment for realized (gains) losses
included in net income
(3,760
)
1,523
(2,237
)
Net unrealized holding gains (losses) during the period
(4,624
)
1,859
(2,765
)
Unrealized losses on derivative instruments:
Unrealized holding gains (losses) during the period
7
(3
)
4
Reclassification adjustment for realized (gains) losses
included in net income
—
—
—
Foreign currency translation adjustments:
Unrealized gains (losses) arising during the period
160
—
160
Reclassification adjustment for realized (gains) losses
included in net income
—
—
—
March 31, 2006
¥  9,130
¥(3,645
)
¥  5,485
F-49
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Thousands of U.S. Dollars
Other
Cumulative
Comprehensive
Other
Income
Tax (Expense)
Comprehensive
Before Tax
or Benefit
Income
March 31, 2005
$115,664
$(46,829
)
$68,835
Unrealized gains on investment securities:
Unrealized holding gains (losses) gains during the period
(7,356
)
2,861
(4,495
)
Reclassification adjustment for realized (gains) losses
included in net income
(32,008
)
12,965
(19,043
)
Net unrealized holding gains (losses) during the period
(39,364
)
15,826
(23,538
)
Unrealized losses on derivative instruments:
Unrealized holding gains (losses) during the period
60
(26
)
34
Reclassification adjustment for realized (gains) losses
included in net income
—
—
—
Foreign currency translation adjustments:
Unrealized gains (losses) arising during the period
1,362
—
1,362
Reclassification adjustment for realized (gains) losses
included in net income
—
—
—
March 31, 2006
$ 77,722
$(31,029
)
$46,693
25. Cash Flow Information
Cash payments for interest and income taxes for the years ended March 31, 2004, 2005 and 2006 are
as follows:
Thousands of
Millions of Yen
U.S. Dollars
2004
2005
2006
2006
Interest
¥3,591
¥2,999
¥2,779
$23,657
Income taxes
5,378
5,266
2,302
19,596
Non-cash investing and financing activities for the years ended March 31, 2004, 2005 and 2006
are as follows:
Thousands of
Millions of Yen
U.S. Dollars
2004
2005
2006
2006
Property and
equipment obtained
under capital
leases
¥922
¥   792
¥   278
$  2,367
Conversion of
convertible bonds
to common stock
—
1,058
8,120
69,124
In addition, cash dividends paid to minority interest by SVC of ¥99 million ($843 thousand)
are included in "Dividends paid" of cash flows from financing activities for the year ended March
31, 2006.
F-50
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
26. Disclosures About Fair Value of Financial Instruments
SFAS No. 107, "Disclosures about Fair Value of Financial Instruments" requires disclosures of the
fair value of financial instruments, both assets and liabilities recognized and not recognized in
the Group's balance sheet. The estimated fair value amounts have been determined by the Group
using available market information and appropriate valuation methodologies. The use of different
market assumptions and/or estimation methodologies may have a material effect on the estimated fair
value amounts. Considerable judgment is required in estimating fair values and the estimates
presented are not necessarily indicative of the amounts the Group could realize in a current
market exchange.
The estimated fair values of the Group's financial instruments as of March 31, 2005 and 2006 are
as follows:
Millions of Yen
Thousands of U.S. Dollars
2005
2006
2006
Carrying
Carrying
Carrying
Amount
Fair Value
Amount
Fair Value
Amount
Fair Value
Financial assets:
Cash and cash equivalents
¥
25,709
¥
25,709
¥
22,860
¥
22,860
$
194,603
$
194,603
Loans receivable, net
146,119
146,119
225,947
220,502
1,923,444
1,877,092
Purchased loans receivable, net
13,581
13,581
24,155
24,155
205,627
205,627
Investment securities
28,443
28,443
42,071
42,071
358,143
358,143
Financial liabilities:
Short-term borrowings
12,600
12,600
60,411
60,411
514,267
514,267
Long-term borrowings
136,844
140,752
198,924
200,487
1,693,403
1,706,708
Off-balance-sheet financial
instruments:
Interest rate swaps
—
(7
)
—
—
—
—
Borrowings with guarantees
—
(371
)
—
(629
)
—
(5,355
)
The following methods and assumptions were used to estimate the fair value of each class of
financial instruments for which it is practicable to estimate that value:
a)
Cash and Cash Equivalents:
Cash and cash equivalents are carried at an amount that
approximates fair value.
