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TOKYO, January 16, 2004 - At a meeting on January 16, 2004 the board of directors of CSK CORPORATION ("CSK") resolved to spin off some of the operations of a consolidated subsidiary, merge its remaining operations into the parent company, and create two new consolidated subsidiaries, as part of an ongoing reorganization of the CSK group.
The reorganization is part of CSK's aim of creating a business structure through which it can continuously contribute to the productivity of customers with unparalleled IT expertise and provide Lifetime Full Support to its customers. It will also enable CSK to respond swiftly to the increasingly sophisticated customer needs, intensifying price competition, and changes in the revenue structure of CSK's core businesses.
I. Spin off and merger of a consolidated subsidiary
- Purpose and details of spin off and merger
CSK Group has been reorganizing Group companies as part of efforts to reduce the duplication of functions within the Group and make more efficient use of management resources. As part of this, CSK will dissolve wholly owned subsidiary CSK Network Systems Corporation ("CSK-NET") by spinning off its Application Service Provider (ASP) and network businesses into a newly created company, and then merging its IT outsourcing business and other remaining operations into CSK.
The newly created company will focus on network resale, and the provision of ASP services to mid-sized companies in the distribution, drug stores and prescription service industries. It will also maintain a relationship with the IT outsourcing and Business Process Outsourcing (BPO) operations of the Group, and aims to grow its business by providing services with increased added value.
The absorption of the remaining CSK-NET operations into CSK will bring together CSK-NET's expertise in facility-based remote services and CSK's traditional strengths in on-site systems management, with the aim of improving CSK's value-added service provision. Furthermore, completing CSK's line up of IT outsourcing processes in this way---from sales and marketing through to network construction and management---will improve CSK's ability to offer a full line up of IT services, and accelerate the evolution of CSK's business model.
- Outline of spin off from CSK Network Systems
(1) Summary of spin off
- Schedule
| CSK board of directors approves spin off |
January 16, 2004 |
| Board of directors to call for extraordinary shareholders' meeting |
January 29, 2004 (scheduled) |
| Extraordinary shareholders' meeting to approve spin off plan |
February 20, 2004 (scheduled) |
| Date of spin off |
April 1, 2004 (scheduled) |
- Method of spin off
Establishment of new company
- Share allocation
The 6,000 shares in the new company will be transferred to CSK Network Systems
- Proceed from spin off
No proceeds from spin off will be made
(2) Outline of company to be spun off.
(As of September 30, 2003)
| Company name |
CSK Network Systems Corporation |
| Main business |
Information technology services |
| Established |
September 1984 |
| Head office |
Minami-Aoyama 2-26-1, Minato-ku Tokyo |
| Representative |
President and Representative Director Nariaki Hino |
| Paid-in capital |
¥4,191 million |
| Shares outstanding |
7,392,600 |
| Shareholders' capital |
¥13,741 million |
| Total assets |
¥17,985 million |
| Fiscal year end |
March 31 |
| Number of employees |
391 |
Principal shareholders and
percentage held |
CSK CORPORATION (100%) |
(3) Results from the three previous fiscal years
(¥million)
|
CSK Network Systems Corporation
|
| FY ended |
March 31, 2001
|
March 31, 2002
|
March 31, 2003
|
| Net sales |
29,524
|
33,253
|
30,546
|
| Operating income |
2,047
|
2,563
|
2,752
|
| Ordinary income |
1,990
|
2,425
|
2,649
|
| Net income |
940
|
1,036
|
1,135
|
(4) Outline of company to be newly established
| Company name |
CSK Network Systems Corporation |
| Main business |
Information technology services |
| Head office |
Minami-Aoyama 2-26-1, Minato-ku, Tokyo |
| Representative |
President and Representative Director Yoshito Fukuyama |
| Paid-in capital |
¥300 million |
| Total assets |
¥4,558 million (approximately, as of November 30, 2003) |
| Number of employees |
179 (approximately, as of November 30, 2003) |
| Fiscal year end |
March 31 |
(5) Effect on parent and consolidated earnings
CSK-NET is currently a consolidated subsidiary of CSK CORPORATION. After the spin off, the new company CSK Network Systems Corporation will also be a consolidated subsidiary of CSK CORPORATION, and CSK will not transfer assets to the new company. Therefore there will be no impact on the parent and consolidated earnings as a result of this spin off.
- Outline of merger
(1) Summary of merger
- Schedule
| CSK board of directors approves merger |
January 16, 2004 |
| Signing of merger contract |
January 16, 2004 |
| Date of merger |
April 1, 2004 |
| Registration of merger |
April 1, 2004 (scheduled) |
- Method of merger
The CSK-NET operations that remain after its ASP and network businesses have been spun off into the newly established company will be merged into CSK. Because this merger will take place under Article 413, Clause 3-1 of the Commercial Code it will not require shareholder approval.
- Merger ratio and proceeds
CSK-NET is already a wholly owned subsidiary of CSK. As a result new shares will not be issued and no proceeds will be transferred.
