Semi-Annual Report Six months ended September 30, 2004

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1 Semi-Annual Report Six months ended September 30, 2004 JACCS CO., LTD. REGISTERED HEAD OFFICE: 2-5, Wakamatsu-cho, Hakodate, Hokkaido Japan PRINCIPAL EXECUTIVE OFFICE: Ebisu Neonato Bldg., 1-18, Ebisu 4-chome, Shibuya-ku, Tokyo , Japan Phone: (03) / Facsimile: (03) URL:

2 Message from the President September 30, 2000 and 1999 General Review During the six-month period ended September 30, 2004, the Japanese domestic economy continued to show signs of a recovery, but improvement in employment and income remained slow, and personal consumption as well continued without experiencing a full recovery. In the consumer credit industry, various alliances were formed across industries and sectors, including consumer credit, banking and consumer finance, as the environment surrounding our industry continues to undergo rapid change. Within this environment JACCS is in the midst of the final year of its three-year management plan Innovation 50 which began in fiscal In June 2004 we will have our 50th anniversary, and in appreciation of these 50 years we are taking initiative in various programs in the form of sales promotions that will assist us in the future. We are also putting emphasis on the development of new products. In the businesses that we handle, our consumer shopping credits business launched J-Plan 50, as a program to promote growth in our 50-year anniversary. J-Plan 50 offers a specially low rate of interest that is limited to 50 payments on product purchases. This business also introduced the credit card J-Card, which includes personal property insurance. We also began handling 1-Day Support 10, which offers hospitalization compensation for auto loans. In our credit cards business, we launched our Thanks Campaign in Appreciation of Our 50 Year Anniversary and other campaigns to commemorate our 50-year anniversary. Our financing business including loan guarantees and personal loans began offering a service to insure customers against theft, for a limited time basis, to customers using the JACCS Housing Loans. In our bill collection services we worked to expand our base of operations, including our launching of Cyber-J-Collect, a new package product which uses the Internet. As a result of the above efforts, the consolidated performance of the JACCS Group in the present semiannual period amounted to an increase of 5.9% year-on-year in consolidated total volume of new contracts, to 1,131,900 million (US$10,197 million); and New Contracts by Business Category For the six months ended September 30, 2004 Yen U.S. Dollars (Millions) (Thousands) Credit cards 243, ,408 $ 2,192,189 Consumer shopping credits 254, ,076 2,290,234 Loan guarantees 258, ,095 2,325,829 Personal loans 134, ,454 1,216,099 Other activities 241, ,272 2,172,946 Total 1,131,900 1,069,305 $ 10,197,297 Note: The U.S. dollar amounts in this report represent translation of Japanese yen for convenience only at the rate of 111 = US$1.00.

3 a decline of 3.4% year-on-year in consolidated finance income, to 69,936 million (US$630 million). As we booked one-time expenses for moving of offices associated with restructuring, our consolidated interim net income declined by 57.8% year-on-year, to 1,040 million (US$9 million). Review by Business Category Credit Cards We implemented various campaigns to commemorate our fiftieth anniversary, including the Thanks Campaign in Appreciation of Our 50 Year Anniversary. The number of new cardholders has increased, and card sales volume has experienced steady growth. Consumer Shopping Credits As we approach our 50th anniversary, we have promoted the J-Plan 50 for sectors such as kimono fabrics, furniture and home electronic appliances. The J-Plan 50 sets especially low interest payments limited to 50 payments. We also began handling 1-Day Support 10, which offers hospitalization benefits for our auto loan customers. Total volume of new auto loan contracts experienced particularly large growth during the present semi-annual period when compared to the same period of the previous year. Loan Guarantees Guaranteed loans were shifted from the consumer shopping credits business and showed strong growth. Housing loan guarantees and guarantees for personal loans through financial institutions, however, remained stagnant. Other Activities Bill collection services have shown strong growth with sales of products such as Cyber-J-Collect, a new package product that utilizes the Internet. Moreover, our consolidated subsidiaries have engaged in expanding peripheral businesses handled, including various distributorship services for property insurance, life insurance and new common carriers, as well as temp-staff business, car leasing, and servicer activities. Prospects for March 2005 Although personal consumption continues to stage a gradual recovery, insecurity about income and employment has not been eliminated, and it appears that consumption trends will continue for some time without that much room for optimism. The environment surrounding the consumer credit industry is severe and competition across industrial boundaries is expected to become even more fierce. Under these conditions we are approaching the final year of our 8th medium-term three-year management plan Innovation 50. We are constantly innovating and working to improve productivity and corporate value in order ensure that the various reforms that we have implemented will be effective. Based on these efforts we expect to achieve a total volume of new contracts of 2,284,000 million (US$20,577 million) for the JACCS Group, with finance income of 148,200 million (US$1,335 million) and net income of 7,520 million (US$68 million). Finally I would like to thank all of our stockholders for their support both until now and in the future. Personal Loans In order to increase the convenience of JACCS cardholders, we have progressed in our alliances with financial institutions that can offer cashing services, and have expanded our network of cash dispensers and automatic teller machines. December 2004 Mitsuhiko Kijima, President 1