b)
Loans Receivable:
The market rate of interest for the Group's loan products has not
changed significantly during the lapsed term of the Group's loans receivable. The fair
value of loans receivable are estimated based on discounted future cash flows. The Group's
lending interest rates were compared to changes in the benchmark, Long-term Prime Rate, over
the remaining life of loans receivable as of March 31, 2006.
c)
Purchased Loans Receivable:
The carrying value of purchased loans receivable is estimated
based on either the market value or the discounted amounts of future cash flows. The Group
believes the carrying value of its purchased loans receivable approximates fair value.
d)
Investment Securities:
The fair value of marketable
equity securities is based on quoted market
prices. The Group also holds ¥9,799 million and ¥18,675 million ($158,977 thousand) in
debt securities and other investments, including non-marketable
equity securities as of March 31, 2005 and 2006, respectively. The fair value of
these investments is assumed to estimate cost until such time as new equity or
financing or significant changes operations demonstrate a new fair value.
F-51
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
e)
Short-Term Borrowings:
Short-term borrowings are carried at an amount that approximates fair
value.
f)
Long-Term Borrowings:
Long-term borrowings, including current portion, are estimated based
on either the market value or the discounted amounts of future cash flows. The borrowing
interest rates which were currently available to the Group offered by financial institutions
for debt with similar terms and remaining average maturities are used as the discount rates.
The fair value of syndicated bonds is estimated using a discounted cash-flow calculation that
applies interests rates at an assumed marginal market-funding rate.
g)
Interest Rate Swaps:
The fair value of interest rate swaps (used for hedging purpose)
reflects the estimated amounts that the Group would receive or pay to terminate the
contracts at the reporting date, thereby taking into account the current unrealized gains or
losses of open contracts. Discounted amounts of future cash flows using the current interest
rate and dealer quotes are available for most of the Group's derivatives.
h)
Borrowings with Guarantees:
The fair value of guaranteed borrowings generally reflects the
probable and estimable amounts that the Group would pay for the delinquent payments of
borrowing under guarantee.
27. Segment Information
For financial reporting purposes, the Group operates under the integrated financial services
segment and the loan servicing segment. The integrated financial services segment
comprises of the loan business, which includes small business owner, Business Timely, secured,
Wide, consumer, and other loans, as well as credit guarantees, leasing and securities business. In
the loan servicing segment, SVC mainly acquires and services non-performing debts from banks and
financial institutions in Japan. The loan servicing segment is operated as a separate segment for
financial reporting purposes. Investment in real estate properties,
insurance agency and consultancy business are insignificant  for
financial reporting  purposes and are included in the integrated
financial services segment for financial reporting purposes. The Group currently conducts its
operating activities mainly in Japan. The Group also conducts activities in China, but these
are currently insignificant for financial reporting  purposes. Selected information for the Group's
business segments for the
years ended March 31, 2004, 2005 and 2006 is as follows:
Millions of Yen
Integrated Financial
Services
Loan Servicing
Total
2004:
Total interest income
¥  38,038
¥2,069
¥  40,107
Total interest expense
3,603
121
3,724
Provision for loan losses, net
12,824
637
13,461
Net income
5,671
406
6,077
Total assets
203,527
6,741
210,268
2005:
Total interest income
¥  29,299
¥   3,256
¥  32,555
Total interest expense
3,006
153
3,159
Provision for loan losses, net
7,759
817
8,576
Net income
6,244
1,018
7,262
Total assets
206,692
21,709
228,401
F-52
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Millions of Yen
Integrated Financial
Services
Loan Servicing
Total
2006:
Total interest income
¥  28,938
¥  4,963
¥  33,901
Total interest expense
2,697
408
3,105
Provision for loan losses, net
8,277
1,186
9,463
Net income
6,117
2,338
8,455
Total assets
316,943
43,000
359,943
Thousands of U.S. Dollars
Integrated Financial
Services
Loan Servicing
Total
2006:
Total interest income
$  246,344
$  42,249
$  288,593
Total interest expense
22,959
3,473
26,432
Provision for loan losses, net
70,461
10,096
80,557
Net income
52,073
19,903
71,976
Total assets
2,698,076
366,051
3,064,127
28. Subsequent Events
1)
On December 20, 2005, the Board of Directors approved a 2-for-1 stock split effective on
April 1, 2006. The Company's common shares owned by shareholders recorded in the fiscal register
of shareholders and the register of beneficiary shareholders as of March 31, 2006 shall be
split two for each one share. The effect of this stock split has been reflected in these
consolidated financial statements.
