"Operating Company Structure"
News Release CSK HOLDINGS CORPORATION CSK decides details of shift to operating holding company structure Two subsidiaries to be merged into CSK Tokyo, August 12, 2010 — On May 26, 2010, in a press release entitled “CSK to shift from pure holding company to operating holding company structure,” CSK HOLDINGS CORPORATION (“CSK”) announced that it had resolved to start preparations for shifting its Group management and business frameworks from a pure holding company structure to an operating holding company structure. CSK has since partially revised the method of the reorganization, based on consideration of the situations of the companies subject to it, and today announces the following details with respect to this reorganization. As part of the reorganization, CSK’s wholly owned subsidiaries CSK-IT MANAGEMENT CORPORATION and CSK SYSTEMS CORPORATION will be merged into CSK, with CSK as the continuing entity and CSK-IT MANAGEMENT and CSK SYSTEMS CORPORATION ceasing to exist after the merger. This was resolved at meetings of the boards of directors of the three companies today and an absorption merger agreement was signed. As this is a short-form absorption merger involving two wholly owned subsidiaries, disclosure of some matters and details is omitted. The release of May 26, 2010 also stated that CSK’s wholly owned subsidiary CSK ServiceWare Corporation would be subject to this merger, but for reasons outlined later in this release we have decided to review the timing of its merger into CSK. However, in order to achieve the objective of this reorganization of combining the three businesses in which we are involved—business process outsourcing (BPO), IT management, and systems development business—and ensuring collaboration among them, CSK ServiceWare will in effect be managed as part of the new structure. I. Objective of reorganization The objective of this reorganization of the Group’s management and business frameworks is to achieve the sustainable growth and development of CSK Group by shifting to Group frameworks that enable us to provide the best possible services that are needed by our customers. This is based on the recognition of the need for further collaboration among the three businesses in which we are involved in order to improve the Group’s competitive strength. Driven by the new post-merger entity, CSK Group will further enhance the strengths and characteristics of each Group company and business, and help our customers to innovate their businesses, by providing services unique to CSK Group that combine the three businesses. II. Review of reorganization method In the release of May 26, 2010, we announced that three wholly owned subsidiaries, CSK ServiceWare, CSK-IT MANAGEMENT and CSK SYSTEMS, would be merged into CSK. However, based on subsequent deliberations and coordination, we decided to review the timing at which CSK ServiceWare would be merged into CSK. This decision was made for the following reasons: 1 (1) Due to the history and business model of CSK ServiceWare, its personnel systems, internal information systems, corporate culture, staff composition and so forth differ significantly from those of CSK, CSK-IT MANAGEMENT and CSK SYSTEMS. As a result, we decided to prioritize collaboration on a business level, and start with moderate ties on an organizational level. (2) We assessed that continued consideration is necessary regarding the task of post-merger integration at CSK ServiceWare, following the July 2009 merger of CSK ServiceWare, CSK Communications Group and its subsidiary CSK Marketing Corporation, and eight Group companies. This covers areas including making the best possible use of business infrastructure, ensuring appropriate allocation of personnel and optimizing business processes. As a result, we decided that post-merger integration within CSK ServiceWare should take priority, and decided to revise the timing of its merger into CSK. III. Overview of merger Merger of CSK, CSK-IT MANAGEMENT and CSK SYSTEMS (1) Merger schedule Approval of merger schedule by boards of directors (three companies) August 12, 2010 Signing of merger agreement (three companies) August 12, 2010 Approval of merger agreement at shareholder meetings (CSK-IT MANAGEMENT, CSK SYSTEMS) August 12, 2010 Effective date of merger October 1, 2010 (planned) *As this merger falls under the category of short-form merger as stipulated in Article 796, paragraph 3 of the Companies Act, it will be carried out without receiving approval of the merger agreement at a shareholder meeting of CSK, based on Article 795, paragraph 1 of the same Act. *Under Article 319, paragraph 1 of the Companies Act, shareholder meetings of CSK-IT MANAGEMENT and CSK SYSTEMS will be undertaken by receiving written agreement regarding the proposed merger from shareholders with voting rights. *The above schedule is subject to change if agreed by the three companies as being necessary because of merger procedures or other circumstances. (2) Merger method Absorption merger with CSK as the continuing entity. (3) Merger ratio As CSK holds all issued shares of CSK-IT MANAGEMENT and CSK SYSTEMS, no merger ratio is applicable and no monetary amounts or other considerations are being exchanged. (4) Stock acquisition rights and bonds with attached warrants 2 No such stock acquisition rights or bonds with attached stock acquisition rights have been issued by CSK-IT MANAGEMENT CORPORATION or CSK SYSTEMS CORPORATION. (5) Overview