(2) Outline of companies involved in merger
(As of September 30, 2003)
| |
Continuing company
|
Company to be absorbed
|
| Company name |
CSK CORPORATION |
CSK Network Systems Corporation |
| Main business |
Information services |
Information technology services |
| Established |
October 1968 |
September 1984 |
| Head office |
Minami-Aoyama 2-26-1, Minato-ku, Tokyo |
Minami-Aoyama 2-26-1, Minato-ku, Tokyo |
| Representative |
Chairman & Chief Executive Officer(CEO) Masahiro Aozono |
President and Representative Director Nariaki Hino |
| Paid-in capital |
¥69,051 million |
¥4,191 million |
| Shares outstanding |
76,489,811 |
7,392,600 |
| Shareholders' capital |
¥104,719 million |
¥13,741 million |
| Total assets |
¥242,919 million |
¥17,985 million |
| Fiscal year end |
March 31 |
March 31 |
| Number of employees |
4,819 |
391 |
| Principal shareholders and percentage held |
Japan Trustee Servivces Bank, Ltd. 9.25%
UFJ Trust Bank Ltd. 6.13%
OE Corporation 4.65% |
CSK 100.0% |
| Main bank |
Sumitomo Trust Bank (others) |
UFJ Bank (others) |
| Relationship with CSK |
Please refer to column on right |
CSK-NET, is a 100%-owned consolidated subsidiary of CSK. CSK-NET shares , some directors and auditors with CSK, and has capital, human resources and business relationships with CSK relating to its IT outsourcing business. |
(3) Results from three previous fiscal years
(¥million)
| |
CSK
(Continuing company)
|
CSK Network Systems
(Company being absorbed)
|
| FY ended: |
March 31, 2001
|
March 31, 2002
|
March 31, 2003
|
March 31, 2001
|
March 31, 2002
|
March 31, 2003
|
| Net sales |
120,982
|
127,633
|
129,346
|
29,524
|
33,253
|
30,546
|
| Ordinary income |
12,189
|
9,202
|
7,091
|
1,990
|
2,425
|
2,649
|
| Net income (loss) |
(5,613)
|
(29,852)
|
(47,757)
|
940
|
1,036
|
1,135
|
| Net income (loss) per share (¥) |
(75.15)
|
(399.63)
|
(649.69)
|
148.31
|
152.17
|
157.09
|
| Dividend per share (¥) |
12.00
|
12.00
|
12.00
|
25.00
|
25.00
|
20.00
|
| Shareholders' equity per share (¥) |
2,455.70
|
2,027.40
|
1,281.46
|
1,484.71
|
1,743.47
|
1,802.59
|
(4) Outline of CSK following the merger
| Company name |
CSK CORPORATION |
| Main business |
Information services |
| Head office |
Minami-Aoyama 2-26-1,Minato-ku,Tokyo |
| Representative |
Chairman and Chief Executive Officer Masahiro Aozono |
| Paid-in capital |
There will be no increase in capital as a result of the merger |
| Total assets |
Following this merger total assets will rise slightly from the figure recorded on September 30, 2003 |
| Fiscal year end |
March 31 |
(5) Effect on parent and consolidated earnings
There will be no significant impact on non-consolidated earnings. Consolidated earnings will also remain largely unaffected, as the planned merger is with a consolidated subsidiary. CSK expects that through this merger it will be able to continue to strengthen the structure of its full line-up of IT services, improve productivity, and increase the reach of the CSK Group's IT outsourcing services.
II Establishment of two new companies
- Establishment of CSK SYSTEM MANAGEMENT CORPORATION
(1) Background to establishment of CSK SYSTEM MANAGEMENT
This specialist subsidiary is being established to bring together our systems management experts, improve internal group efficiencies and to develop systems management services that can respond to evolving market needs.
(2) Outline of new company
| Company name |
CSK SYSTEM MANAGEMENT CORPORATION |
| Date of establishment |
Scheduled for February 2, 2004, with operations to start on April 1, 2004 |
| Head office |
Minami Aoyama 2-26-1, Minato-ku, Tokyo |
| Paid-in capital |
¥100 million (100% provided by CSK) |
| Representative |
President and Representative Director Keiji Azuma |
| Main business |
System management services for managing the operation of information systems etc. |
- Establishment of CSK BUSINESS SERVICE CORPORATION
(1) Background to establishment of CSK BUSINESS SERVICE
This specialist subsidiary is being established to pursue the most appropriate operations support for the CSK Group, to reduce consolidated selling, general, and administrative costs, to improve management efficiencies, and to provide shared services for back office operation of CSK and Group companies.
(2) Outline of new company
| Company name |
CSK BUSINESS SERVICE CORPORATION |
| Date of establishment |
Scheduled for February 2, 2004, with operations to start on April 1, 2004 |
| Head office |
Minami Aoyama 2-26-1, Minato-ku, Tokyo |
| Paid-in capital |
¥100 million (100% provided by CSK) |
| Representative |
President and Representative Director Hiromi Hidaka |
| Main business |
Back office outsourcing services and management administration services |
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