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Tokyo, May 17, 2005 - QUO CARD Co., Ltd. ("QUO Card"), a core consolidated subsidiary of CSK that engages in prepaid card issuance and related operations, has changed the accounting standard it will use for the fiscal year ending March 31, 2006. Details are as follows.
1. Outline of QUO CARD Co., Ltd. (as of March 31, 2005)
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| 1. Company name | QUO CARD Co., Ltd. |
| 2. Main business |
1.Prepaid card issuance and settlement services
2.Management and settlement services for internet-based transaction systems
3.Sale and maintenance of prepaid cards and related equipment
4.Card-related information processing
5.Card encoding (magnetic strip information input)
6.Card-based advertising operations |
| 3. Date of establishment | December 1987 |
| 4. Headquarters | 2-4-1 Honcho, Nihonbashi, Chuo-ku, Tokyo |
| 5. Representatives |
Chairman: Hidekazu Yukawa
President: Hiroshi Inoue
Vice-President: Shigeru Nishizawa |
| 6. Paid-in capital | ¥310 million |
| 7. Shares outstanding | 3,160 shares |
| 8. Shareholders' capital | ¥3,541 million |
| 9. Total assets | ¥42,674 million |
| 10. Financial year end | March 31 |
| 11. Number of employees | 65 |
| 12. Main customer | Seven-Eleven Japan, others |
| 13. Shareholders | CSK Corporation (100%) |
| 14. Main bank | The Sumitomo Trust & Banking Company, Ltd. |
| 15. Relationship with CSK | |
| Capital | QUO Card is 100% owned by and a consolidated subsidiary of CSK |
| Personnel | 2 directors of QUO Card are also directors of CSK. Three auditors are employees of CSK. |
| Transactions | QUO Card sells prepaid cards to CSK. |
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2. Reason for and timing of change of accounting standard
| In recent years, sales activities have resulted in an increase in the portion of sales in excess of the face value of gift cards and other cards. QUO Card has also established a sound earnings base through factors such as a different earnings structure arising from changes in the way cards are issued, and stabilization of settlement fee earnings associated with an increase in participating stores and improvements to contacts with participating stores. The Company therefore decided to adopt an accounting treatment that clarifies earnings generated by sales activities and enables a better understanding of the sales situation.
This standard will apply from the fiscal year beginning April 1, 2005.
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3. Outline of change in accounting standard
| Until now, the accounting treatment for third-party type cards was for the face value of cards to be recorded as sales on the date of issue; when cards were used the value used was recorded as a cost of sale, and at the same time the remaining value of the card was added to cost of sales as an additional 'estimated cost of sales' figure. From the fiscal year beginning April 1, 2005, however, the treatment method will change so that the face value of cards when issued is recorded as 'card deposits collected', with subsequent deductions from that amount as cards are used.
Also under the new accounting standard, any remaining card value that is considered unlikely to be used will be recorded as non-operating income, rather than being deducted from cost of sales. Any amounts that can be used in excess of the face value of the card will be handled as an expense at the time of card issuance, instead of the previous method of expensing these amounts at the time of use.
Accompanying these changes, items on the balance sheet will change in the following manner:
The face value of cards issued will change from 'Accounts receivable' to 'Accounts receivable-card'.
The unused value of cards that is expected to be used will change from 'Card income pending' to 'Card deposits collected'.
Liabilities arising from the amount of card value used will change from 'Accounts payable - trade' to 'Unpaid card expenses'.
Funds received before card issuance will change from 'Advances received' to 'Provisional card payments received'.
Under these new accounting standards, the impact on results for the fiscal year that ended March 31, 2005 would have been to reduce net sales by ¥50,106 million, ordinary income by ¥3 million, and net income before tax by ¥138 million.
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4. Effect on consolidated financial results
| The consolidated interim and full-year forecasts issued today for the fiscal year ending March 31, 2006 reflect the changed accounting standards outlined above.
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