CSK CORPORATION

1. Revised earnings forecasts for the financial year ending March 31, 2004

(1) Consolidated forecasts

	(¥ million)
	Net sales Ordinary income Net income Previous (A) 380,000 26,000 11,000 Revised (B) 365,000 30,000 18,000 Change (B) - (A) (15,000) 4,000 7,000 Change in percent (3.9%) 15.4% 63.6% Financial year ended March 31, 2003 357,505 16,361 10,781

 

(2) Non-consolidated forecasts

	(¥ million)
	Net sales Ordinary income Net income Previous (A) 135,000 10,000 5,000 Revised (B) 135,000 10,000 17,000 Change (B) - (A) -- -- 12,000 Change in percent -- -- 240.0% Financial year ended March 31, 2003 129,346 7,091 (47,757)

 

2. Reasons for revision of forecasts and comparison with previous financial year

(1) Consolidated forecasts

	A) Reason for revision
		The main reasons for the revised forecasts are as follows.
		Sales were affected by the withdrawal of high value cards from sale at QUO CARD CO., LTD., a subsidiary involved in prepaid card operations. In the IT services area, the business environment for systems integration and systems management was expected to be severe, due to factors such as changing customer needs and competitive pricing pressures. CSK has therefore been reforming its business model and earnings structure to position BPO (Business Process Outsourcing) as a key source of revenue.   The environment for systems integration and systems management has in fact been more severe than expected, but revenue levels have been supported by the contribution of BPO operations.   In addition, CSK's financial services operation has been placed on a firm footing, and as CSK develops this business as a source of earnings it is contributing strongly to the efficient use of Group management resources and capital.   As a result of adopted this revised earnings structure, ordinary income is expected to exceed the forecast previously announced. The increase in net income forecast for the fiscal year reflects the increase at the ordinary income level, and also ¥17.0 billion of extraordinary income booked on the sale in December 2003 of all the shares CSK held in SEGA CORPORATION, which was until that point an equity-accounted affiliate.   A ¥6.0 billion extraordinary loss is also being booked in this period for a one-time amortization of employee retirement benefit liabilities resulting from a review of the retirement benefits system for retirement payments and the company pension scheme. Following the adoption of the new system in the next fiscal year, retirement benefit expenses and amortization costs arising from such things as actuarial differentials will be lower than would have occurred under the previous system.   Extraordinary loss figures relating to the introduction of a new retirement benefits system are provisional, and may change depending on the status of pension fund assets at the end of the period.

B) Comparison with actual results from the previous financial year

	Consolidated	(¥ million)
	Net sales Ordinary income Net income Previous (A) Year ended March 31, 2003 357,505 16,361 10,781 Revised current full year forecast (B) 365,000 30,000 18,000 Change (B) - (A) 7,495 13,639 7,219 Change in percent 2.1% 83.4% 67.0%

		The main factors contributing to the improvement of the current full year forecast over the actual results from the previous financial year are as follows.
		Sales and ordinary income are expected to exceed the previous financial year, as favorable performance in BPO and financial services operations are more than compensating for the decline in systems integration and systems management that has resulted from changing customer needs and tougher competition. Small and medium scale subsidiaries have also produced steady improvements in performance as a result of initiatives to improve the management structure, sales capabilities, and efficiency of each subsidiary.   The above factors are expected to result in increased sales and increased ordinary income at the consolidated level for the full year, with the latter forecast to reach record levels. The forecast increase in net income, also to record levels, for the year ending March 31, 2004 reflects the improved performance at the ordinary income level, and also factors such as the ¥17.0 billion extraordinary income being booked on the December 2003 sale of shares in SEGA CORPORATION.

(2) Non-consolidated forecasts

	A) Reason for revision
		The main reasons for the revised non-consolidated full year forecasts are as follows.
		The forecast increase in non-consolidated net income for the fiscal year ending March 31, 2004 mainly reflects the booking of a ¥19.0 billion profit on the sale of shares in affiliated company SEGA CORPORATION. An extraordinary loss of approximately ¥5.0 billion is expected to be booked as a result of a review of the retirement benefits system for retirement payments and the company pension scheme.   Extraordinary loss figures relating to the introduction of a new retirement benefits system are provisional, and may change depending on the status of pension fund assets at the end of the period.

B) Comparison with actual results from the previous fiscal year

	Non-consolidated	(¥ million)
	Net sales Ordinary income Net income Previous (A) Year ended March 31, 2003 129,346 7,091 (47,757) Revised current full year forecast (B) 135,000 10,000 17,000 Change (B) - (A) 5,654 2,909 64,757 Change in percent 4.4% 41.0% --

		The main factors contributing to the change of the current full year forecast over the actual results from the previous fiscal year are as follows.
		Net sales and ordinary income have benefited from a recovery in capital expenditure on IT and a positive trend in orders for computer equipment. Non-operating income is also expected to benefit from factors such as the use of a cash management system to improve capital efficiency across the Group. The substantial upward revision of non-consolidated net income forecast for the period, which is expected to reach a record level, reflects the increase in income at the ordinary level, and also the booking of approximately ¥19.0 billion in extraordinary income resulting from the sale of shares in SEGA CORPORATION, for which an appraisal loss had been booked in the previous fiscal year.