|
Tokyo, 17th May, 2005 - At a meeting today the board of directors of CSK CORPORATION ("CSK") agreed details regarding a shift to a holding company structure using the company separation method. The matter will now be proposed for approval at the annual general meeting of shareholders.
- Aim of shifting to holding company structure
(1) Background
|
The IT services industry, which for many years was a high-growth industry, is now in transition to relative market maturity. Developing further growth will therefore require the creation of business areas and business models that are quite different from those demanded during the growth and expansion of the industry to date.
Factors contributing to this leveling off of growth include the increasingly sophisticated requirements of customers, an intense demand for clarity with regard to Total Cost of Ownership (TCO: total costs over a system's lifetime, including maintenance and operating costs), and intense competition and duplication of capabilities within the information services industry.
Meanwhile, new business opportunities have been emerging for IT as infrastructure, supported by factors such as the increasingly indispensable role of IT in economic society, the blurring of industry and business boundaries through deregulation, integration of different industries, and the proliferation of outsourcing as industries seek to concentrate management resources in their core business areas.
|
(2) Aim
|
By shifting to a holding company structure in the context of the business environment outlined above, CSK intends to create new sources of revenue through the optimal allocation of management resources, develop strategic operations as a service provider, and improve management transparency. In these ways CSK Group will endeavor to increase enterprise value and shareholder value, fulfilling its social responsibility as a corporation at the same time as contributing to the development of society overall.
- Creating new sources of revenue through the optimal allocation of resources
By shifting to a holding company structure CSK is pursuing further specialization and creativity by Group companies in each of its business areas. CSK aims to create a business system that is more flexible, more objectively measurable, and more independent. Under this new structure CSK will seek to continuously reallocate resources in a timely manner, to establish a stable business foundation, and to accurately recognize changes in the operating environment and in market needs-and in doing so, to generate new sources of earnings.
- Developing strategic operations as service provider
CSK intends to move quickly and decisively to strengthen its operational base and invest management resources in the strategic areas of finance, communication, and healthcare. CSK's approach will be from the point of view of a service provider in pursuit of higher convenience in a society that is increasingly founded on IT.
- Improving management transparency
CSK Group has been actively engaged in measures to strengthen corporate governance, and with the shift to a holding company structure the Group is taking the opportunity to construct an even more robust Group governance system. CSK is now implementing concerted and concentrated measures across the Group to ensure that a structure is put in place that minimizes external risks and prevents company management-related and other such problems from developing, creating a higher level of management transparency.
|
- Outline of company separation
(1) Schedule
| |
| 17th May, 2005 |
Meeting of CSK board of directors to approve and sign separation contract |
| 28th June, 2005 (planned) |
Annual general meeting to approve separation contract |
| 1st October, 2005 (planned) |
Date of separation |
|
(2) Separation method
|
The method to be used is a company separation and absorption, with CSK as the separating company and CSK's wholly owned subsidiary CSK Systems Preparatory Corporation as the succeeding company.
The separating company method is being used because it allows CSK Systems Preparatory Corporation to prepare for the transfer of licenses and permits and smoothly begin operations from the day of separation, and because compared to the operational transfer method it allows an efficient and smooth transfer to a new operating structure.
|
(3) Allocation of shares
|
CSK Systems Preparatory Corporation, the succeeding company, will issue 198,000 ordinary shares to CSK.
|
(4) Amount of capital decrease, etc. arising from separation; cancellation of shares;
separation payments
|
None of these items are applicable. |
(5) Rights and obligations of succeeding company
|
The succeeding company will assume CSK's assets and liabilities relating to its operations, as well as various types of contracts, etc. However, specific items as outlined in the separation contract will be excluded.
Liabilities will be assumed using the concurrent liability adoption method.
