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Benesse Corporation today announced that goodwill of consolidated subsidiary Berlitz International, Inc. is to be amortized effective from fiscal 2008, the year ending March 31, 2009, in line with a recent change in accounting standards. Details are as follows.

1.Overview
Effective from fiscal years beginning on or after April 1, 2008, companies in Japan are required to adopt uniform accounting treatment for foreign subsidiaries, in accordance with "Practical Solution on Unification of Accounting Policies Applied to Foreign Subsidiaries for Consolidated Financial Statements" (Accounting Standards Board of Japan (ASBJ), Practical Issues Task Force (PITF) No. 18, May 17, 2006). Accordingly, in Benesse's consolidated financial statements, goodwill of Berlitz International, which has previously been accounted for in accordance with U.S. GAAP, will be regularly amortized. Benesse does not anticipate any other changes with a major impact besides amortization of goodwill as a result of applying PITF No. 18.

(Reference)
Under U.S. GAAP, companies must test for impairment of goodwill every fiscal term without amortizing it, and book an impairment loss when a decline in value is recognized. In August 2007, the ASBJ and International Accounting Standards Board (IASB) agreed to work toward the elimination of major differences in accounting standards. Under this so-called Tokyo Agreement, the two standard-setting bodies jointly stated their intention to eliminate major differences between Japanese GAAP and International Financial Reporting Standards (IFRSs) by June 2011. The proposed treatment of goodwill, however, is unclear at this stage.

2. Impact on Earnings and Financial Position
(1) Earnings
Effective from fiscal 2008, Benesse expects to record additional amortization expenses of approximately 2.0 yen billion every fiscal term in its consolidated statement of income. Benesse plans to announce fiscal 2008 earnings forecasts when it releases fiscal 2007 operating results on April 30.

(2) Financial Condition
Benesse expects to make an adjustment to the opening balance of consolidated total equity on April 1, 2008 of approximately \19.0 billion to account for the difference between the carrying amount of goodwill and restated amount, based on amortization of goodwill primarily over a period of 20 years since acquisition. This adjustment will decrease the opening balance of consolidated total equity on April 1, 2008.