2)
On June 24, 2006, the shareholders of the Company authorized the following at the Annual
Shareholders' Meeting:
(1)
Payment of a year-end cash dividend of ¥0.55 ($0.005) per share to shareholders of
record as of March 31, 2006 or a total of ¥1,503 million ($12,795 thousand)
(2)
Payment of bonuses to directors of ¥74 million ($630 thousand)
(3)
Change of the upper limits of compensation for a director and a statutory auditor per
year from ¥250 million ($2,128 thousand) to ¥500 million ($4,256 thousand) and from ¥60
million ($511 thousand) to ¥150 million ($1,277 thousand), respectively.
(4)
The upper limit of ¥500 million ($4,256 thousand) per year for stock options in form
of new share subscription rights to directors as compensation, separately from the revised
amount of directors' compensation. The details of stock options will be determined in
accordance with a resolution of the Board of Directors on issuance.
(5)
Partial amendments of the Article of Incorporation
•
The company name has been changed from "Nissin Co., Ltd." to "NIS Group Co., Ltd."
In addition, the change shall be effective on October 1, 2006.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
3)
On June 24, 2006, Mr. Shinsuke Amiya has been appointed as President, Representative Director
and Co-CEO. In addition, Mr. Kunihiko Sakioka, former President, Representative Director and
Executive Officer, has been appointed as Chairman, Representative Director and Co-CEO.
4)
On June 23, 2006, the shareholders of SVC authorized payment of bonuses to its directors and
statutory auditors of ¥28 million ($238 thousand) at its Annual Shareholders' Meeting.
F-54
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INDEX OF EXHIBITS
Exhibit
Number
Description
1.1
—
Our Articles of Incorporation (English Translation)
1.2
—
Our Share Handling Regulations (English Translation)
1.3
—
Our Regulations of the Board of Directors (English Translation)
1.4
—
Our Regulations of the Board of Statutory Auditors (English Translation)
2.1
—
Our Specimen Common Stock Certificate (English Translation) (incorporated by
reference to the corresponding exhibit to our Registration Statement Form F-1
(File No. 333-97229) declared effective on August 1, 2002)
2.2
—
Form of Deposit Agreement Among Nissin Co., Ltd., The Bank of New York as
Depositary and All Owners and Holders from Time to Time of American Depositary
Receipts, Including the Form of American Depositary Receipt (incorporated by
reference to the Registration Statement on Form F-6 (File No. 333-97133) filed on
July 24, 2002)
8.1
—
List of Our Subsidiaries
12.1
—
Certification of principal executive officer required by 17 C.F.R. 240. 13a-14(a)
12.2
—
Certification of principal executive officer required by 17 C.F.R. 240. 13a-14(a)
12.3
—
Certification of principal financial officer required by 17 C.F.R. 240. 13a-14(a)
13.1
—
Certification of chief executive officer required by 18 U.S.C. Section 1350
13.2
—
Certification of chief executive officer required by 18 U.S.C. Section 1350
13.3
—
Certification of chief financial officer required by 18 U.S.C. Section 1350