|
(6) Outlook for fulfillment of debt obligations
|
Sufficient financial resources will continue to be held after the company separation, and no material difficulty is envisioned for either CSK or the succeeding company to meet debt obligations falling after the date of separation. |
(7) New executives of succeeding company
|
| Directors: | Shozo Hirose |
| Auditors: | Sadayuki Nomura, Masayuki Ishihara, Akihiko Harima |
|
- Overview of companies involved in separation (as of 17th May, 2005)
| |
Separating Company |
Succeeding Company |
| (1)Company name |
CSK Corporation
(*3) |
CSK Systems Preparatory Corporation (*4) |
| (2)Main business |
Systems integration services; systems development and consulting, network systems development, applications development/ component technology and tool development; outsourcing services; systems-related hardware sales; training services; user support services, etc. |
(As on left) |
| (3)Established |
October 1968 |
May 2005 |
| (4)Head Office |
2-26-1 Minami Aoyama, Minato-ku, Tokyo |
(As on left) |
| (5)Representative |
Chairman & Chief Executive Officer: Yoshito Fukuyama |
Chairman & Chief Executive Officer: Yoshito Fukuyama (*5) |
| (6)Paid-in capital |
¥69,490 million (*6) |
¥100 million |
| (7)Shares outstanding |
76,733,284(*6) |
2,000 |
| (8)Shareholders' capital |
¥149,455 million (*6) |
¥100 million |
| (9)Total assets |
¥269,780 million (*6) |
¥100 million |
| (10)Fiscal year end |
31st March |
31st March |
| (11)Number of employees |
4,402 (*6,7) |
0 |
| (12)Key clients |
Nissay Information Technology Co., Ltd. (others) |
- |
| (13)Principal shareholders and percentage held |
| Japan Trustee Services Bank, Ltd.(trust account) |
11.18% |
| The Master Trust Bank of Japan, Ltd.(account in trust) |
8.13% |
| OE Corporation |
4.63% |
| (*6) | |
|
|
| (14)Main banks |
The Sumitomo Trust & Banking Co., Ltd. |
- |
| (15) Company relationship? |
The succeeding company is a wholly owned subsidiary of CSK Corporation. Some CSK Corporation directors and executive officers will serve in both companies. |
| (*3) | The name of this company is scheduled to change to CSK Holdings Corporation on 1st October, 2005. |
| (*4) | The name of this company is scheduled to change to CSK Systems Corporation on 1st October, 2005. |
| (*5) | Shozo Hirose is scheduled to become President on 1st October, 2005. |
| (*6) | As of 31st March, 2005. |
| (*7) | The number of employees does not include: 736 employees who are working for subsidiaries, and 15 temporary staff. |
- Details of business operations to be separated
(1) Businesses
|
All operations of CSK Corporation will be separated. |
(2) Results of past three financial years
- CSK Corporation
|
(Unit: yen, million) |
| |
Non-consolidated |
Consolidated |
| FY ended |
31st March,
2003 |
31st March,
2004 |
31st March,
2005 |
31st March,
2003 |
31st March,
2004 |
31st March,
2005 |
| Net sales |
129,346 |
146,420 |
138,365 |
357,505 |
378,472 |
319,993 |
| Operating income |
10,205 |
7,892 |
7,400 |
22,092 |
28,290 |
24,046 |
| Ordinary income |
7,091 |
10,063 |
11,532 |
16,361 |
30,565 |
27,626 |
| Net income (loss) (¥) |
(47,757) |
18,527 |
33,469 |
10,781 |
21,424 |
33,343 |
| Net income (loss) per share (¥) |
(649.69) |
243.03 |
440.33 |
148.25 |
283.85 |
437.31 |
| Dividend per share (¥) |
12 |
15 |
17 |
- |
- |
- |
| Shareholders' equity per share (¥) |
1,281.46 |
1,614.44 |
1,980.89 |
1,237.10 |
1,702.47 |
2,072.02 |
|
- Results relating to succeeding operations
|
(Unit: yen, million) |
| FY ended |
31st March,
2003 |
31st March,
2004 |
31st March,
2005 |
| Net sales |
129,346 |
146,420 |
138,365 |
| Operating income |
10,205 |
7,892 |
7,400 |
|
The succeeding company, CSK Systems Preparatory Corporation, was established on 6th May, 2005 for the purposes of continuing the operations of CSK after the transfer. As of the date of this announcement no business activities have been undertaken by this company, so no business results are recorded.
(3) Amount of assets/ liabilities being transferred (as of March 31, 2005)
|
(Unit: yen, million) |
|
| Assets |
Liabilities |
| Item |
Book value |
Item |
Book value |
| Current assets |
42.5 |
Current Liabilities |
19.6 |
| Fixed assets |
8.6 |
Long-term Liabilities |
0 |
| Total assets |
51.1 |
Total liabilities |
19.6 |
The above figures will be confirmed depending on increases/decreases and additions/ deletions up to the date of separation.
|
|
- Situation following separation
(1) CSK Corporation following separation
|
| (1)Company name |
CSK Holdings Corporation |
| (2)Main business |
Holding company |
| (3)Established |
October 1968 |
| (4)Head Office |
2-26-1 Minami Aoyama, Minato-ku, Tokyo |
| (5)Representative |
Representative Director Yoshito Fukuyama |
| (6)Paid-in capital |
Paid-in capital will not increase due to the transfer |
| (7)Total assets |
The amount of liabilities assumed by the succeeding company will decrease. |
| (8)Fiscal year end |
31st March |
|
(2) Executives of succeeding company (Scheduled for October 1, 2005)
|
| Representative Director & President |
Shozo Hirose |
Currently CSK Corporation Executive Vice President |
| Director |
Yoshito Fukuyama |
Currently CSK Corporation Chairman & Chief Executive Officer (CEO) |
| Director |
Teiichi Aruga |
Currently CSK Corporation Representative Director |
| Director |
Takahiro Suzuki |
Currently CSK Corporation Representative Director & Chief Financial Officer (CFO) |
| Statutory Auditor |
Sadayuki Nomura |
Currently CSI Solutions Corporation Representative Director & President |
| Auditor |
Masayuki Ishihara |
Currently CSK Corporation Statutory Auditor |
| Auditor |
Akihiko Harima |
Currently CSK Corporation Auditor |
|
(3)Forecasts following separation
|
The shift of CSK Corporation to a holding company structure is expected to have only a minor effect on group consolidated results, as the transfer is taking place within the Group.
On a non-consolidated basis, when CSK becomes a holding company it is expected that the Company will receive dividend revenues from Group companies, along with revenues for Group management services. This revenue is expected to cover the holding company's operational expenses and provide resources for dividends to shareholders.
|
|