4 Semi-Annual Consolidated Balance Sheets (UNAUDITED) JACCS CO., LTD. and Subsidiary Companies September 30 Thousands of Millions of Yen U.S. Dollars (Note 1) ASSETS Current Assets: Cash and cash equivalents... 33,789 48,205 $ 304,405 Time deposits ,351 Marketable securities (Note 2) Finance receivables: (Note 3) Ordinary finance receivables ,145 1,023,002 8,920,225 Loan guarantee receivables... 1,647,564 1,629,710 14,842,919 Less: Allowance for doubtful accounts... (24,120) (22,141) (217,297) Prepaid expenses and accrued income ,622 Deferred income taxes... 3,167 3,518 28,532 Other current assets... 31,871 30, ,126 Total current assets... 2,683,452 2,714,057 24,175,243 Property and Equipment, at Cost... 35,145 36, ,621 Less: Accumulated depreciation... (6,815) (7,033) (61,396) 28,330 29, ,225 Intangible Assets... 44,812 49, ,712 Investments in Securities (Note 2)... 23,468 21, ,424 Deferred Income Taxes... 5,965 8,301 53,739 Other Assets... 26,330 16, ,207 Less: Allowance for doubtful accounts... (9,436) (10,616) (85,009) 2,802,921 2,829,311 $ 25,251,541 See Accompanying Notes to Semi-Annual Consolidated Financial Statements. 2

5 Thousands of Millions of Yen U.S. Dollars (Note 1) LIABILITIES AND STOCKHOLDERS EQUITY Current Liabilities: Short-term borrowings , ,994 $ 2,216,351 Current portion of long-term debt... 67, , ,063 Commercial paper , ,500 1,184,685 Finance payables: Ordinary finance payables... 77,871 75, ,540 Loan guarantee payables... 1,647,564 1,629,710 14,842,919 Income taxes payable ,402 1,892 Accrued expenses... 4,059 4,167 36,568 Unearned finance income... 83,533 83, ,550 Other current liabilities... 38,857 24, ,063 Total current liabilities... 2,297,437 2,350,419 20,697,631 Long-term Debt , ,565 3,698,613 Liability for Employees Retirement Benefits... 6,491 6,268 58,477 Allowance for Directors Retirement Benefits (Note 4-1) ,955 Minority Interests Stockholders Equity: Common stock: Authorized 394,550,000 shares Issued 147,180,808 shares... 11,652 11, ,973 Capital surplus... 25,983 25, ,081 Retained earnings... 46,683 43, ,568 Net unrealized holding gains on securities (Note 2)... 3,719 1,557 33,505 Less treasury stock... (67) (53) (604) Total stockholders equity... 87,970 83, ,523 2,802,921 2,829,311 $ 25,251,541 3