of accounting treatment As the parties to this transaction are characterized as businesses under common control in the rules for accounting for business combinations, no goodwill will arise. IV. Overview of companies involved (as of March 31 2010) (1) Company name CSK HOLDINGS CORPORATION (2) Head office 2-26-1 Minami-Aoyama, Minato-ku, Tokyo (3) Representative Takeshi Nakanishi, President and Representative Director (4) Main business Business administration and related operations for CSK Group and Group companies (5) Paid-in capital ¥96,225 million (6) Established October 7, 1968 (7) No. of shares issued 125,787,714 shares (8) Financial year-end March 31 (9) Major shareholders ACA Investments and ownership interest 36.15% (10) Financial position and operating results for previous fiscal year FY2010/3 (consolidated) Net assets ¥15,807 million Total assets ¥267,749 million Net assets per share (¥241.34) Operating revenue ¥169,518 million Operating income ¥4,176 million Ordinary income ¥2,919 million Net income (¥59,180 million) Net income per share (¥720.62) (1) Company name CSK-IT MANAGEMENT CSK SYSTEMS CORPORATION*1 CORPORATION (2) Head office 2-26-1 Minami-Aoyama, 2-26-1 Minami-Aoyama, Minato-ku, Minato-ku, Tokyo Tokyo (3) Representative Tooru Tanihara, President and Takeshi Nakanishi, President and Representative Director Representative Director (4) Main business IT management System development (5) Paid-in capital ¥3,000 million ¥10,000 million (6) Established April 1, 2004 May 6, 2005 (7) No. of shares issued 6,002 shares 200,000 shares (8) Financial year-end March 31 March 31 3 (9) Major shareholders CSK HOLDINGS CORP. CSK HOLDINGS CORP. and ownership 100% 100% interest (10) Financial position and operating results for previous financial year FY2010/3 (non-consolidated) FY2010/3 (non-consolidated)*1 Net assets ¥7,025 million ¥22,264 million Total assets ¥12,979 million ¥30,611 million Net assets per share ¥1,170,457.48 ¥111,324.34 Operating revenue ¥28,583 million ¥51,918 million Operating income ¥2,055 million ¥7,001 million Ordinary income ¥2,038 million ¥6,983 million Net income ¥1,026 million ¥3,458 million Net income per share ¥171,105.07 ¥17,292.58 *1 CSK SYSTEMS merged with CSK SYSTEMS NISHINIHON CORPORATION and CSK SYSTEMS CHUBU CORPORATION on April 1, 2010, with CSK SYSTEMS as the continuing entity. Furthermore, as stated in the press release of June 30, 2010 entitled “Merger of CSK SYSTEMS and CSK Securities Service,” CSK SYSTEMS is scheduled to merge with CSK Securities Service Co., Ltd. on September 1, 2010, with CSK SYSTEMS as the continuing entity. The financial position and operating results of CSK SYSTEMS for the previous financial year are as of March 31, 2010. V. Overview of continuing entity after merger (1) Company name CSK CORPORATION*2 (2) Head office 2-26-1 Minami-Aoyama, Minato-ku, Tokyo (3) Representative Takeshi Nakanishi, President and Representative Director (4) Main business BPO IT management System development (5) Paid-in capital ¥96,225 million (6) Financial year-end March 31 *2 CSK HOLDINGS CORPORATION is scheduled to change its name to CSK CORPORATION as of October 1, 2010. VI. Organizational framework of new company The organizational framework of the new company will be as follows (1) Operations will be organized into three business units: the IT Management Company, the IT Solutions Company, and the Business Services Company. ・The IT Management Company will assume the operations of CSK-IT MANAGEMENT ・The IT Solutions Company will assume the operations of CSK SYSTEMS ・The Business Services Company will be established and will operate in conjunction with CSK ServiceWare as part of a unified management system. (2) We will establish a Corporate Division—to provide Group-wide head office functions—and a 4 Business Promotion Division—to promote combined projects of the three business units. (3) The functions of CSK ADMINISTRATION SERVICE CORPORATION, which takes charge of shared Group administration services, will be incorporated into the new company at the time of the merger, and we plan to reorganize indirect and corporate staff functions of head office. Board of Directors President Business Promotion コーポレート部門 Corporate Division 事業推進部門 Division BUSINESS SERVICES COMPANY IT MANAGEMENT COMPANY IT SOLUTIONS COMPANY ・Consulting ・IT infrastructure planning/ ・コンサルティング ・Consulting ・コンサルティング CSK ServiceWare establishment ・Systems integration ＣＳＫサービスウェア ・ＩＴインフラ設計・構築 ・システムインテグレーション ・Business consulting ・IT outsourcing ・ＩＴアウトソーシング ・Solution services ・ソリューションサービス ・業務コンサルティング ・Business process analysis/ planning ・Systems management ・システム運用 (ERP/SCM/CRM) （ERP/SCM/CRM） ・業務プロセス分析・設計 ・Hardware maintenance ・ハードウェア保守 ASP, SaaS, PaaSサービス ・・ASP、SaaS、PaaS services ・Contact center service ・コンタクトセンターサービス ・Business-specific BPO services ・Data administration/analysis ・データ管理・分析 ・業務別ＢＰＯサービス ・Back-office BPO ・バックオフィスＢＰＯ VII. Impact on earnings Further details regarding this matter, including its effect on our financial results, will be promptly disclosed as soon as they are determined. Reference: Consolidated earnings forecasts for FY2011/3 (announced on May 12, 2010) and operating results for previous financial year Operating Operating Ordinary Net revenue income income income Forecast for current fiscal year ¥160,000 million ¥10,000 million ¥9,300 million ¥500 million (FY2011/3) Operating results for previous fiscal ¥169,518 million ¥4,176 million ¥2,919 million (¥59,180 million) year (FY2010/3) Ends 5