6 Semi-Annual Consolidated Statements of Income (UNAUDITED) JACCS CO., LTD. and Subsidiary Companies For the six months ended September 30 Thousands of Millions of Yen U.S. Dollars (Note 1) Revenues: Finance income (Note 4-2)... 69,936 72,386 $ 630,054 Investment and other income ,658 Other, net ,218 72, ,595 Expenses: Interest expenses... 5,825 6,334 52,478 Provision for doubtful accounts... 17,679 17, ,270 Salaries, bonuses and employee benefits... 13,693 14, ,360 Other, net... 31,034 29, ,586 68,231 68, ,694 Income before Income Taxes and Minority Interests... 1,987 4,633 17,901 Income Taxes ,167 8,396 Minority Interests (1) 135 Net Income... 1,040 2,467 $ 9,370 See Accompanying Notes to Semi-Annual Consolidated Financial Statements. Semi-Annual Consolidated Statements of Stockholders Equity (UNAUDITED) JACCS CO., LTD. and Subsidiary Companies For the years ended March 31, 2004 and the six months ended September 30, 2004 Number of share of common stock (Thousands) Common stock Millions of Yen Balance at March 31, ,181 11,652 25,983 42,889 (438) (48) Net income for the year... 6,013 Net unrealized holding gains (losses) on securities... 4,189 Treasury stock... (10) Cash dividends paid... (2,205) Balance at March 31, ,181 11,652 25,983 46,697 3,751 (58) Net income for the six months... 1,040 Net unrealized holding gains (losses) on securities... (32) Treasury stock... (9) Cash dividends paid... (1,029) Bonuses to directors... (25) Balance at September 30, ,181 11,652 25,983 46,683 3,719 (67) Common stock Capital surplus Thousands of U.S. Dollars (Note 1) Capital surplus Retained earnings Retained earnings Net unrealized holding gains (losses) on securities Net unrealized holding gains (losses) on securities Treasury stock Treasury stock Balance at March 31, $ 104,973 $ 234,081 $ 420,694 $ 33,793 $ (523) Net income for the six months... 9,370 Net unrealized holding gains (losses) on securities... (288) Treasury stock... (81) Cash dividends paid... (9,271) Bonuses to directors... (225) Balance at September 30, $ 104,973 $ 234,081 $ 420,568 $ 33,505 $ (604) 4 See Accompanying Notes to Semi-Annual Consolidated Financial Statements.

7 Notes to Semi-Annual Consolidated Financial Statements (UNAUDITED) JACCS CO., LTD. and Subsidiary Companies For the six months ended September Basis of Presenting Semi-annual Consolidated Financial Statements: (1) (the Company ) and its consolidated domestic subsidiaries maintain their accounts and records in accordance with the provisions set forth in the Japanese Commercial Code and the Securities and Exchange Law and in conformity with accounting principles and practices generally accepted in Japan ( Japanese GAAP ), which are different in certain respects as to application and disclosure requirements of International Financial Reporting Standards. (2) The accounts of overseas subsidiaries are based on their accounting records maintained in conformity with generally accepted accounting principles prevailing in the respective countries of domicile. The accompanying semi-annual consolidated financial statements have been restructured and translated into English (with some expanded descriptions and the inclusion of consolidated statements of shareholders equity) from the semi-annual consolidated financial statements of the Company prepared in accordance with Japanese GAAP and filed with the appropriate Local Finance Bureau of the Ministry of Finance as required by the Securities and Exchange Law. Some supplementary information included in the statutory Japanese language semi-annual consolidated financial statements, but not required for fair presentation, is not presented in the accompanying semi-annual consolidated financial statements. (3) The translation of the Japanese yen amounts into U.S. dollars are included solely for the convenience of readers, using the prevailing exchange rate at September 30, 2004, which was 111 to U.S.$1.00. The convenience translations should not be construed as representations that the Japanese yen amounts have been, could have been, or could in the future be, converted into U.S. dollars at this or any other rate of exchange. (4) The semi-annual consolidated financial statements include the accounts of the Company and all of its significant subsidiaries (together the Companies ) which are controlled through substantial ownership of majority voting rights or existence of certain conditions. All significant intercompany balances and transactions have been eliminated. In the elimination of investments in subsidiaries, the assets and liabilities of the subsidiaries, including the portion attributable to minority stockholders, are recorded based on the fair value at the time the Company acquired control of the respective subsidiaries. 2. Marketable Securities and Investments in Securities: Under the accounting standard for financial instruments, all securities are classified as (a) securities held for trading purposes (hereafter, trading securities ), (b) debt securities intended to be held to maturity (hereafter, held-tomaturity debt securities ), (c) equity securities issued by subsidiaries and affiliated companies, or (d) all other securities that are not classified in any of the above categories (hereafter, available-for-sale securities ). Trading securities are stated at fair market value. Gains and losses realized on disposal and unrealized gains and losses from market value fluctuations are recognized as gains or losses in the period of the change. Held-to-maturity debt securities are stated at amortized cost. Equity securities issued by subsidiaries and affiliated companies which are not consolidated or accounted for using the equity method are stated at moving-average cost. Debt securities with no available fair market value are stated at amortized cost, net of the amount considered not collectible. Other securities with no available fair market value are stated at moving-average cost. Available-for-sale securities with available fair market values are stated at fair market value. Unrealized gains and unrealized losses on these securities are reported, net of applicable income taxes, as a separate component of stockholders equity. Realized gains and losses on sale of such securities are computed using moving-average cost. 3. The Company s assets pledged as collateral for short-term bank loans and long-term loans with banks and other financial institutions at September 30, 2004 and 2003, are summarized as follows: Contracts with financial institutions require that the Company shall transfer legal title to finance receivables (except loan guarantee receivables) to such institutions at any time upon request. Such finance receivables (except loan guarantee receivables) amounted to 535,040 million (US$4,820,180 thousand) and 589,039 million at September 30, 2004 and Accounting change: (1) Allowance for directors retirement benefits had previously been accounted for as expenses when payment were made. Effective April 1, 2004, the Company provided allowance for directors retirement benefits at amounts required in accordance with the internal rules had all directors retired as of the balance sheet date. As a result of the change, income before income taxes and minority interests decreased by 438 million (US$3,946 thousand) compared with what would have been reported under the previous accounting policies. (2) The Company provides individual customers with consumer shopping credit facilities, under which individual customers pay purchase prices on an installment basis on retail contracts with member merchant and member outlets who participate in the membership arrangements for such sales finance services offered by the Company. Previously, the Company recognized income on the deferred commissions from member merchants and outlets and individual customers on a straight-line basis when monthly repayments become due under the contracts. Effective April 1, 2004, the Company changed the accounting policies and (1) recognized such commissions from member merchants and outlets when sales are made by the member merchants and outlets, and (2) recognized deferred commissions from individual customers on an accrual basis using an interest rate applied to the remaining installment payments. As a result of the change, operating income and income before income taxes and minority interests decreased by 229 million (US$2,063 thousand) compared with what would have been reported under the previous accounting policies. 5

8 Corporate Directory (As of September 30, 2004) Founders / Board of Directors, Executive Officers and Corporate Auditors Founder and Honorary Chairman Kaname Yamane Founder and Counselor Tatsuya Watanabe Counselor Kazuo Fujii President & CEO and Representative Director Mitsuhiko Kijima Vice President & COO and Representative Director Tadashi Sato Directors Noriaki Nagasawa Junichi Yamamoto Tomoyasu Aoki Naoe Sugimoto Tomonari Kurobe Motoyasu Kanasugi* Ken Hosoda* *Outside Directors Executive Officers Yoshio Kawasaki Kiyomatsu Yamauchi Masashi Hisano Kenichi Yoshimi Mitsugu Abe Mikio Hayashi Minoru Suzuki Tomoo Iwamura Shinichi Tanno Masami Imai Yuzuru Eguchi Shigenori Ikejima Hidechika Kobayashi Ryuichiro Matsumura Akira Ishikawa Yasuo Higuchi Masahiro Sawamukai Standing Corporate Auditors Shozo Takimura Yoshiaki Nakayama Corporate Auditors Saburosuke Fujisaki Kazuhoshi Oi About the Company Name: JACCS CO., LTD. URL: Founded: June 29, 1954 Paid-in Capital: 11,651,997,260 (US$104,973 thousand) Registered Head Office: 2-5, Wakamatsu-cho, Hakodate, Hokkaido , Japan Principal Executive Office: Ebisu Neonato Bldg., 1-18, Ebisu 4-chome, Shibuya-ku, Tokyo , Japan Phone: (03) Facsimile: (03) Business Volume: (Six months ended September 30, 2004) 1,131,900 million (US$10,197,297 thousand) Number of Employees: 3,090 Branches & Sales Offices: 103 / Others: 22 Stock Listings: Tokyo Stock Exchange (1st Section) Sapporo Stock Exchange Transfer Agent: The Mitsubishi Trust and Banking Corporation 11-1, Nagata-cho 2-chome, Chiyoda-ku, Tokyo , Japan Principal Stockholders: Japan Trustee Services Bank, Ltd. (Trust) % The Dai-ichi Mutual Life Insurance Company PIONEER INVESTMENT CORP Mizuho Corporate Bank, Ltd The Bank of Tokyo-Mitsubishi, Ltd Meiji Yasuda Life Insurance Company The Chase Manhattan Bank NA London The Master Trust Bank of Japan, Ltd. (Trust) Sony Finance International, Inc NIPPONKOA Insurance Co., Ltd Total % Number of Stockholders: 6,989 Shares Outstanding: 147,180,808 Printed in Japan

Non-Consolidated Financial Results for the six-month period ended October 31, 2001 (Figures are rounded down to million yen.)

ITO EN, LTD. Non-Consolidated Financial Results for the six-month period ended October 3, 200 December 4, 200 ITO EN, LTD. (Securities number: 2593) 47-0 Honmachi 3-chome Shibuya-ku, Tokyo Contact: Minoru